Mr. Wade Dawe reports
TORRENT CAPITAL CORPORATE UPDATE
Torrent Capital Ltd. has provided a corporate update on its 50/50 joint venture company, Argentia Capital Inc., with Port of Argentia Inc., as announced on Sept. 21, 2022, and an update on its investment portfolio.
About Argentia Capital Inc.
Through the ACI joint venture, Torrent Capital is investing in developmental projects at the Port of Argentia, which will generate opportunities to earn revenue through royalty incomes and equity positions.
"Particularly commendable was the June, 2023, commercial terms announcement with Pattern Renewable Holdings Canada 2 ULC for a planned wind to green fuels project at the Port of Argentia, in which ACI is a signatory to the agreement," said Carl Sheppard, chief executive officer of ACI.
Negotiated commercial terms will see ACI receiving a royalty calculated as a percentage of gross revenue on sales from ammonia production facilities at rates consistent with prevailing renewable industry practices for landowners. In addition, ACI has the right to acquire an up-to-12.5-per-cent limited partner equity interest in the wind, hydrogen and ammonia project, or any other entities established for operating a renewable energy or green fuel production project at the Port of Argentia.
Pattern Energy has commenced feasibility and permitting work for the project. A 400-metric-tonne-per-day green ammonia plant, coupled with a hydrogen electrolysis facility and an on-site 300-megawatt wind project, is proposed. Depending on viability limits and market conditions, the project could be scaled up to more than one gigawatt of renewable energy producing approximately 1,400 mt/d of ammonia.
Rare earth industrial park
Torrent Capital and POA are collaborating to establish a rare earth industrial park at the port. Torrent Capital has retained specialty engineering firm TrajectorE to prepare a rare earth supply chain study. The study is being undertaken with support and financial contributions from the Atlantic Canada Opportunities Agency and Newfoundland and Labrador's Department of Innovation, Energy and Technology. Torrent Capital believes the Port of Argentia is strategically situated with potential to become a processing hub in the capital-intensive rare earth supply chain. Work for the study has commenced and is expected to be completed during the second quarter of 2024.
"I wish to express my confidence in the continued success of Argentia Capital Inc. and its rapidly advancing role in the green economy. The vision and strategic collaborations demonstrated thus far position ACI as a key player in driving economic growth, sustainability and innovation in the region," commented Wade Dawe, chief executive officer of Torrent Capital.
Investment portfolio commentary
Canadian small-capitalization equities have been under pressure for some time, weighing on the investment portfolio's performance. This trend has continued in 2023, with the investment portfolio declining 6.4 per cent in the third quarter. This compares favourably with the S&P/TSX Venture Composite, which fell 9.9 per cent over the same period.
Torrent Capital fair values its investment portfolio based on the market prices of shares at the end of each quarter. During the past quarter, Torrent Capital had an unrealized loss on investments of $860,582 or three cents per share as compared with an unrealized loss on investments of $1,227,990 or five cents per share in the comparable quarter.
It is beginning to see encouraging signs that the worst for small-cap stocks may have passed. Volumes on the S&P/TSX Venture Composite have declined 80 per cent from their long-term average, representing a fraction of the volume typically seen during buoyant market conditions. The valuation ratio of the Russell 2,000 (smaller companies) as compared with the Russell 1,000 (larger companies) is the most depressed it has been in 20 years, representing a historically significant mispricing between those segments of the market. Many growth-related investments, such as those in the software-as-a-service, fintech, cleantech and e-commerce sectors, currently trade at enterprise value to revenue multiples of one times to two times versus historically trading north of five times.
Torrent Capital remains committed to identifying high-quality investment candidates that have overcorrected against a weak macroenvironment.
About Torrent Capital Ltd.
Torrent Capital is a publicly traded investment issuer that invests in the securities of private and publicly traded companies. The company invests in companies that are due to experience accelerated growth or are trading at a discount to their intrinsic value. Torrent Capital offers investors the potential to earn above-market returns while providing transparency, daily liquidity and a modest fee profile compared with competing investment products.
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