SMX PLC (NASDAQ: SMX) shares are finding bullish interest after the company announced it increased its stake in True Gold Consortium Pty Ltd to 51.9%, which, according to a 2021 assessment, adds roughly $43.7 million to SMX's balance sheet. And that was then. In 2023 terms, True Gold could be worth significantly more than its then-estimated between $78.5 million and $90 million (USD) valuation. In other words, investors are right to take advantage of the opportunity. Compromising at the middle of True Gold's assessment, that 51.9% stake is worth nearly 10X its current market cap of $4.74 million*.
That disconnect is not only vast, it exposes a considerable investment opportunity. CEO H. Alon thinks so. He said, "The agreement fortifies a gold industry alliance, which we expect will ensure a cohesive approach towards achieving shared strategic objectives, particularly the development and commercialization of the True Gold platform. This acquisition exemplifies a mutual endeavor to pool resources, management acumen, and R&D capabilities, fostering innovative solutions that address industry challenges. We believe that SMX and True Gold are now more robustly positioned to redefine standards for transparency, security, and authenticity within the gold value chain, heralding a new era of strategic collaboration and industry innovation."
That deal isn't the only one strengthening the bullish thesis. Last month, SMX amended and/or satisfied three loan agreements, turning debt into equity at what was then above market prices. Those investors should be satisfied. They converted notes at $1.34 a share, which at SMX's current $2.02 stock price provides them a paper gain of over 49%. The better news for them, and, frankly, for all its investors, is that the bullish trend is strengthening. (* share price and market cap on 10/20/23, Yahoo Finance, $2.02, 10:01 AM EST)
Bullish Trend Strengthens, Shares Rally 20%
Since last week's low, SMX shares are currently higher by over 20%. Much of the interest is inherent to the broader SMX story, with the theme being SMX's contribution to changing the rules of engagement for how a circular economy gets managed. And its technology is not something easily poached. In fact, SMX technology is protected by a robust IP portfolio that should keep its revenue-generating potential protected from competition. That's a big deal for billions of reasons- in dollar terms.
That's not an overzealous presumption. Remember, the invention of barcoding, also a next-gen technology, generated billions in value. SMX technology can do the same, with many suggesting its invisible marking technology is like barcodes on steroids. That comparison makes sense. Why? Because SMX technology is not only more robust in use applications, its invisible marking technology can be uniquely and permanently applied to metals, rubber, liquids, plastics, and other materials, adding a specific signature that becomes a part of that material's "DNA" forever.
It's more than revolutionary; it can change manufacturing globally by providing the most potent identification means for virtually any industry material, ensuring transparency and accountability from an invisible marking technology that can be used pre-, mid, and post-production to keep a record of origin, the number of times a product has been used, how many times and where it's been recycled.
That's only part of what it can do or provide.
Facilitating Sustainable Manufacturing Processes
SMX technology is also a sustainability initiatives game changer from its use to track raw materials from virgin use through pre-, pro, and post-production life cycles. More simply said, it's a one-and-done, cradle-to-grave application, which, for the manufacturing and mining sectors, can be the most significant inclusion to proving its commitment to sustainable practices. Once added to the material, it can't be altered. Rigorous testing shows it survives melting, grinding, burning, water immersion, and other potentially disintegrating processes. That inherent strength makes its applications virtually limitless.
And it's helping pave the path toward mainstream use. SMX has already proved its viability to mark plastics, rubber, precious metals, oil, and other liquids. The technology is more than innovative and unique to SMX; it also goes beyond what people generally call 21st-century advancements, providing its users an unparalleled and verifiable means to act as authenticators, validators, and facilitators of an entire supply chain process. Additionally, with its integration into blockchain technology, the legacy of materials mined, used, or wasted maintains a historical record. For the first time ever, miners, producers, suppliers, and recyclers can have the ability to track commitments made and kept.
As one should expect, industries are taking notice. Lots of them. With its use applications extending to timber, rubber, palm oil, cocoa, steel, gold, luxury goods, leather, plastics, and non-ferrous metals, its use by companies to prove reducing their carbon footprints and waste is almost limitless. That's not SMX's ambition; they are already providing that means. So far, SMX announced working with The Perth Mint, Continental Rubber, and a major steel manufacturer, utilizing SMX marking technology as its product life cycle transparency and supply chain validation source. And more are expected to follow, especially as use cases supporting its value accrue.
Validations And Use By Major Global Companies
SMX published a compelling update working with Continental. Earlier this year, SMX announced success in verifying a marker substance for natural rubber in a tire for the first time, with the marking surviving throughout the entire production process. The dedicated marker technology, which both companies optimized for use in natural rubber, is designed to create greater transparency along the value chain of tires and technical rubber products from Continental. Embedding special security features, using the marker substances enables the invisible marking of natural rubber with information on its geographical origin. The value to Continental isn't going unappreciated.
The established precedent means that responsibly sourced natural rubber and its origin can be verified at every stage of the supply chain all the way through to the customer. In doing so, Continental further strengthens its pioneering role in its commitment to greater transparency along its supply chain. SMX noted in its release that by 2050 at the latest, Continental expects that all materials it uses in its tire production will originate from responsible sources. How will they do that? Well, SMX provides a great start by providing them the DNA of the material right up front. In fact, more than a great start, Continental likely has no reason to look elsewhere to ensure meeting its internal compliance initiative; SMX marker technology may already be the most excellent and easily used way to ensure that the natural rubber used in its tires is grown and responsibly sourced.
If integration by Continental goes as expected, SMX stock could be off to the races. In its note, SMX said that Continental intends to use the new marker technology on a larger scale while sourcing its rubber and integrating it into other rubber products. For SMX, that intent could send revenues soaring, and certainly at a pace faster than many expected. Additionally, as part of the industrialization of this technology, the value inherent to SMX technology can increase by its potential linking of the markers with blockchain technology, which is generally considered tamper-proof. Better still, from a company and investor's perspective, success with Continental potentially opens doors to Goodyear (NasdaqGS: GT) and/or Bridgestone Corp (OTC Other: BRDCY).
An Integral Part Of Supply Chain Management
That could happen faster than many expect. And it should, considering that SMX offers a robust, innovative, and scalable solution for supply chain authentication, traceability, and transparency in the circular economy. Not only for solid goods. SMX technology also gives materials in liquid and gas forms the ability to maintain a virtual memory of origination, processing, and supply chain journey, including the ability to authenticate provenance, track recycling loop counts, and tally the percentage of certified and/or recycled materials contained. That's not all.
SMX marking technology is also easy to implement, making it an efficient, cost-effective drop-in solution within an existing supply chain, enabling substantial benefits for manufacturers, consumers, and others in the value chain – and the planet, including providing the necessary data for product recycling and reuse. Additionally, the SMX technology addresses the issue of the increase in waste globally by serving the rise in demand for verified, usable recycled materials by creating a commoditized, tradable certified asset, which is the recycled material, which can be traded and sold to other players in the value chain and ecosystem. That could open massive deal-making opportunities, including with thousands of private companies that resell millions of megatons per year of recycled plastics, resins, and other fit-for-new manufacturing materials.
Incidentally, while only recently getting its introduction to the US markets, the SMX technology has been in active operational use on a national scale by the Israeli Government for over a decade. Since then, SMX has been able to do more than build its resume; it's proven its value in contributing to environmental sustainability by meeting the highest expectations. That trend will continue. SMX announced joining the Global Platform for Sustainable Natural Rubber (GPSNR). This voluntary membership organization brings together organizations, companies, societies, institutions, and government agencies to help foster improvements that have socio-economic and environmental benefits across the natural rubber supply chain.
Targeting A Global Need And A Multi-Billion Dollar Opportunity
Bottom line: The sum of SMX's parts compared to its current $2.02 share price exposes a valuation disconnect worth seizing. Its majority stake in True Gold alone supports a share price nearly 10X higher than its current. And by making deals with some of the world's largest manufacturers, that holding's value could pale compared to near and long-term revenues generated. Remember, SMX has demonstrated success well beyond marking rubber. They have also proven their value by marking gold bars, timber, plastics, leather, and other non-ferrous metals. That proves SMX can generate revenues from virtually any market, anywhere.
Is SMX ahead of its time? Maybe. But that makes the value proposition even more compelling. Every great company started with a vision to disrupt the status quo, including Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), which brought products to market when the thought of carrying a cellphone with mainframe capabilities and seamlessly operating desktop computers drew laughs instead of praise. They proved that being innovators still matters.
Moreover, they showed that the rewards from doing so can be beyond vast; they can be exponential. SMX targets similar potential. In fact, based on what this technology can do and the global mission of ensuring sustainable and accountable business practices, the inclusion of SMX technology is less of a question of when it becomes mainstream but how substantial the rewards will be from creating it.
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