Kimi Venkataraman and Sidd Thomas of India Intrinsic Value Consultants presented their investment thesis on Lycopodium Ltd (Australia: LYL) at Asian Investing Summit 2026.
Thesis summary:
Lycopodium is a Perth-based engineering and project delivery services firm serving the resources sector, founded in 1992 and listed on the ASX in 2004. Sidd and Kimi describe a 30-plus-year-old business that derives roughly 94% of revenue from miners in gold, copper, lithium, rare earths, uranium, titanium and mineral sands, with no equity raises since listing. The three founders — Rodney Leonard, Michael Caratti and CEO Peter De Leo — remain involved and collectively own about 30% of the equity, aligning management with outside shareholders. Market cap recently stood at about A$530 million (about US$365 million) at a share price of A$13.30.
The core of the thesis rests on Lycopodium’s predominantly EPCM (engineering, procurement and construction management) model, which Sidd and Kimi contrast with the lump-sum EPC model that dominates listed peers. In EPCM, the owner bears cost-overrun risk while Lycopodium earns a cost-plus professional services fee, making the business capital-light, free of balance-sheet exposure, and capable of generating 30%-plus ROE (FY25). Today roughly 80%-plus of revenue sits in EPCM, with the EPC-heavier exposure largely ring-fenced via a 40/60 JV with Monadelphous. Kimi emphasizes a “study-to-EPCM flywheel”: the firm runs 40-plus scoping, PFS, FS and DFS studies at any point, and miners who use Lycopodium for feasibility almost always award it the EPCM, which in turn feeds recurring optimization work. Committed contracts stood at A$415 million with a A$1.3 billion opportunity pipeline as of December 2025.
Competitive strengths include on-time, at-budget delivery track record, two-thirds of revenue from repeat clients, a client list that includes Newmont, Rio Tinto and Anglo American Platinum, and 30-plus years of metallurgical and process data that is not replicable by new entrants. About 57% of FY25 revenue came from Africa, an area of relative strength given few established peers. In 2024, Lycopodium entered the Americas through its acquisition of Argentine firm SAXUM, which management estimates expands its TAM by about 40%. Tailwinds include high gold prices (six-plus active gold EPCM projects), a looming copper deficit driven by the energy transition, and battery-mineral demand (lithium, nickel, graphite, rare earths). The principal risk, as highlighted by the 2013-2017 commodity downturn and reinforced by Kimi, is a mining capex cycle that compresses miners’ access to financing, which historically forced Lycopodium to take on EPC risk and produced its only loss year (FY15).
Revenue grew from A$162 million in FY21 to A$340 million in FY25 (about 20% CAGR), while NPAT grew from A$14 million to A$42 million (about 31% CAGR), with net income margins expanding from 8.8% to peaks of 14.5% before softening to 12.4% in FY25. The balance sheet carries A$79 million of net cash and zero debt. The payout ratio averaged in the high 60s until FY25, when management cut payout to 33% to fund SAXUM — an unusual attribute of a business that has compounded earnings while distributing two-thirds of profits. Over the 20 years since listing, revenue compounded at 8.2%, net income at 10.8%, dividends at 11.3%, and total shareholder return (including dividends reinvested) at 14.9% CAGR.
Kimi and Sidd frame valuation by projecting the past 20-year track record forward 20 years. Starting from a current market cap of A$531 million, they estimate cumulative dividends reinvested at 3% of A$1,795 million, terminal NPAT of A$262 million, and apply a deliberately conservative terminal P/E of 7x (compared with a trailing P/E of about 15x today and peer multiples of 17-40x trailing) for a terminal value of A$1,837 million. Total expected value of A$3,632 million implies an expected return of about 10.1% CAGR over two decades. The shares recently traded at a trailing P/E of 15x against a depressed FY25 earnings base; Kimi notes that low near-term earnings — with FY26 expected roughly flat to FY25 — are precisely what create the current opportunity as feasibility projects convert into EPCM delivery and SAXUM contributes to the Americas pipeline.
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Slides
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