GK, Very informative and helpful posts today as usual. More recollection from the AGM, CF was very clear that dilution will occur, without which the mine will not get built (obviously) but he was very insistent and convincing when stressing that the best possible terms for existing shareholders (including the board members) would be obtained. In reply to a question from the floor as to whether or not existing shareholders would be able, as the "seed corn" of this company to be able to participate in any equity raise in the form of a rights issue CF wasn't able to confirm what form the equity raise was going to take. On the finance discussion I noticed CF referring again to the 'cornerstone investors', now I might have missed references to these investors in recent months and might be wrong but I think this is the first mention of the 'cornerstone investors' for sometime? Just feel after the AGM as though all the ducks are lined up!
To the analysts. Supposed 'Pitch'. There is something that niggles here.
First the very obvious: someone who wants to get new issue shares or acquire those already available in the market wants the lowest price possible. Undoubtedly for the new issue soon to come that bargaining for a slice at the lowest price is happening right now. So can any price estimates, particularly from those wanting 'in', be any way trusted. Nope. Conversely can I as an existing holder be trusted? Nope. So DYOR.
The analysts will be told what is in the DFS - 10mt/y. For sure. They will also be told that all already know the plan is to take this to 20m, that the mine will be built so it can go to 20m, that there would be no extra external cost to do that, that the market is there to take 20m and that there is far more profit from it at 20m. They build this to 20m.
So what does 20mt/y contribute in tax? £200m/y? Nope. Project Summery doc. p31: "£500m in tax contributions per year" and also: "£2.5bn in exports per annum" and: "£2.3bn annual contribution to UK GDP." For the 20mt scheme.
It is a given that all those wanting to take some of this co via the new issue will fight for the lowest price, maybe by all means in attempts to 'engineer' the lowest issue price. Is putting up the idea we should be ignoring the expansion potential that provides so much more value part of that? Is the suggestion analysts won't be told any of that part of that also in the 'engineering' handbook, I wonder?
Be advised, they want your shares. They don't shed a tear if dilution is far higher as a result of successful 'engineering'. Far from it, they have more we have less. These are the same shares that indeed can be worth some 2 quid on 10mt/y AND most definitely would be worth 5,6,7 quid at 20mt..........but be very clear about this: not to us if huge dilution happens.
Well after a very busy weekend here in sunny Scarbados with the Armed Forces weekend I finally got time to catch up on the posts here, thankyou to those who have taken time to report on this and your assessment of the situation, much appreciated.
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