You have brought to our attention a couple of times now MTR possibly acquiring BMR. However, I'm quite sure that a failed offer for one company, the Beta company, would not result in said Beta company then attempting to acquire the Alpha company.
Due to the nature of BMR's business, with oncoming self-production of its premium asset in a matter of months, not to mention its long-standing ties to Kabwe, it would have to be BMR acquiring MTR only. No other scenario. BMR is on a different level entirely in terms of its established foundations and the way in which it operates. Thankfully, the proposed move is not being taken any further, as a higher offer would have been to BMR's detriment. Sensibly concluded.
MTR effectively, in my opinion, is an acquisitions only company, including buying percentage stakes in other companies, whereas BMR is primarily concerned with developing projects of its own, to fruition, and hence is appropriately staffed to do so. It intends to generate its own revenue, create its own wealth, and will continue to expand more securely as a result, being unreliant on other companies for its coin. It is also in the process of developing a unique production method for tailings, which could eventually be patented and marketed worldwide. A real possibility.
The Kabwe project is 100% BMR owned, is being developed using its own technically expert staff, all the while adhering to strict environmental codes. MTR could not hope to acquire this. Not only couldn't it realistically afford the assets without extreme detriment to its existing shareholders, the territory would be far too unfamiliar in my view, and the lack of particular expertise would raise too many questions with the Zambian authorities. ZEMA in particular, who could then withdraw the environmental permit. This project therefore remains with BMR and BMR remains solely the master of its own destiny, largely because of it, which is excellent news for BMR holders.
Good synopsis relating to the positive possible motive of AB.
I really cannot see AB doing anything to harm BMR having become involved - I know is sounds like I am blowing smoke in to a dark and moist place, however, WHY would he try and scupper something which is I believe, on the brink of something quite big, nay LARGE?
I would have preferred BMR to be a producer and have an income stream before enlarging BMR GROUP - however, some times one has to grasp the nettle so to speak.
This time it had a bit of a disastrous consequence as far as the SP went - though I expect this to be fairly short term.
We have the reports due out in about a fortnight and with a spot of good luck we should have something positive being reported. Next month is 2017 so not too far away from projected production and revenue stream.
I realise that there are some out there calling for the head of Alex Borelli after the failed merger attempt between Metal Tiger (MTR) and BMR (BMR), two companies where he is the CEO. I admit it all looks odd. But my initial position is based on the assumption that Borelli saved BMR, going in after the previous boss stole all the cash. Fundamentally he is a good and honest man so surely he would not do anything dodgy. Having dug around I put to you another hypothesis.
Metal Tiger is an investment company but AIM hates investment companies and is always trying to get them delisted or to do a re-admission document to become operating companies. And there is a case that Metal is close to being an operating company anyway. Such documents are massively expensive and you do not need to be a rocket scientist to work out that Metal may have assets both operating and investments (shares in a range of small time AIM miners) but it is not drowning in cash.
So Metal has a potential issue or two here. The solution was an offer from BMR in that in a straight all paper deal there would be no need for a complex readmission document and BMR is already an operating company. So that solves one costly problem.There would be no immediate need for cash and merging two companies would strip out one set of overheads. The enlarged group would have been of a critical mass which would have allowed it to access proper institutional money.
I can see why some folks might have worried that since the enlarged group would have had no need to demonstrate to AIM Regulation that it was an investment company, it would have sold off all of Metals stakes in a way that Metals cannot on its own do without risking its status. In one or two cases there would have been a share price pummeling overhang. That fear may explain some of the animosity towards the deal.
But if Borelli was thinking as I believe he was, and that has been impossible to confirm, the proposal put forward would have been very good news for Metal Tiger and probably also for BMR. It is one of those cases where, as Rob Terry would have said, 2+2 can = 5.
My view of Borelli has not changed and, unlike Cynical Bear, I think he is the last person either company should be parting company with.
I see they are up fourfold from their low at the beginning of this year. I can't remember the exact composition of their resources but seem to remember we generally rose and fell with them and the accompanying metals prices when other factors weren't affecting our s/p. By that measure, IMO, we should be around 12p.
I tend to think that nothing is quite as it seems. I can see no way that the MTR/ BMR piece was anything other than a highly orchestrated pice of PR Think about it...
1. Borrelli's RNSs (BMR/MTR) both landed at 4.20pm friday - bound to cause a stir but not affect the sp immediately because the markets were closed
2. MTRs rejection RNS came at 7am Monday before the market opened - mitigating any further negative reaction
Critically - all the rns's had to be approved via the Nomads and then scheduled for release on the LSE RNS system - and in working day implications, there's not a huge difference between after hours friday and before hours monday - so it is my considered view, that all the RNS's were loaded simultaneously probably on the Thursday, with their releases scheduled quite precisely (I do not believe for one moment, Terry Grammar spent his weekend on the phone to lawyers & Nomads drafting & wordsmitihng RNS's)
The question then to ask is not "what happened?" but "why did it happen?" - what is the motive behind the scheme?
1. It has been asserted that under takeover rules, holders of 1% of MTR had to declare their holdings as a consequence of the initial announcement - and it has been argued elsewhere, for some time, that MTR is being actively shorted...so could this have been a ruse to identify connected parties either shorting or position building in MTR?
2. It could simply be a low cost way of binging huge investor attention to both BMR & MTR companies (though this seems and odd way of doing anything given the risk to AB's personal credibiility that has, entirely predictably, ensued)
3. Grammer, though rejecting the offer as being below mtr value, also said their could be synergies at the right price - i.e. the answer was not a no, just no for now, no at the price offered....at a stroke it put MTR assets (either individually or at a total company level) in play
4. Similarly, the rebuffing of bmr also puts them in play too
5. Scoping study results in botswana are due imminently; today MTR are in the high court disapplying historic carried losses to enable dividend / dispersions to shareholders (should the moment arise) and BMR awaits ZEMA (AGAIN) - so there is much value creating activity due to be released to the markets - this is not a time to worry too hard - this is not Alikhani time
6. I have speculated too that the takeover might well come from the other direction. MTR is almost 2xBMR market cap - the scoping study could see the price surge next week to say 4p...what if MTR tables an 8p per share offer for BMR - which could mean 2 MTR shares for each BMR share....because BMRs investment to cash cycle in Kabwe might provide MTR with sufficient funds to develop Botswana with MOD?
All speculation. A week is a long time. But, before any talk of resignations, let's see how the fog clears and get some visibility on the real motivations of these rather odd goings on.
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