Is it not realistic to ask existing shareholders to fork out more cash.....put a new BOD in place fresh ideas and hopefully lower costs. Alternatively a quick rights issue sack the BOD, place operation (or lack thereof) on care and maintenance, appoint a competent Administrator and wait for a decent offer.....with a view to going into production when resources pick up.
I agree the establishment of the JV is to include HER SA in the instalments on Picasso and Paz.
The La Serena cash to be received by HER SA I hope will be into HER SA bank account but will possibly be called on to meet some of our JV obligations.
Include the big final payment from NEXT $2.5 m as being needed to service HER SA establishment expenses as well as our JV obligations....... final payt on Picasso $5M ........? No doubt in my mind they will keep the JV going long enough to keep us obligated to a share in this.
I don't feel we are going to be flush with cash anytime soon.
I expect there will be cash to run the office and pay GS ( will he take a pay cut ?? )
But as to the direction HER can take now it is very simple. We will need to look for another JV partner but one with deep pockets and so we can expect another massive dilution but hopefully enough of a chunk of Pat to have made it all worth while.
That said why are all the big holders still here, Someone must see possibilities somewhere in the not to distant future.
My main thought on all this is that Picasso has played the part it was supposed to play ...... ie keep us in the game whilst everything fell apart on metal prices. We obviously arnt out of the woods yet.
If the motion is passed then the bod will feel free to go for huge dilution anytime to put money in the bank to pay their salaries.
I really have no idea how we can get any value here I only cling to the hope that the big share holder arnt all silly too and this will become apparent to the market soon.
what i was trying to say is... ... scenario(s) if the NExt deal goes ahead: - $2M cash + 30% of the JV - $2.625M cash + 22.5% of the JV - $5.125M cash no stake in the JV. (if i'm wrong about La Serena proceeds, then those amounts can be added to the above).
And what I didn't say: - HER can never ever bring Pic & Pas to production on their own. Funding for that would have cost us (PI's) a lot more than this proposition.
- Clearly Errazuriz (Tambillos) was turned down. The 'attachment' refers to "terms were unacceptable", which I would think applies to them specifically. Good ridance.
- HER, seeing no progress in JV-talks, and having no money for the next option-payments, can only turn away from Pic & Pas. - Probably an indication as well that the BoD didn't do their homework properly prior to starting all of this... anyhow, that's where we are. One could get 'personal' about it all... but that's live.
- Better abandon Pic & Pas than trying to get the impossible done. Sad, stupid also, but better then having to cut further losses due to continued expenditures.
- 'Next' is probably the only remaining interested party. And thus the only option left.
future: - all depends on what the BoD wants to do with the available cash. If they use it to further Paguanta then I'm OK. - If it's put to use for going back to Guamanga... doubtful. - If it's going to be used for another 'new project' then we'll see the same (silliness) all over again as we've seen re Pic & Pas .
I just hope they won't have to issue shares (at a significant discount to get investors convinced) to bridge the gap between end of February and end of April. then even a nominal value of 0.01p may be too high...
BTW: I just send an email to GS to get confirmation on some of my assumptions and other stuff... hope he'll respond.
There's an attachment to the notice of the GM on HER's website home-page. Noteworthy: (1) No consolidation but reducing the nominal value of the shares to 0.01p. (2) they seek approval to issue shares (without pre-emptive rights) for up to £426K... approx 50% of current Mcap. (3) the deal with Next is about disposing of Herencia Chile SA as a whole, not 'just' Pic&Pas. (4) one of the conditions precedent : disposal of La Serena. (5) other conditions : Pastizal options agreement + amending Picachos Options agreement.
now. for a series of amounts (from Attachment to notice + RNS's)
From the 'attachment'. a> Initial payment of $2M for 35 % of Herencia Chile SA (Apr 2015) b> following 15months: Injection up to $2M for additional 35% (Jul 2017) c> 6 months later payment of $625K for 6,75% (jan 2018) d> 9 months later payment of $2.5M for remaining 22,5% (apr 2018)
If c> and d> are not made: the thing goes further as a JV. (e.g. 70% Next, 30% Herencia plc) If Next wants 100% of Herencia Chile SA they will have paid $5,125M (which is a> + c> + d>: the 'payments'... not the injection)
RNS dd 07-aug-2013 (re Picachos), Remaining payments e> After 24 months $600K (Aug-2015. no RNS, assume its still due) f> After 36 months $1.6M (Aug-2016) g> After 48 months $5.7M (Aug-2017)
RNS dd 30-jan-2015 (disposal of La Serena to Cuprum), HER to receive: h> After 12 months $350K (jan-2016) i> After 24 months $500K (jan-2017) j> After 36 months $3M (Jan-2018) RNS dd 29-oct-2015 (re Pastizal) k> 6 months $50K (apr-2016) l> 12 months $160K (oct-2016) m> 24 months $250K (oct-2017) n> 36 months $400K (oct-2018)
And thus: all IMO and to make the amounts fit more or less + assuming: - Picachos option agreement gets re-negotiated - Pastizal option agreement gets signed - the proceeds from La Serena stay within Herencia SA (why else is the disposal a pre-requisite to the Next-deal) (stay in Herencia SA = stay in the 'temporary' JV) - Next is not a non-profit organisation
A) The 'injection' (b>) + La Serena proceeds (h>) pay off installments (e>) and (f>) on Pic + installment (k>) on Pas At this point (Jul 2017) Next has 70% of Herencia SA (the 'JV'). Assuming disposal of La Serena is done, then Herencia SA has $3.5M in cash B) $3.5M (Herencia SA cash) + $2.5M (from Next) to pay final Pic-installment (g>) and installment (m>) in Pas Next pays $625K to us and has 76.75% of Herencia Chile SA, Picachos fully owned by the JV At this point (Jan 2018) Next has 76,75% of the 'JV')
IF Next wants full control C) Next pays us $2.5M for 22,5% of Herencia Chile SA Next pays remaining $400K for Pastizal. Becomes fully owned by the JV.
Otherwise Herencia Chile SA will have (had) $2,625M in cash and 22.5% part in the JV (and partakes in the final Pastizal installment)
Given the current economic climate and that the Company is not is a cash generating position, it is the Directors recommendation that shareholders support the Disposal and the other proposed resolutions.
By law, a company cannot issue new shares at a price below the nominal value of those shares. Herencia's shares have a nominal value of 0.1p, but its share price has been below this for some time. As a result, Herencia has struggled to issue new shares to raise funds, because it would have to issue them for at least 0.1p - not an attractive proposal to investors when the market price is significantly below that. The Directors are proposing a subdivision of each Ordinary Share into 1 ordinary share of 0.01p and a deferred share of 0.09p. The deferred shares are essentially valueless and will not carry any voting or dividend rights - meaning the only significant change is the nominal value, allowing the company to issue shares in the future at any price above 0.01p.
No shareholders stake will be affected by the restructuring, with the changes expected to take effect on 26 February 2016 if approved by shareholders at a general meeting to be held on the same day.
Key information relating to the General Meeting of Shareholders is:
· The Disposal is a fundamental change of business pursuant to Rule 15 of the AIM Rules for Companies. However, as the Company retains other assets and the effect of the Disposal is not to divest all or substantially all of the Company's assets or activities, the Company will not be considered to be an Investing Company, as defined in the AIM Rules;
· Record date for determining those shareholders who are entitled to receive notice of and to vote at the General Meeting: 9 February 2016;
· Date for submission of proxy forms by registered shareholders: 2.30 pm, 24 February 2016; and
· General Meeting date and location: 2.30 pm on 26 February 2016 at the offices of One America Square, Crosswall, London EC3N 2SG.
· If Next make the initial payments, but do not take up these additional amounts then the project will be operated as a joint venture with Herencia.
Should Next elect to acquire 100% of Herencia Resources (Chile) SA, the total consideration payable under the agreement to Herencia is US$5.125 million (approximately £3.6 million).
Herencia will also undertake to provide Next with a revised Picachos Option Agreement and will undertake to sign a formal Pastizal Option Agreement, which was placed on hold whilst these latest negotiations were concluded.
Reasons for the Proposal
The Directors believe that this proposal represents a positive development for the Company, especially in this current market where sourcing capital is extremely difficult. Assuming the transaction proceeds it intends to use the proceeds to assess a number of new opportunities the Company has been reviewing, to assist with development and/or joint venture of the Company's existing projects and for working capital purposes. The Picachos project do not represent all or substantially all of Herencia's activities or assets, so that in the event that Next ultimately acquire 100% of Herencia Resources (Chile) SA, Herencia has the option to refocus its efforts on developing its other key assets - Paguanta and Guamanga or look to advance other opportunities in the natural resources sector.
Herencia Resources (Chile) SA has no turnover, and a current book value of £1.36m (as at 30 June 2015) although the directors believe the actual value to be substantially higher.
Working Capital Position/ Directors Recommendation
Over the past nine months the Company has undertaken a comprehensive cost review of corporate and operations. The result of the review has seen the Board, including the Managing Director, take on a 45% reduction in their remuneration and a significant reduction in Chilean operating cost. These measures along with a number of Director loans (see RNS 3 February 2016) were necessary to support the Company whilst longer term funding plans including the proposed Disposal were being developed. The Company has sufficient funds on hand for another four weeks and is currently seeking expressions of interest from several groups for a small bridging facility to meet operating costs until the Disposal is completed. The Company is also reviewing other funding opportunities, such as the joint venture or sale of some of its other assets should the Disposal not proceed. To enable the Company the appropriate level of flexibility when considering all funding options, the Directors are proposing authority to issue further shares and disapplication of pre-emption rights. The details of the proposed issue of further share capital are contained within the Shareholder Circular.
Given the current economic climate and that the Company is not is a cash generating position, it is the Directors recommendation that shareholders support the Disposal and the o
Further to the announcement of 3 February 2016, the Company is pleased to announce that it has today dispatched a Notice of General Meeting seeking shareholder consent for the proposed disposal of up to 100% of Herencia Chile SA, the Company's wholly owned subsidiary that owns the Picachos copper project to Next Minerals SA ("Next"). In addition the General Meeting propose authority to issue further shares and disapplication of pre-emption rights.
This shareholder meeting will be held at One America Square, Crosswall, London EC3N 2SG, on 26 February 2016 at 2.30 pm. These documents are also available on Herencia's website (www.herenciaresources.com).
Details of the Disposal
On 3 February 2016 Herencia announced the signing of a binding Term Sheet ("Term Sheet" or "Agreement") with Next, a private Chilean mining company. Under the Term Sheet, Next can enter into a joint venture with the Company by way of purchasing part of Herencia Resources (Chile) SA, the Company's wholly owned subsidiary which holds the Company's Picachos copper project. The Term Sheet provides that Next may eventually acquire up to 100% of Herencia Resources (Chile) SA as set out in the key terms below.
The Agreement will allow Next to earn into a joint venture arrangement with a series of cash payments to Herencia and additional funds, paid directly into the Joint Venture, which will be used to advance both the Picachos and Pastizal Projects in Chile.
The key terms of the binding Agreement are as follows:
· It is conditional on the consent of shareholders of Herencia, to be given at a general meeting of the Company which has been convened by the Notice of General Meeting sent out today.
· It is conditional on a three (3) month due diligence process ("DD") to be completed by 30 April 2016, during which Next will meet most of Herencia's in-country operational expenses on the Picachos project and the Herencia team will assist with the due diligence process.
· Upon successful completion of their DD process and fulfilment of the other conditions, Next will immediately pay Herencia US$2 million no later than 30 April 2016 for 35% and will spend up to US$2 million over a 15 month period, to acquire a further 35% for a total of 70% share in the Picachos and Pastizal Projects through Herencia Resources (Chile) SA.
· After 6 months, Next can elect to pay Herencia a further US$625,000 cash to acquire an additional 7.5% of Herencia Resources (Chile) SA (increasing their stake to 77.5% of Picachos and Pastizal).
· After a further 9 months, Next can elect to pay Herenica a further $2.5 million to acquire the remaining shares in Herencia Resources (Chile) SA and therefore acquire 100% of the Picachos and the Pastizal projects.
· If Next make the initial payments, but do not take up these additional amount
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.