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This share price is getting silly; purely Berenberg going wild, walking it down. Struggling to see what the downside is here, irrespective of the Ganfeng outcome.
We have to remember, that prior to the Ganfeng offtake agreement the closing price was 27. It is currently 31, and since that date the Co has also proven up Zinnwald as an economically viable asset with a project NAV of 428m! It was only after that Zinnwald release that the company went on a share price run. Post the Ganfeng agreement and before the Zin release, the share price was just 25p!! It can hardly be said the market was overly enamored with this deal, and if it doesn't happen, that won't distract from the fact this company has two monstrous, post Feasibility assets with NPVs in the billions! In a space forecast for significant growth, this will go unnoticed even if it is not Ganfeng who see it through to production. Its absurd a company with projects running into the billions in value is being driven sub £50m market cap, just because market makers at this level can do what they want, and Berenberg are opting to run it short.
I would be very surprised if this has any effect on Garfeng's deal with BCN. Garfeng is not cash strapped and has other option and routes to raise money. The initial deal is small change to them and they would not want the opportunity to slip by. Garfeng have also stated that the Sonora project is key to their growth strategy. As quoted in the initial RNS, Mr Wang Xiaoshen, the Deputy Chairman of GFL, commented: "Our proposed investment in Bacanora Lithium and the Sonora Lithium Project would form a cornerstone in Ganfeng's growth strategy to become the world's largest lithium producer. Specifically, the Sonora deposit is large and scalable, with low operating costs". Key word 'cornerstone'.
I think on the KDNC board some are trying to rationalise their selling of BCN shares. I personally think they are deluding themselves.
Their initial share purchase was peanuts but their proportional contribution to the overall financing is much larger. That said, they signed the formal agreement and in my view have committed.
I suspect Peter S is having a chat with them about it though and lets hope he let the market know swiftly to avoid any further uncertainty.
Clarification would be nice, but let’s be honest Ganfeng have got a great deal with us for what amounts to just over pocket change for a company of there size, they will not be wanting to let this opportunity pass them by.
northesea, I think you've misunderstood.
The vote in HK sought to prevent Ganfeng from raising new money, and which appears to have been successful.
The question is; will this affect their ability to provide funds for BCN? As others have said, perhaps PS needs to clarify.
As long as Ganfeng have the cash to help fund this deal I wouldn't think any dilution of their company would have any impact on BCN. If it was the other way around it would affect them as they hold 29% but we don't hold any of their stock. Or am I just seeing it in black and white too much?
NST
Yes, as far as I am concerned, Gangfeng have already committed to the Bacanora project. Surely they would not commit if they did not have the funds. We are waiting on the Chinese Government signing off the project. Which is taking a frustrating amount of time.
If this failed equity placing (according to lithium ion rocks Howard Rodney, they failed by 1% of the votes to get it away) then an rns would have been released by now.
Somebody is taking advantage anyway, plenty of chunky buys going through.
I have read through the rns' on the Ganfeng partnership and I couldn't see mention that shareholder approval was required? Surely as they have signed the formal agreement and its going through chinese government approvals we are passed the problem outlined in the article below. Ganfeng have enough cash I assume...
When reading the last rns re reading the note from Ganfeng lifted my spirits again:
'Mr Wang Xiaoshen, the Deputy Chairman of GFL, commented: "In signing these agreements we are not just committing immediate financial and technical support to the Sonora Project, but also advancing Ganfeng's growth strategy to become the world's largest lithium producer. We are demonstrating our intention to be the cornerstone funding partner for Bacanora at a corporate and project level going forward. Over the rest of 2019, we will work closely with Bacanora's management team to optimise project capital costs and evaluate potential economies of scale in the Sonora Project."
https://www.investing.com/equities/ganfeng-lithium-a-balance-sheet.
There balance sheet at the 31/3/19 has 400 million pounds of cash approximately. Conversion from CNY to pounds approx 8 to 1.
The road to lithium investing has been long and rocky for me since the heady days of Lenigas's 'Saudi Arabia of Lithium' comment I hope one day to see the light at the end of the tunnel !
Well, for whoever this is "shocking" seriously... planning a equity dilution... I never saw a positive reaction of current investors.
Let's wait for the signatures, we know what all can happen with speculations... just look back what happened to Wirecard, and now they are shining again.
The farmers who worry about our phone batteries
https://www.bbc.com/news/business-49207042
No doubt knee jerk sentiment will impact the share price here in the short term BUT we need to keep a sense of perspective. This has nothing to do with this project itself and is much much broader than BCN/Sonora. This is about Ganfeng medium to long term strategy and how it arranges its capital and funding structure. It will have other multiple other options than just the Hong Kong equity market including the mainland equity market and debt for starters.
There is always something with this, what a ball ache! And this gets advertised after the sell out and price drop... wtf now, bit of reassurance would be nice, we are still waiting for second and third sign off aren’t we?
I don´t think this refers to already signed agreements ...
Indeed, degsie. This is a damn good project that ought to have been financed eons ago.
The NPV of Sonora is £1.25b as compared with a market cap of £46m and Zinnwald has NPV of 428 m euros.
Sorry I only noticed the link to LAC’s results on the KDNC page, and didn’t see anything to worry about on there.
dan, and you think it is encouraging? Seems a slightly odd way of looking at it.
https://www.pv-magazine.com/2019/08/14/ganfeng-lithiums-hong-kong-based-shareholders-rebel/ ...
Please confirm which part of that “doesn’t look encouraging”?
you haven't done so already, I suggest you have a look at the KDNC page re a set-back in Gangfen's plans.
I'm afraid it doesn't look encouraging.
Johnson Matthey used to be Europe's biggest independent designer and manufacturer of lithium ion battery systems. I dunno what the situation is like these days though.
You are probably right r7632 I am a bit obsessed and disheartened with it all. I was talking about ‘politicians’ not ‘the people’ There is a reluctance to invest in U.K. business at the moment, even with GBP on the floor, the uncertainty is a big factor in this. Let’s see what happens in the next 10 weeks.. atb
"Stupid Brexiteers". Your opinion on Brexit is totally irrelevant to mining Lithium is Mexico. This general Market unease is generally a summer thing as lots of people are on Vacation. This year added to by Trumps continuing trade war with China. And if the face of everything suggesting interest rates should be raised they are being lowered. Which actually is good for changing Mortgage deals. Result of Brexit is yet to be shown. But so far all project fear has been proved wrong. But in my opinion continually extending the deadline is worse than just leaving as it adds uncertainty to the market and delays projects and investments. Again absolutely no effect in my opinion on BCN which is open to Global Investors and funding. And none of the Lithium I would expect to come to the UK as as far as I'm aware the UK does not produce Lithium Batteries in quantity if at all.