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Zarro , don’t rule out the Oman group who had pledged £65 million to be part of this last year, apparently we are still trying to negotiate with them to come on aboard again
I hear you Mr C and I understand the frustration. My average is just about ok but I have a fair chunk from the 80-90p days myself.
quite likely that they will be the ones leveraging the sp in their favour just now then... including ganfeng now too... as they have pre-emptive rights on their 29.9%... for any dilutive equity raise bcn do from existing shareholders...
Mr C. Secker does say going back to EXISTING share holders, so I assume he means the big players already involved in BCN .and what price?
This is whats done the damage to the post deal share price this interview with secker see at time 3:25 where he talks at going back to shareholders :-
https://www.proactiveinvestors.co.uk/companies/news/904763/bacanora-lithium-ceo-hails-completion-of-strategic-investment-by-ganfeng-904763.html
Zarro - I am suffering from "how come most of my shares are underwater after 5 years" syndrome or perhaps "that sinking feeling syndrome" -- This has not turned out to be a great investment over the timescale even if we EVENTUALLY get to 120-150p many people bought at well over 50p so to wait 6 or 7 years for a 3 bagger is poo really.
I emailed BCN yesterday to enquire the capital cost of Sonora Project and was told $420m . The Annual report that is due on Monday should tell us more,
sorry .. your calculation is wrong .. Ganfengs 22.5% project funding ist 450M*0,225 = 101,25M ...
project cost 450M
- cost Saving -50M
- Ganfeng project financing -90M (reduced project costs*0,225)
- Hanwa -25M
- RK financing -150M
- Ganfeng investment in BCN & project: -28M (22M GB)
- cash on hand : -10M (in Feb. 20M)
---------------------------------------------------
financing gap = 97M (w/o zinnwald ...)
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Strangerstill - tend to agree. Not sure why everyone is flummoxed. There was a discussion posted on this board over the weekend of the end of August...the distilled version of which was:
Project costs say $450m including w/cap; less Ganfeng sourced cost savings of say $50m and project financing from Redkite $150m leaves $250m project funding required - of which 22.5% Ganfeng project shareholder funds $56m leaving funding gap of c$200m. Little bit from Hanwa and perhaps some from Zinwald means Mr Secker needs to find around £150m (say $125m - $175m). Company is authorised to issue another 308m shares which points to about 50p per share. Deeper pocket investors might be happy to underwrite an equity raise at 50p per share and blow out PI's. Of course there any many other ways to plug the funding gap (increased debt / Mezzanine / shareholder loans) - this is the one of the most negative for PI's i.e 100% equity. For some reason people think that Ganfeng will fund 50% of $450m (presumably because they argue that they have 22.5% at project level and 30% at group level - hello apple and pear) worse still that they will do it despite the fact that there is a US$150m RedKite Mortgage on the project and worse still they seem to think that most of the BCN part of the other 50% (which is the wrong percentage to start with ) will come from the proceeds of the red kite loan. Ho ho ho! i.e it is alleged that BCN have very little left to find.
Whatever....I am not sure that even I believe the equity raise can be at a premium to the prevailing share price - which either means the share price will have to be higher than today OR bigger investors get to eat your lunch!!!!
Not all doom and gloom ( and I have a fair wedge invested long here) for those who do not suffer from "how come I did not double my money in 2 week syndrome) the fundamental value once financing is in place is £1.50+ ....BUT only once we are the other side of the fundraising required to plug the equity gap.
I am very happy to see the May Flies evaporate over the next 3- 4 months with resultant withering of the share price......
Of course ...as I have often been told before, I could also easily have this all wrong - and for sure, some of it must be wrong.
I mean 35,000 tonnes not 25,000 tonnes
The final real value of Sonara will be realised when two things happen;
a) when production gets to 25,000 tonnes pa and
b) when any loans are substantially paid back.
With a fair wind and Ganfeng's know how and money production might get to 35,000 tonnes by 2023, the loan pay back might take longer. The higher the loan amount the higher the final share value but the longer it will take to pay the loan back.
Also I know that it will be easier to raise the money with Ganfeng now invested but don't forget if they invest at the project level they will then have an equity stake in the project which will dilute the earnings attributable to Bacanora as the parent company. Ganfeng will want a return from investing at the project level.
As I have been investing in the AIM market for several years I now take a more pessimistic view of production dates and share dilution to mine completion thus I have taken 2026 as the year that I suspect that full share value will be realised . Oh for the days when I was a happy, optimistic investor.
Strangerstill I agree with the suggested values you place on BCN but as production is planned for 2021 I think your date of 2026 is pessimistic.
SID - Exactly right with almost all the AIM shares I have ever owned -- have a look at CASP it has been "any day now " for years.
reminds me of that donkey with a carrot dangled on a stick just out of reach but walking towards it, and that seems to be the case for many AIM stocks LTH = Donkey , but here we all are waiting and waiting and waiting ,not easy making speculative investments is it?
Its funny how the term "long term" is never far away from AIM junior miners ! Perhaps I should have started investing when I was in my 30's !
Why is everyone so surprised that there will have to further capital raised through share issues. At present Bacanora still has $180 million of agreed loan funding in place to draw down and has just received $22 million from Ganfeng giving a total of $202 million. Discounting any cash in the bank and the fact that Bacanora has been undertaking preliminary earth works, the amount still needed to be raised to complete the mine is about $250,000,000. The worst case scenario is that all this has to be raised through equity. Although Bacanora have stated that the company may only need to raise half of the additional funding needed because Ganfeng will raise the rest through its equity stake in the company and the equity stake in the project this in itself will dilute the profit attributable to Bacanora shareholders. If you take the worst case scenario of 100% equity then I estimate that the long term price per share from 2026, at $11,000 per tonne and 35,000 tonnes per year, will be between £1.50 and £2.50. I very much doubt that Bacanora will have to raise all future funding through equity and there is also the NPV of Zinwald to be added to the equation. My belief is that with 50% of future funding requirement coming from loan funding and Zinwald thrown into the mix the long term price will be in the region of £3.50 to £4.50, if you can afford to hold for the long term.