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" Hence any gain we make from Aclara has to be balanced against the loss of value of our HOC shares."
....any dip in the HOC price will soon recover ....
HOC will only fall by the book value ...because that is what is coming off the books ..not that much to adjust ...
you wont get any real Aclara benefit by keeping it within HOC ...and what if there was a HOC placing to fund it.....what dip would there be then ?
need to be patient with Aclara ...going to take time ......
kenj
It is a very odd valuation based on the fundamentals we know. My strategy will be to hold Aclara as it will find its true value as a standalone company. I was invested in SLP when they spun off its iron assets so expect HOC to fall in value by the MC of Aclara but expect the REM company to rise reflecting its true value when the dust settles.
Leas
"Surely it ( ACLARA) has to be worth more now."
Sotolo
"Book value is of course much lower than sale value which I hope for nearer $100m."
It will be interesting to see what value HOC ascribe to Aclara, but the inclusion of the lowball $38.2m figure in the demerger RNS suggests to me that it will be considerably lower than $100m. The sale value would indeed be much higher than the book value, but the shares are not being sold to a rival predator; they are being gifted to HOC shareholders. The additional IPO is to raise funds for CAPEX and operating costs. However, the new shares will need to be set at attractive price to attract investors - too high and they will not sell.
A company's share price tends to drop by the value of any special dividend, so a 4.3p divi will cause a much smaller fall than a c12p divi (for a $100m valuation). Hence any gain we make from Aclara has to be balanced against the loss of value of our HOC shares.
On a more positive note, the latest figures and exploration results are excellent.
Apologies, texting on the hoof but I mean current valuation based on percentage of MC it was at the time if the RNS compared with the percentage MC at the time of purchase
kenj
Maybe the recent valuation is smoke and mirrors. Valuation based on current sp at the time if the RNS. Surely it has to be worth more now. The US Fed Govt have already said that they will seek to curtail China’s domination of REMs and can see an asset being spun off as a cheap and easy target.
My assumption of course but makes sense. Diversification was the buzz word last year but now a change of direction.
Have to say the Peruvian Govt seem to have also changed strategy with foreign investment so perhaps ceasing hostility towards miners is also a consideration .
Just been looking back at some of last weeks posts. Spotted this from Leas.
"HOC have invested just over 60m in buying and developing the asset. Asset value must have increased significantly since 2018 as REM are even more in demand which will surge as carbon emissions are reduced. Im guessing circa 8% of the current MC is a fair value."
Checking back HOC do appear to have spent c $60m acquiring this asset.
RNS 2 Oct 2019
"Hochschild is acquiring 93.8% of the BioLantanidos deposit that it does not already own for a consideration of $56.3 million and is therefore consolidating 100% of the project."
"Hochschild has previously invested $2.5 million in the project during 2018 and early 2019 in exchange for a 6.2% equity stake with an option to increase ownership."
So why have HOC now stated a gross value of $38.2m? Have they written off over one third of the value, or is this some accounting trick?
RNS 19 Oct 2021
"As at 30 June 2021, the gross asset value of Aclara was $38.2 million (book value)."
The latest value stated for Aclara was in June - $38.2m (£27.7m).
80% of this sum £22.16m is to be given to shareholders in new Aclara shares.
So £22.16m will be divided among 514m HOC shareholders.This equates to a special dividend of roughly 4.3p per share.
(UK dividend tax will apply if this pushes your total annual dividend income over £2000.)
IMO, it is unlikely that Aclara shares will be set at such a low price. A 15p to 20p price is more likely to attract new buyers. One new Aclara shares for every 4 Hoc shares would give an issue price of around 17.2p (4 x 4.3p).
An IPO is also proposed. I expect they will want to raise at least £20m to £25m to fund the new company, hence HOC shareholders are likely to end up holding nearer 40% of Aclara, rather than the 80% stated.