Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I wonder how the market would react if Ganfeng started to sell their 29.99% in an attempt to tank the share price so they can buy to 50% of SLL on the cheap? I suspect it might have the opposite effect to what they desired, and I suspect they know this, so they probably won't try. Which means if they do start to sell, perhaps it indicates they aren't planning on increasing from 22.5% to 50%? Oh! Paper, scissors, stone anybody?
I'm not sure what you are questioning @tomcat, if indeed you are questioning anything. For clarification, my current understanding is that Ganfeng paid £7,563,649 for 22.5% of Sonora Lithium Limited (SLL). Should they wish to increase this to say 45% within 24 months and if the share price happened to be 25p at the time (likely volume weighted average price over 20 days), then they would have to pay another £7,563,649 for the privilege.
By way of clarification by example: if the (possibly 20 day VWAP) share price was a pound, and Ganfeng wished to exercise their full right to 50% then I believe they would be required to pay:
£7,563,649 * (100p / 25p) * (27.5% / 22.5%) = £37m
and now be liable to half of the cost of the project, rather than the current 22.5%.
Is this how you see it? Admittedly I'm not fully convinced by this understanding as it means it's in Ganfeng's interest that the value of the project appears in the market cap but not the share price - favouring equity dilution to grow the market cap/fund the project. Although I suppose since Ganfeng own 29.99% of BCN this strategy won't be great for them. Perhaps if we run through the numbers they would show that with these percentages it doesn't matter too much? Apologies if this sounds complicated! How about an example?
Ganfeng have 57.6m shares. At 25p these are worth £14.4m and I believe it would cost them £9.25m to increase to 50%.
Since £14.4m > £9.25m then in principle, on paper at least, it is in Ganfeng's interests that the share price increases, even though it will mean they have to pay more to get their 50%. In practice it's probably suits them to tank the share price, buy to 50%, reverse the tank. And of course, even if they pay £x millions to increase to 50% they may believe the value of that extra percentage is worth 2-3 times or more the £x millions they paid for them. But then the same would be true of the believed value they place on their 29.99% - probably. Confused? I hope so!
Idle speculation. Perhaps I should have written this on the BCN board...
Ob.
It's all out on Sedar as well this evening
https://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00045238
today 13:57...
does the difference in the number of shares in issue not now affect the relative value of sonora lithium ltd shares...
bcn 192,065,236...
sll 134,464,872...
Bacanora Lithium companies house
https://beta.companieshouse.gov.uk/company/11189628/filing-history/MzI0NzI0MzE2M2FkaXF6a2N4/document?format=pdf&download=0
Obs. I think we agree that value of JV is at least £10m to KDNC.
Reading through the BCN annual report I'd forgotten about this: "acquire an initial 22.5% interest in the Sonora Lithium Limited, for a cash payment of £7,563,649, equivalent to a price of 25 pence per share, with an option to increase its interest in the Sonora Lithium Limited to up to 50% from 22.5%, within 24 months of the completion of the initial investment. The valuation of any additional investment by Ganfeng would be based on the share price of Bacanora Lithium Plc at the time of the additional purchase."
BCN's share price is currently around 32.5p therefore the Sonora KDNC valuation based on ownership of currently defined reserves, which @tomcat and I were discussing yesterday, becomes:
£7,563,649 * (839kt / 827.1kt) * (32.5p / 25p) = £10m
And if BCN's share price rose to over a pound our reserves would be worth just over £30m by this measure.
Whether it's a good measure to use I don't know. In my conservative valuation estimate I have Sonora pegged as being worth a few million based on that mined in the current DFS and BCN's market cap. But should the timescales and/or the mined volumes improve considerably then so should my estimate - assuming more of our JV is brought into play and/or sooner.
Ob
k :-)
....we'll see Obs.... you press away on those buttons it's OK I already think you're a nob :-)
I'm fully expecting our next placing will be above 8.125p, that's a premium to today's share price right? LoL. Now I am pressing buttons.
..... perhaps we could do a placing for a premium eh !!!
And let me clarify this some more :-) "So I'd say hold selling anything until all lights are looking green for Amapa and then play them off one another with the fall back of raising via equity/debt/CLN's."
I'm not talking about selling anything on the cheap & nasty. If no-one is prepared to pay a half decent price for us to be gone, then we should do as you say, arrange to fund this ourselves via whatever we believe is most cost effective/achievable. Ideally 100% debt at 0 interest rate. LoL
Perhaps you are right @Bannor. But there has to be a point where we decide to sell. If we were offered £50m today to be gone completely from Sonora I doubt we'd turn it down, even if we believed it might be worth 2, 3, perhaps even 10 times this to us in time. Time value of money and all that...
& by the by ..... there are very few people on my trust list & indeed as you may have suspected .... you're not one of them ...
Jesus Obs - you're not related to our Boris are you!!
Do you not think that if 'all the lights are Green' on Amapa we shouldn't be able to find a better way to finance it than selling valuable assets on the cheap & nasty or in fact once the 'lights are all green' sell it or JV it for a good profit to a proper well established real mining company ... rather than letting our particular class of Lenigas potentially screw it up for us?
LoL @Bannor you should know by now you can only trust your own view at all times, not just this time :-)
Let me clarify this "So I'd say hold selling anything until all lights are looking green for Amapa and then play them off one another with the fall back of raising via equity/debt/CLN's."
I personally hope we don't sell any of the current assets until we are at the 27% and looking to go to 49% because all lights are green (project pretty much derisked) and we see better, faster returns through Amapa than elsewhere. If we don't we shouldn't sell.
.... & now you're advocating throwing everything away for Amapa - which still has several degrees of uncertainty attached to it in my view ... & you'll excuse me for trusting my view over yours at this time ... !!
.....& all the bllx about taking the unnecessary loan, buying 4.5M for £4.5M, blocking the redom for the reason you put forward as being to 'protect our interests' means what nothing!?? We can just give it away for peanuts now because you think they've found a better rainbow to chase.... do you make any money from share trading or do you just have a very different agenda because I find it hard to follow you're line of thinking at times or what it is you're trying to achieve, cover or throw a blanket over...
Let me assure you @Bannor my post wasn't designed to press your buttons. If we believe we can turn say £7m from say the sale of EMH or Sonora or Yanigbana into say £70m faster and with less risk through other projects which we have control over then we should do so regardless of the history of the £7m. Whether we believe we can do that remains to be seen - I believe, presumably like you, that Sonora is worth much more than £7m to us, but on what timescales? 5 Years? 10? 20?
You know I was quite disappointed we let Greenland go after all that was said of it. I invested quite a bit of my time researching that. History happens.
Apologies if I wound you up. I'm trying to keep it real! There is only so many times I can take being wrong. LoL. :-)
Ob.
I assume that's supposed to be some sort of wind up line @Obs ... so having paid £1 each for 4.5M shares we sold at for circa 30p each losing about £3M .... you're also advocating a reasonable sale of the JV's that we ploughed millions of dollars in through debt & dilution for drilling & proving is worth peanuts as a return ......but you'd be OK with that because of bluddy Amapa ... when they announced that farcical 2.18p target which some dreamers thought because they'd said it meant it was realistic & going to happen instead of seeing it for the misleading bull it was from the outset by the Minigas crew to keep PI's quiet for a while..... anyway I seem to recall ( in one of his um er um er bumbling interviews or webinars) Kiran indicated a value himself to KDNC in the hundreds of millions for the Sonora JV's & about the same in AUD for the Yangi JV's but somehow accepting £7M is OK!!!!
I for one would be extremely unhappy, so much so I'd change my plans hold onto my shares after the Sonora JV was sold & demonstrate how 'disappointed' I was by attending next year's AGM wherever it was, or the time or day of the week & telling them personally.
If your comment was purely to press some buttons - well done!!
bcn’s feasibility study gives and npv8 valuation of $1,527/t contained lce...
$1.25bn for 819kt contained lce mined...
kdnc currently own 888kt contained lce in our mexilit jv... measured + indicated class... (excluding el sauz1)...
the potential is there... if nothing else...
I wonder how WHI valued Sonora in their recent research note?
https://*********************/companies/uk/precious-metals/cadence-minerals/research/whireland/amap-transformational-and-a-potential-company-maker/1cd417f2-1bdc-4021-bdd3-c11db4c2be30
From my perspective our JV in Sonora is pretty worthless to us at the moment (low millions) and I can't see the market attributing any real value to it unless plans are brought forward for a 35kt, 50kt, 100kt mine - only then we might start to approach @Bannor's figures. i.e. hold until then if we can! Especially since Lithium demand could be about to ramp up considerably - potentially leading to a winner takes (mostly!) all scenario for this low cost scaleable project. :-)
We'll see. No doubt they'll want us gone by hook or crook before announcing their plans for expansion. Question is, would we be happy with circa £7m in the bank today - which might be deemed fair and is actually quite good based on their current plans and progress, or potentially much more at a later date which may never come? The answer should relate to how fast and reliable we could grow that £7m in comparison to letting Sonora ride.
If Amapa continues according to plan we might want to sell out of Sonora (or Yangibana or EMH) rather than raising the near term $3.5m to take us to 27% or the medium term, presumably larger, funding to take us up to 49%. So I'd say hold selling anything until all lights are looking green for Amapa and then play them off one another with the fall back of raising via equity/debt/CLN's.
Just idle speculation.
Ob.
So being generous and this value doubles our Mcap and sp inline with it.... Where do we find the other 50p per share so I break even?..
I think it's very likely that "SLL also owns 70% of the El Sauz and Fleur concessions, which are held by Mexilit S.A. de C.V. ('Mexilit’)" means all of the El Sauz concessions held by Mexilit. But I take your point! ;-)
that small discrepancy will be due to me excluding el sauz1 concessions... as that isn’t stated as being owned by sonora... it may be... but it may not be...