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Observer- I agree completely. Providing the news of ore shipment comes, kdnc go from a junior explorer pf company to a production company, with a world class asset being priced in to some degree.
They are skipping out a lot of the mining cycle on this asset
I can see your side of the coin @Ivy, and this is good discussion, especially if you manage to change my view, or me yours. It is true that everything I am saying is predicated on Amapa coming good over the next few months. And by coming good I mean shipping ore and all preconditions for us owning 20% met. But even if it doesn't come good on 2-3 month timescales it's better to have the CLN repayments spread out to April than due in September IMHO, to allow more time for Amapa to come good.
If it does come good then the CLN will likely be converted every month rather than us having to find the cash. My understanding of yesterday's RNS is that the first half of the CLN will have been repaid over 8 months by August, and we've agreed that the second half can also be repaid over 8 months (1st September to 1st April). That's about £270k per month. If below 12p then I would say it's slowly slowly goodbye EMH shares (currently worth around £3.5m)
On revenue flow. We have repayments from DEV coming in over the next 4 months with interest.
However, if that ore gets flowing I think it's very likely the market will start to value the Amapa project potentially into the $100m's at today's iron ore prices and when we get 20% of that we are looking at our share price re-rating accordingly. It matters not a jot whether any of the sale of iron ore revenues comes directly to us - it's the resale value of our 20% that will contribute to our market cap.
@Kiran put it well last week:
"Transformational cycle of Cadence Minerals" (29/05/2020)
https://ukinvestormagazine.co.uk/transformational-cycle-of-cadence-minerals/
===[
“This is a huge step change for Cadence,” says Cadence CEO Kiran Morzaria.
“Our range of lithium and iron ore investments continue to add value, but once settlement is finalized with our creditors, Cadence will own 27% of Amapá, with options to acquire up to 49%. Our EBITDA forecasts will deliver a material change to current valuation metrics for our company.”
]===
Even if Amapa is viewed by the market to be worth only $50m, and only contributing $10m to our market cap, it would still make sense for us to take our holding to 27% for $3.5m (through dilution if necessary). Though I personally think we'll be looking at that "material change to current valuation metrics", potentially as soon as next week...
Sometimes you just get lucky :-)
Ob.
@Obs No I am not missing your point at all, which is primarily conjecture and optimism.
We raised £525,000 in early May .Now have £2m+ to make in monthly repayments until Apr 2020.
Any income from Amapa stockpile does not give kdnc ready cash but is to repay debts etc.
I would love to see your theoretical timescale come to fruition but I am pragmatic.
If sp does not rise above 12p then CLN [no conversion] cost will have to be repaid from cash resources.
Add to that admin and any further delay in shipping [was originally going to be last December]
and we get to further cap raise needed pretty quickly.
As I have said many times we need adequate cash resources to give more confidence.
Yes even a sale of assets would do me!
Cheers @Dallas! Well reminded @tomcat. @Ivy I think you are missing the point I'm getting at. If Amapa comes good for us over the next few months our share price should re-rate, but it wouldn't re-rate so much if it thought a placing was imminent to repay the CLN *and* raise $3.5m in the same period. Assuming this logic is correct (remember AIM is weird and it might very not be! Lol) any dilution to existing holders should be less, and IMHO consequently outweighs this marginal cost to KDNC/gain to the CLN holder for this deferment. So overall existing holders benefit from the move to April 2021 - of course they may have fully converted long by then anyway if Amapa comes good and we re-rate...
Although not directly relevant to the above explanation I should point out that dilution isn't nailed on. It's also possible we sell an asset or take out another loan, which may or may not rile up some on here. lol.
Ob.
we’re getting 18% interest on our loans to dev...
@obs Ah "assuming Amapa is in full flow"
The CLN holders do not have to make any such assumptions.
They are going to receive a higher return and kdnc are going to have a higher cost.
15.8M volume with a trade price of 12p and above.
5M of that volume were trades => 100K.
Hope that helps lol... ;-)
LoL. Decipher
@Ivy: "Note outstanding balance of £2m+ continuing interest rate of 7.9% until April 2021. This produces a higher cost to kdnc than redemption in Sept 2020."
In terms of nominal cash yes, but almost certainly not in overall "cost" to KDNC. i.e. the benefits to KDNC for a later repayment date, assuming Amapa is in full flow and we own 27% by then, far outweighs this nominal additional few hundred K of interest IMHO - remember, we have to raise $3.5m (CLN / equity / sale) and that's going to be all the easier for the market to swallow without another lump of debt being repayable around the same time.
It was a great RNS whatever way you look at it IMHO. And there was Amapa news on Friday which I have yet to deceiver...
I knew sharing thoughts on here was useful, and fun @tomcat! Got your detective hat at the ready?
We know they crossed the 6% threshold on Monday when on Tuesday they reported they were now at 5.99%. Since our share price didn't go above 12p until Wednesday this was presumably due to repayments in cash from us.
1,835,706 shares is about 1.5% of the company, which means if they did forward sell them on Wednesday or/and Thursday we should see a TR1 notification on Monday - unless they are being sneaky, or have a technical reason up their sleeve to why they don't have to report until a few days later or when the shares are admitted around the 11th (Thursday).
Ob.
ivy... just the man... this forward selling lark... is that where they borrow your shares and sell them to falsely suppress the share price so that you sell and lose your money and they then buy back your shares taking the profit from your loss so the shares can then be returned back into your account so that your broker can then pass them on to the person who bought your shares when you sold them... lucking feverage hey... can’ts...
i haven’t changed my view on that ob... hence why i was looking to find where the 6p conversions went... they weren’t on the tr-1... and unlike these... those would have affected their holdings... let’s see if we get and update this time...
Yep. Agree with that 12p -13p resistance due to the notes. However for me anything below that level is an excellent buy in. Bear in mind £2 million quids worth unlocks revenues, with shipments starting likely within weeks. Plus that in turn unlocks value in Amapa which as we know had a billion dollar price tag on it. I remember EUA having warrants but demand was too high to stop the SP rise. It did churn though between 0.9 and 1.2 for a while.
With Honda high how many of those would you have bought if you could have offloaded them at 7p months later?
I think this could be one of the great mining plays over last decade. They do need positive news on the shipments to unlock that, but that news basically unlocks everything.
Will be adding here
@observer842 For what my view is worth I also think a forward sale was achieved re CLN.
The whole ethos of these lenders is to maximise return for the consortium advantage.
Note outstanding balance of £2m+ continuing interest rate of 7.9% until April 2021.
This produces a higher cost to kdnc than redemption in Sept 2020.
@dallas will be able to tell you exactly how many shares were traded above 12p this week. *Very* broadly I make it over 10m - they could easily have sold their 1,835,706 as part of this, and if so explains the drag around 12-13p.
I don’t think there has been enough volume at significantly above 12p, to enable them to offload close to a quarter of a Million pounds worth of shares.
@tomcat: "they’ve converted 1,835,706 shares at 12p per share... for £220,284.72... which is a 21.82% premium... on tonight’s closing price of 9.85p... d:)"
Surely the sceptic in you, and no doubt many others on here will be thinking that they have already forward sold these shares when the share price was above 12p during the week?
This would technically be a short on the shares above the public notifiable limit of 0.5%, but since they are not *net* short by that amount I don't believe they have to notify.
Now before anyone accuses me of selling out and wanting a lower entry... perhaps they haven't forward sold these shares, and the reason they decided to convert them now was because the alternative is that we would have repaid the equivalent in cash, whereas the repayment extension to April 2021 suggests that they are confident that the share price will rise above 12p again before then allowing them to make a greater profit than repayment + interest today would afford.
Now before anyone accuses me of ramping so I can sell... the reasoning around the April 2021 extension also applies to the less risky strategy for them of forward selling their shares when the share price is above 12p before converting them.
I'd loved to be proved wrong, and that in fact they haven't sold a jot, and don't intend to in the short term on the prospect of a serious multi-bagging from here on the back of Amapa news (another post coming!). Over to you @tomcat ;-)
Ob.
Great rns and buyers will pounce on this dip
Fomo on this stock is real
60-days up next Sunday for the banks to agree on the settlement, so hopefully the reason for a tick up next week - if I'm not mistaken.
or they could have done a 50/50 split on the total balance today... and worked it as the previous agreement... either way... it’s a cracker of an rns... enjoy the weekend all... roll on monday... to hopefully top that off with the news me and dallas and everyone else who’s joined up or topped up this week are anticipating... ;)
oh yes... and it’s worth adding that repayment of the outstanding loan amounts... has been extended until april 2021 as well... from september 2020... a 7-month loan extension / repayment holiday... doesn’t say... but the 3-months remaining on the monthly payments to september... i assume will now be reduced and spread out over the now remaining 10-months too... d:)
Lol @Barks....time will tell ;-)
Dal you are beginning to read their script really well after so many years watching and waiting :)
Just in time for possible settlement news ;-)
loan note conversion...
they’ve converted 1,835,706 shares at 12p per share... for £220,284.72... which is a 21.82% premium... on tonight’s closing price of 9.85p... d:)