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Got some on the dip, at the end of the day bigger picture it’s a drop in the ocean to the amount of cash flow that’s going to be thrown off over the next few years , Mtl should put it to bed and continue moving forward
Mac19 - The original Mezzanine was much lower initially but was added to incrementally whilst the Company couldn't make the payments to the old Senior debt facility.
RHL are claiming that the Company defaulted numerous times but MTL Lux are seemingly claiming the opposite.
It was pointed out elmonths ago by myself that the major shareholders could use the paperwork delay as a get out clause to wriggle out of lowering the 15% rate.
When the Senior debt facility was repaid less the £1200 mentioned there was $81m Mezzanine debt outstanding at 2nd November 2022.
Loads of unknown trades are buys. one is mine
Whilst today's announcement is disappointing, it is also not completely surprising. The RNS's relating to the debt have previously clearly indicated that Candy agreed to the lower interest in principle, on the basis that the official documentation was concluded within a reasonable time; Edwards did not give that assurance and it might be reasonable to assume he was frustrating the process on the basis, as already suggested today, the repayment was significantly earlier than anticipated. It was the completion of the documentation that would formally trigger the lower interest rate so it seems the principle was well laid out in writing, but the execution manipulated to an alternative agenda on a technicality.
Both lenders signed up to the same agreement so it's not unreasonable for Candy to seeks the same treatment as the minor lender, given Edwards is playing hardball and, given the delay games, potentially has a technical case, if not a reasonable one. A compromise (as appears to have been instigated, if not agreed) is likely the better outcome than protracted legal proceedings, despite Edwards seeming to not be following the clear spirit of the agreement he signed up to. All speculation on my part of course, but reasonable speculation based on previous news released in my view.
It's worth remembering that, without the support of the major shareholders, we would probably have gone bust, but it's also the case that they have been rewarded hugely by that support. The original mezzanine debt was only around $20m from memory (and I can't find an RNS to the contrary) with the rest made up of interest at 20% and penalty interest of 25% compounding. Across all the debt, we have paid over $70m interest in 3.5 years when base rates were 0.1% so they pretty much got their share holdings free if you factor both elements.
Regardless, the business is in a fantastic position going forward and I remain hugely excited about the next few months and years and very confident of significant growth ahead..... The future is very bright!
What they are asking for is already covered by cash in the back as at 30th April - approx $8.8m
According to the above agreement, if the Company defaults on the debt repayments then the interest rates increase by 5% per annum.
From the Final Results for the Year Ended 31st December 2022 RNS posted on 16th May 2023 - "During FY2022 the Group made regular monthly loan repayments such that, except for a nominal circa US$1,200, the New Senior Debt has been fully repaid. This nominal amount was left in place to ensure various securities remained in place until the mezzanine loans are elevated to the status of secured borrowings (the "Elevation").
The majority mezzanine lender, MTL Luxemburg, Nick Candy's investment vehicle, (holding 70.7% of the Mezzanine Debt), has confirmed in writing that, subject to completion of the Elevation documents within a reasonable period (expected to be before the end of Q3 2023), the interest rate on its portion of the Mezzanine Debt will reduce to 7% per annum from 15% per annum from 3 November 2022 (being the date that the Company could have fully repaid the Senior Facility, but for the requirements of the elevation)."
MTL Luxembourg confirmed in writing that the interest rate would be reduced to 7% but has now gone back on that.
RHL are claiming that the Company had defaulted on numerous occasions and that the default interest is accrued from 5th October 2023. This opens up a number of questions. MTL had not made any payments to the Senior debt facility since November 2022. If RHL are not claiming this is a default then they must have accepted that the Senior debt facility had been repaid, therefore the interest rates on the Mezzanine debt facility should have been reduced.
Also, how has MTL defaulted on numerous occasions starting with 5th October 2023 and onwards? As the payments were being made every quarter I can only assume that the following condition within the debt restructure agreement has not been followed - "There will be no set fixed principal and interest repayment schedule, instead the Company will be required to pay a Quarterly Payment to the Lenders within 5 business days of each quarter end (being 31 March, 30 June, 30 September and 31 December);" So were RHL expecting a payment on 5th October 2023? 30th September was on a Saturday last year so 5 business days later would be Friday 6th October. Surely RHL should be claiming that the default interest rate should be accrued from 6th October 2023 if the quarterly payment date had been missed.
As posters have already pointed out, when the Company has paid $81m of debt since November 2022 then the $6.35m that the major shareholders are claiming is still owed is a merely a drop in the ocean when compared with the £300m free cash flow that is still left to mine.
I would be happy for the board to pay this and then we can move forward with no further niggling doubts.
Although it’s clear the major shareholders are greedy bastards, it’s pocket change now, we currently make $6 million in just 19 days production, assuming we don’t get it back it’s a 19 day set back, take it on the chin and move on, as said earlier they expected a lot longer period of interest than they got, clambering for more is low, but it is what it is.
Top up opportunity, 10p a share in 12 months has not changed, everything else remains the same, record high gold producing huge bankable sums.
'get back to mining gold'?? dont think they stopped mining...
Morning
And this is exactly why profit should be taken on AIM. These people can't be trusted, none of them. We have a 'supposed' agreement from Candy that the 7% interest is applicable, and now it isn't and he wants another pound of flesh. The RHL lot have claimed a default which means 20% needs paying (if they're correct) and MTL dispute this but have started paying them anyway.
It's a complete farce and has now impacted sentiment yet again which frustrates new investors who may have paid close to 6p for their shares. It also puts off anyone on the sidelines watching as they will now be waiting for the outcome.
But more importantly for me, it shows the words in RNS releases mean absolutely NOTHING because clearly Nick Candy isn't 'fully behind the company', well at least not in the way DB has suggested. If he was, he wouldn't be selling his shares or suddenly applying an additional interest rate he 'informaly' told the company he would forego. If it wasn't in writing, it didn't exist. And if the company are on solid legal ground, they wouldn't be paying them ANYTHING and would/should make them prove it in court.
The fact they have made an interim payment means they have folded, end of. The higher rate applies, we are currently NOT debt free. Luckily for us the gold is being sold for a large profit. Get this company created clusterfcuk sorted, and get back to mining gold.
And please take off the blinkers, this is AIM not an index fund, sentiment is everything.
Its worth remembering that debt at end of 1st qtr 2023 was $69 mill... its now gone.. so $ 4 mill is a drop in the ocean in the bigger scheme of things, this is a cash monster in the making . markket cap just dropped $12 mill for this $4mill charge, just bought more
@darientaylor
Agreed. Best take this as a suspected loss for now, allow them to compete it internally and if it returns to our pockets later then ideal. It is poor form to not have any of this documented, particularly considering the value of sums discussed and the duration of the repayment deal. However even informal deals can be enforced in court, though the difficulty is in proving what was agreed.
I reckon some of this push back has come from the fact that debts have been repaid faster than they anticipated so are probably not extracting as much money as they had hoped.
Great chance to buy on the dip
I agree , feels like a bit of bullying but probably have to take it.
Interesting that Candy sold some recently then changes his tune on the Interest. Mtl via rns stated many times that Candy's debt was sorted. He had ample opportunity to dispute that given it was public knowledge.
Imo just get it paid and see the back of it. It start costing more to the shareholders now continuing to argue the toss.
In the bigger scheme of things this is small beer. lets be serious MTL are generating huge cash piles at the current gold price, so as pain in the bum as this is, its a small blip on the road. so if they provide for this in the year end numbers next week its a profit of $36 million for the year rather than $ 40 mill. move on. keep digging and keep selling.
That’s my thoughts CCC ;)
No doubt another buying opportunity coming up today.
Yes naive for sure. This is a classic case of doing what’s commercially sensible and drawing a line under the sorry historical take is no doubt for the best.
I was sat reading this RNS and thought to myself, surely this is all contractually laid out. Then I got to...' However, these assurances were given either on an informal basis or for a limited period only.'
Come on....
JWB this debt dispute has been well know and todays update is frustrating for sure but it’s a sensible path to resolution and small change in the grand scheme of where we are now. Expect a pullback from the those who didn’t foresee this panicking but then and upwards!
I get you have been burned by the new chairman elsewhere but this is a completely different company who are now printing money!
As I’ve said, all you hear here is ramps
Read SP Angels broker note yesterday on the new Chairman here and specifically the way he has led things at ARCM. The note starts off with “do you ever feel like you have been wrong footed by something on a management call or in an rns…. Most management teams are straight up about their work”
MTL made a very bad move imo appointing this new chair
Read SP Angels broker note yesterday on the new Chairman here and specifically the way he has led things at ARCM. The note starts off with “do you ever feel like you have been wrong footed by something on a management call or in an rns…. Most management teams are straight up about their work”
MTL made a very bad move imo appointing this new chair
All included. but the important part is. that the debt is wiped popout going forward and this will help the bottom line to the tune of $4 mill this year, pure profit..
Darien you would also need to adjust for the debt interest dispute as well as the increased taxes (I believe I read about these somewhere).
Year end number out next thursday. I'm going for :
Revenue $167 mill,
GP $97 mill
Op profit $58 mill
PBT $43 mill
that would work