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Maybe they have a better option.
MARKET RELEASE
Announcement relating to the proposed acquisition of the Santa Rita and Serrote mines in
Brazil
Johannesburg, 24 January 2022: On 26 October 2021 Sibanye-Stillwater (Tickers JSE: SSW and NYSE:
SBSW) announced that it had entered into purchase and sale agreements with affiliates of funds
advised by Appian Capital Advisory LLP ("Appian") to purchase 100% of the Santa Rita nickel mine
("Santa Rita") and the Serrote copper mine, both located in Brazil, for a cash consideration of US$1.0
billion and a 5.0% net smelter royalty over potential future underground production at Santa Rita (the
"Atlantic Nickel SPA" and the "MVV SPA", respectively).
The Company has been advised by Appian that subsequent to the signing of the Atlantic Nickel SPA
and the MVV SPA a geotechnical event occurred at Santa Rita. The Company has assessed the event
and its effect and has concluded that it is and is reasonably expected to be material and adverse to
the business, financial condition, results of operations, the properties, assets, liabilities or operations of
Santa Rita.
Accordingly, pursuant to the terms of the Atlantic Nickel SPA, Sibanye BM Brazil (Proprietary) Limited
(the "Purchaser"), a wholly owned subsidiary of Sibanye-Stillwater, has today given notice of
termination of the Atlantic Nickel SPA. As the MVV SPA is conditional on the contemporaneous closing
of the Atlantic Nickel SPA, and that condition has become impossible to satisfy, the Purchaser has also
today given notice of termination of the MVV SPA
We are now a very obvious target. 25p and they can have it.
£230m market cap at the close of play. As a potential takeover target there are a few things to consider :
1. How tightly held are the shares?
2. What price would it take to land the company?
3. What's the capital required to fund development?
4. How long to payback the investment?
For 1 I suspect they may be a lot looser now than they were a couple of months ago. Teck and Glencore's control over HZM is effectively gone, so we are now open to a bid from BHP, Vale or whoever wheras six months ago we weren't.
2. Having paid 7p in the equity raise, Orion and La Mancha would only be open to an offer that have them a healthy return for their trouble. Canaccord may also be open to an offer, Teck and or Glen may oppose depending on what they think they may get from it but don't be certain, Glen's offtake may hold even in a change of control so they may be in favour. The PIs do not hold enough to off set the corporate holders if the majority are pro bid. That means a bid price could be a lot lower than we might wish for, 14 or 15p would get it from the corporates. £600m. With £150m sat in the bank that's a net cost to buy of £400-450m. I'd have hoped for twice that, or at least $1Bn given the size of the assets.
3. The company has a big chunk of cash in the bank right now, plus arranged low rate loans tk fund Araguaia that are very likely transferable. A buyer may not need to pout their own cash reserves in for development.
4. Time to full payback is likely inside 5 years. That's got to be attractive compared to many other options. The business cases stand up strongly for acquisition.
So yes, we are a sitting duck, I'd guess an initial bid in the region of 12p a share rising to sell at 14-17p. Yes we all know it is worth more in the long run, but a buyer pays what they can not what they should.
Don't disagree Picked. Good analysis & points.
Tbh. With the macro economic situation.... EG inflation going higher, the fed and its likely reaction, Ukraine etc etc.
The likely short, or even now mid term reaction to an offer for the lot bottoming out at over 15p..... Yes can very much see that being seriously looked at in the places that matter. So not just by disenchanted minority PI holders.
Right or wrong. But its on the agenda more now than in the past one has to say.
Not what many invested here for originally granted. But it may be a possible endgame you have to think.
Regards.
Can't see Orion or La Mancha selling anything for 15p also can't see Bhp making an offer with so many names on the Share register.
Ivor - yes they would, 100% profit inside a year and elimination of the risk element. They'd take their arm off.
As for having so many names on the register, what are you on about? Almost all public companies that get taken out have a similar level of complexity. If your argument was valid no plc would ever get bought.
Thats your opinion.
What do you think would happen to the share price if Bhp put any type of bid in? Pi's would jump on it and the share price would be in the 20's and it also depends on what the management want.
The only way to stop a low bid is to have the sap hare price at a high level in the first place, otherwise someone will always take the money.
ivor - the price would not exceed the offer price - pi's wouldn;t jump on it - if they did, institutions would sell into it.
How do you explain bhp Norant offer then? Orion and La Mancha can't sell any for 4 months.
No body accepts the first offer.
HZM Npv net Present value is $2.3 b @22000 Dollar per tonne, makes SP 45p, Shanghai metal nickel $25000, if Nickel goes above 24000 at LME, HZM will be worth around 70p, 50p takeover is possible