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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.
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?
this bit... 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... which applied when the shares were synchronised... but not it’s not...
36,977,840 shares in sll for £1/share... would cost them £36,977,840... i think...
but if bcn’s sp is £1... with 192,065,236 shares in issue... bcn is worth £192,065,236... meaning the market value of sll is £192,065,236... with 134,464,872 sll shares issued currently... that would give them a value per share of £1.42...
36,977,840 shares in sll for £1.42/share... would cost them £52,508,532... wouldn’t it...
I think I see what you are saying @tomcat, and it had crossed my mind, but the wording is:
"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."
and not:
"The valuation of any additional investment by Ganfeng would be based on the market capitalisation of Bacanora Lithium Plc at the time of the additional purchase."
which it should have said for what you are suggesting to be the case.
I really don't know why some companies have a hard time at being clear... Personally I think basing the cost to take Ganfeng's percentage holding of SLL to 50% on the market cap of BCN rather than the share price of BCN makes more sense. But what do I know? :-)
Ob.
"Personally I think basing the cost to take Ganfeng's percentage holding of SLL to 50% on the market cap of BCN rather than the share price of BCN makes more sense." But I suppose Ganfeng could have insisted it were based on the share price rather than the market cap as a hedge/disincentive against BCN diluting their 30% holding in BCN?
would the hmrc let them pick and choose like that...
btw... can you see who owns megalit...
Looks like it happened in 2018 and we (I at least!) missed it.
2017 accounts:
===[
The remaining three concessions, Buenavista, Megalit and San Gabriel, cover 89,235 hectares, and are
subject to a separate agreement between the Company and Cadence. As at June 30, 2017, Buenavista
and San Gabriel concessions are owned by Megalit, while the Megalit concession was in the process of
being transferred to Megalit. The Megalit concessions is currently owned by MSB. Megalit is owned 70%
by Bacanora and 30% by Cadence.
]===
2018 accounts:
===[
The remaining three concessions, Buenavista, Megalit and San Gabriel, were outside of the scope of the Sonora
Project Feasibility Study. They cover 89,235 hectares and are subject to a separate agreement between the
Company and Cadence. As at 30 June 2018, Buenavista, Megalit and San Gabriel concessions were owned by
Megalit. Megalit is owned 70% by the Group and 30% by Cadence.
]===
2019 accounts:
===[
Three concessions, in Sonora Mexico, Buenavista, Megalit and San Gabriel, fall outside of the scope of the Sonora
Lithium Project Feasibility Study. They cover 89,235 hectares and are subject to a separate agreement between
the Company and Cadence. As at 31 December 2019, Buenavista, Megalit and San Gabriel concessions were owned
by Megalit. Megalit is owned 70% by the Group and 30% by Cadence.
]===
Presumably they meant 30 June 2019...
Good spot!
yeh... that’s the transfer from msb to megalit... but who owns megalit...
We own 30% of it. BCN own the other 70%. But I'm guessing you have another answer in mind. :-)
Don't the 'Group' own 70%.....isn't that Sonora lithium,Ltd .are we included in that as well?
they obviously don’t want us to know for sure... they refer to ‘the group’ on page 75... but state that megalit is held by bacanora minerals ltd on page 59... so it looks like bml to me?...
I don't think it matters. For all intents and purposes BCN shareholders own 70% of Megalit, KDNC shareholder own 30%. Page 19 of the 2018 accounts.
===[
Bacanora Lithium Plc was incorporated on 6 February 2018. On 23 March 2018, a new Canadian company 1976844
Alberta Ltd. issued 197,471,292 share of nominal value CAD$1 per share to Bacanora Lithium Plc. At the same time
1976844 Alberta Ltd. amalgamated with Bacanora Minerals Ltd. to create a new amalgamated entity in Canada
renamed as Bacanora Minerals Ltd. Concurrently, Bacanora Lithium Plc purchased the combined assets of Bacanora
Minerals Ltd and 1976844 Alberta Ltd. through the purchase of 100% of the share capital of the new amalgamated
company and thus became the new Parent Company of the Group. In return, a 1 for 1 ************** occurred
whereby all shareholders of the original Bacanora Minerals Ltd were issued shares in Plc.
]===
i don’t think bcn shareholders own 100% of bacanora minerals ltd anymore... so if bml owns 70% of megalit... as it does mexilit... then gfl will own some of megalit too... 54.25% bcn / 15.75% gfl...
does that put the likelihood of gfl exercising the 50% option on sll much higher up the scale of certainty... if there was much doubt anyway... does it put the value / price for the remaining 27.5% up or down...
@tomcat you'll have to provide me with some evidence. As far as I can see BCN's LV and 70% of the Mexilit JV are owned by SLL (Sonora Lithium Ltd being currently owned by 77.5% BCN, 22.5% Ganfeng). Whereas 70% of the Megalit JV is owned by BCN / the group. If it was arranged how you suggest then I would have thought Megalit would appear on the diagram on page 19 of the 2019 accounts. Since Megalit is not part of the Sonora Lithium Project (owned by SLL) it doesn't.
page 59... both mexilit and megalit have the same ‘*’ against them...
and it states above the graphic on page 19... on 14th august... bacanora lithium plc transferred it’s shareholding in bacanora minerals ltd to sonora lithium ltd...
Sonora Lithium limited at companies house
https://beta.companieshouse.gov.uk/company/11349694/filing-history/MzI0NzMyNzM4NmFkaXF6a2N4/document?format=pdf&download=0
' Notification of Ganfeng International Trading (Shanghai) Limited as a person with significant control on 18 October 2019'
LoL @tomcat: "page 59... both mexilit and megalit have the same ‘*’ against them...", that's because that was the case on the date the table documents (30 June 2019). The graphic on page 19 is what is currently the case (from 14 August 2019). I'm near 100% certain that Ganfeng doesn't have a claim over Megalit, other than indirectly via their 29.99% in BCN, and if you find anything which might indicate to the contrary in the report I'm almost certain to view it as a typo or a clerical oversight as IMHO there's little to no chance they've accidentally or surreptitiously got their hands on the potential monster that is Megalit behind the market's back. Surely you can't think so? Oh the fun we have. ;-)
if it had since been transferred elsewhere... wouldn’t it say so... i quite fancy ganfeng having a vested interest in unleashing the monster...