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Ministers have been urged to block China’s planned takeover of a British lithium miner as fears mount over Beijing’s grip on essential materials for electric cars.
Bacanora Lithium, which is listed in London, said it had received a £ 190million offer from its largest shareholder, China’s Ganfeng Lithium, which is already one of the world’s largest producers of the material.
Ganfeng controls 17.5% of Bacanora and announced in February its intention to increase this stake to almost 30%.
The cash offer for the remaining shares is 67.5 pence per share – a premium of almost 50 pc – and values ??Bacanora at over £ 250million.
Bacanora shares climbed nearly 30% to 57.9% on news of the offering, which its directors said they plan to recommend to shareholders.
But experts warned the potential takeover was “deeply concerning” and called on ministers to intervene immediately.
Sir Iain Duncan Smith, the former leader of the Conservative Party, said: “The government should now call it up and block it.
“China already has three quarters of the world’s rare earth minerals and an even larger share of their processing.
“Rare earth minerals like lithium are to the 21st century what oil was to the 20th century and deals like this are about taking control of strategic materials to get the West to go to China for them.”
Sam Armstrong, of the Henry Jackson Society’s Foreign Policy Think Tank, added: “The National Security and Investment Act, which came into effect last week, allows ministers to block acquisitions that risk that hostile states take control of critical resources.
“There can be no better candidate for the first ministerial appeal under the new legislation than this deeply disturbing acquisition that risks ceding control of a critical resource of the future to a genocidal state.”
Over not offer...
Are BCN dual listed with Canada? Does this affect the ability of the U.K. to block?
Holy crap. 65% fines now $243/tonne
Annual EBITDA from Amapa I get to be $913 million per annum and stockpile now almost $300 million
Although BCN is currently domiciled in the UK , it wasn't originally a British company. Furthermore, most (all?) of its assets are outside of the UK ........
..... Is BCN really a British company? Does the UK Govt. have any powers to intervene?
Regardless, I still think the Ganfeng offer is an insult. £190M for a company that owns 70% of a $1.2B asset (and a couple of other assets bolted on). The management must be crazy to recommend !
@EyeGuy
If these numbers are correct, then KDNC's 20% ownership of the stockpiles ONLY (£43M) are worth more than its current market cap (£41M).
Flabbergasted !
at this stage... considering how far they’ve let it develop without any regulatory restrictions to date... it might be easier for them to secure the other 30% of the jv’s... that kdnc own... with guarantees that it is consolidated into the overall asset... but ring fenced... and legally protected for the uk...
I can't see how or why the UK gov would want or have any say in what a couple of AIM co's do or don't do with an asset that's in Mexico..... they might make a comment or but other than that how could they stop anything at all unless they convince the Mexican govt to step in .... I think you can kiss Sonora goodbye otherwise .... I just hope that comparatively Cadence get more for their shareholders for its 30% from Ganfeng, assuming they do indeed want to buy us out, than Bacanora will get currently for their shareholders for the company .....
bcn are a uk listed company... and are governed by the uk laws and takeover code... mergers and monopolies commission... etc... maybe the sonora lithium asset has a much higher global significance than you (and the uk aim market) credit(ed) it... does the re-dom make more sense... now this has happened...
To be fair kiran knew what was coming hence the original 25p remark and us selling at a loss. I have a big lump in BCN and will over double my stake at 67.5p but I had planned to leave it for production. I do feel robbed as I feel Sonora will be the biggest lithium producer in the world within 5 yrs I certainly will be voting against. £1.20 would have been fair value at this point.
can anyone remember what the cash equivalent offer was that we made... that bcn directors refused at the time... i have about £1 in my mind...
Correct...
I sold all my Bcn at 57.5p and put the profits elsewhere. Should have left it but thought I might see if Kdnc pops first, I’ll double up. Knowing my luck, the Reddit mob will start a price war.
Question ???
Gov aside BCN only have 38.1% not in public hands,,, So,,,, My question is, Can current BCN shareholders revolt against
the BOD as with as little as 10% holders can call an EGM for a vote of no confid.. Not a holder so just thinking out loud..
thanks squid... you got the beers ready to wave ‘em off later...
regardless of that... i worked out that pi’s will need over 74,063,137 votes against... to block it... i don’t think a new bod can block it... they could only recommend against it... if the offer is made officially... it has to go to a shareholder vote... or get a regulatory ban on ganfeng owning 100% bcn...
Just posted on BCN but here are my thoughts on the deal:
I think some are failing to remember that investing involves risk. And the same two statements are cropping up.
1. “If 67p is guaranteed then why isn’t everyone buying” – it’s a “Possible Offer” not a done deal you are not taking in to account the risk of the deal falling through.
2. “This is a terrible deal BCN is worth way more”
Those asking #2 what do you believe the company is worth today and why is it so massively undervalued and disliked by the market?
My answer would be that there are several risks that justify a somewhat lower share price:
Jurisdiction risk – mostly political (e.g nationalisation) and crime related mexico’s reputation for cartels etc.
Project risk - construction problems or over budget
Price risk – future lithium prices are uncertain (although predicted to go higher)
Confidence in CEO to execute
Other risks
I would be interested to hear what you all believe a fair value is for buying BCN outright today (with proper reasoning taking in to account these risks) because the market had decided 45p was correct – why was the market so wrong on this?
FYI: I bought in at 44p after the raise as I thought it was a fair trade-off for the above risks given that it was fully funded.
the quandary for me... us... is... i don’t know now whether i should be buying bcn shares to support ganfeng’s offer... and be partnered with this 800lb global lithium gorilla... or should i be buying bcn shares to oppose the offer and have it shot... lmao...
Cheers @tc: and I guess a good proportion of the 74mil have a lower entry point so why vote against.
@EV_: Arn't they also 2 year behind ?
People do not seem to realise that Ganfeng were already in control with 50% of the JV and 30% ownership of BCN. BCN was the puppet really.
For me It comes back to why the market lost interest and this was in 40-45p range for a long time prior to the offer.
Is the Chinese factor clouding judgements and would people feel different if this was Albermarle not Ganfeng?
Waiting 2 years for the SP to be £1 you have to discount that back to today at a fair risk premium of say 15%
£1 in 2 years is therefore 75p today (59p at 30%)
£2 in 2 years is £1.50 (£1.18 at 30%)
This is what it boils down to for me.
@MLQ yes to the 2 years behind
30% ownership doesn't necessarily make the company a puppet unless you have a very weak board and CEO. But more simply put this is an engineered and aggressive takeover bid which is just plain wrong on any level and shows the type of game the chinese play. I will wager (with hindsight) the large shareholding by a chinese organisation has put some people off investing in BCN hence the stolid share performance.
I have direct experience of the chinese in business as I worked for one of the large global telecoms manufacturers and had the pleasure of watching how Huawei priced all of the competition out of the market in the UK and elsewhere in the unsuspecting world !
I don't personally have any faith in the CEO so it will be interesting to see how he responds (if at all) and if M&G are in favour.
The crux of it is there people don't want to invest in BCN. It is only worth what someone else is willing to pay, and at the moment the one willing to pay the most is Ganfeng. I am just not sure what a fair price today really is and nobody seems to offer one with solid numbers to back it up given it was trading at 40-45p for months you can't blame Ganfeng for making this offer and of course shareholders have every right to reject it if it really is a p155 take. Of course this will be worth far more when scaled up to 100t and is in full production but that is still 2-3 years from now.
Good find here, it confirms what I have been saying, ie economic warfare by the chinese
Evidence of their Imperialist ambitions is everywhere, fortunately the West is no longer sleep walking into their trap.
at least we’ve got an uptodate valuation for our jv assets... straight from the gorilla’s mouth...
bcn owns about 40% of sonora... ganfeng are looking to acquire that 40% for £200m... (100% £500m)...
kdnc owns about 20% of sonora (~30% of 70%)... which would value our jv’s today... at £100m... ;)