Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I think boards shareholding also cannot be judged as we progress there will be share options etc.
Hoping for best and planning for the worst.
They did it but still suboptimal.
Raising 4m gbp to dilute 15pct on 600m gbp.
Is that 4m worth 90m.
2 approaches.
Invest 4m now. Maybe turns into 16.
Sell assets now. Spend extra 90m gbp at end to buy advanced asset.
The sensible approach is clear it is about management alignment.
Close up shop. Put it on maintaince and for all i care they go work in other companies for 4 yrs.
"I think it has value, but have worry about dilution."
GreenX have followed the exact same path as PAT appear to have ahead of them. Periodically raising capital at increasing share prices as their litigation process proceeds & using this capital to fund their other projects. It has worked just fine over there, with shares up 10x on where they were in the month preceding LIT funding receipt and trading at ~20% of the claim value.
If PAT need £2m per annum going forwards(what they've raised in the last 12 months) and raise at incrementally higher levels each year, then dilution will be minimal vs the claim quantum / any negotiated settlement amount.
I.e. Later this year let's assume they raise £2m at 20p, that would result in 10m new shares at a market cap of £35m, which equals just 4.5% of a $1b claim quantum
2025 £2m at 40p = 5m shares = 9% of a $1b claim quantum
2026 £2m at 60p = 3.33m shares = 15% of a $1b claim quantum
That would mean total dilution of just over 10% from current levels vs a 1000% increase in the share price (and still leave a market cap lower that GRX currently sits...)
Even if you halve those numbers it's still immaterial vs the potential reward.
The key is the rerating to a more appropriate market cap, the risk vs reward looks massively asymmetric to me.
Plus the fact the BOD own just under 10% of shares in issue and the CEO is on record on a podcast saying that avoiding dilution is absolutely critical...
Banging my possible early settlement drum again!..Dilution won't be a problem.
I thought aim is all about generating cash to some extent, also MB has said on numerous occasions pat are very conscious on dilution. It has to be controlled with progress.
I think it has value, but have worry about dilution.
If we win the case, we become a cash shell. We could choose lots of farm in opportunities at that time.
I don't see a 20% stake in a project with $18m of secured funding as a distraction. Cascades updated MRE will come this year and tell us whether it's feasible (2-3moz).
The company should be split into 2 entities.
1. With litigation
2. Other with mining.
We have sharea in both, they can then fund 1 properly without diluting 2
Not to forget, during the last two fund raise, the broker/ advisor took shares and options in lieu of the fees.
In my opinion just a bit of a distraction and possible dilution.
If we win and have capital you will easily be able to farm in to a good opportunity.
Copy that Pk73!
Don’t overlook the African assets @gall… they’re pretty good too!
the indian government followed ditto steps the ****stan government took with tethehan mining company. the latter was awarded $5.8 billion. however, the ****stan government could not afford this sum so in return for it to be waived, they awarded he licence to barrik gold, tetheyam being a jv company under barrik.
the cases are absolutely identical. moreover, one of the pat directors used to be a director with tethehan mining company. i forget his name but he is on linkedin. now you can see why we have him on board.
i think the rajasthan government had completely overlooked the mechanism of the india - australia bilateral treaty. by them winning the case in rajasthan high court and thereby expropriating the assets, they have done panthera a very big favour indeed.
Final thought for day.
Worst thing for junior miners is getting cash (the dilution). If we settle or get an award. You have a mining company that is a cash shell.
Surely they will be in a good position to pick a good project to partner on. With say 300m gbp in cash they might find opportunities to make even 50m a year on a sustainable basis. Or 4x our market cap now per year
I think people underestimate how nice this trade is vs others.
Painful now while we wait for damages amount.
But after that we do not need to worry about:Sales figures, politics, interest rates, competition.
Just that our case does not get thrown out. We dont even need to worry if we win. If we make it to a final hearing we will be multiples higher
Yeah they know exactly what they are doing IMO, but their strategy will be a masterstroke for PAT shareholders if the arbitration tribunal agree with the case we present. Frankly, I don't really care about how/when we get paid, all I'm interested in is the claim size & the verdict. I'd guess shares would hit 50% of claim size in the event of a positive verdict, I'd be happy to leave some for the next man at that stage...
It's just now about what they can get away with.
Sad thing is if we had the project. With a very low amount you could prove we are on a 10 to 20mt deposit. So our claim might be limited to 6.7mt and some guessing blue sky.
Master stroke by indian gov
Have followed De Grey for some time as it has a world class discovery, although appears fairly priced.
Here is their DFS from last September for their 6Moz @1.5g/t Hemi deposit; https://degreymining.com.au/wp-content/uploads/2023/09/20230928-ASX-DEG-DFS-Equity-Raising-Presentation-lodgement.pdf
P11 has the key info, at the DFS gold price used of $1800 it has a post tax NPV5 of A$2.9b (£1.5b)
De Grey's market cap today is A$2.4b / £1.25b
Bhukia at 6.7Moz @1.945g/t is certainly comparable to this, although obviously in a different jurisdiction with many unknowns regarding infrastructure & cost to mine etc.
£3.00! to clarify!
Allenby Capital reckon around 3.00 per share if I remember correctly.
I will take a 20 to 30% swing on that either way!
I think Bhukia is much much bigger than we think, it's not until they start working on it that they may find it's true value, but as long as we get our share that's OK by me.
I doubt we will get the full post tax npv.
Maybe the market cap of similar companies with similar deposits.
The NPV assumes certain prices, excludes operational issues. It will be smaller than this. Degray is 1.5bn mkt cap. Their npv is probably 5bn?
The pre tax NPV will be far higher than $1.2b with gold prices at $2150 and rising, and I suspect that is a good part of the reasoning for the apparent gov strategy.
A brief review of the history of this deposit provides further clues as to why we are where we are;
From the PAT website;
"In 1993, Hindustan Zinc Limited (HZL) applied for, and was granted a PL, completing 4,000.3m of shallow diamond drilling which resulted in an unclassified resource of 8.7 Mt at 2.0g/t Au. Initially the focus of HZL was to see if there was the potential for mining the oxidised mineralisation processing via heap leach. The trial was not successful and the findings by HZL led the company to let the licence lapse in 2001"
When Hindustan Zinc got the PL in 1993 the price of gold was around $400oz, gold traded lower throughout the 1990's,and bottomed out at ~$250oz in mid 2001, they almost certainly let the license lapse because the economics wouldn't have made sense at $250oz, especially not via heap leach...
Indo gold picked up the Bhukia license in ~2003, when gold had recovered back to it's early 90's prices but was still in a 20 year downtrend... between then and 2008 that changed in a major way and I suspect Hindustan Zinc's feasibility studies looked dramatically different with gold at $900/oz!
15 years have then gone by to reach where we stand today, and now gold sits nearly 10x higher than when Hindustan held the license, the assets won't have changed one bit, but the economics will have utterly transformed.
A fascinating special situation the likes of which I've never come across before.
They key here is. Will the sale cost be taken as valuation of potential damages.
If there is a risk the gov can sell for 500m, but we claim 1.2bn. Then it becomes a pressure situation for the gov.
Is the 500m is taken as all we are entitled to get then they have no risk.
This is rhe key point i think
Sorry Gallmat
Gallant
Probably reality has not sunk in that they might have to pay out say $1.2 B which may wipe out the NPV arising over the lifetime of the mine
OR
They think they will just turn a blind eye to the international tribunal award in which case we should be able I believe to go after the state owned assets wherever situated - I.E. BANKS