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The Singapore International Arbitration Centre says it recorded its second-highest number of cases in 2023, with an overall value of US$11.9 billion.
This could be the reason for delays ?
Email from Mark:
"Subject to the details outlined in the RNS on 2 April, we expect to issue the Notice of Arbitration (NoA) in the near future with the Statement of Claim (containing the damages amount) to follow later in the year. We may however elect to included a damages estimate in the NoA, however, this is discretionary. "
" I do you however refer you to our RNS on 2 January where we quoted government officials estimates of ~US$1 billion.
Unfortunately, this is the extent of what I am permitted to disclose at this time."
Thanks. So i read this as $1Bn+. We then get to add on potentially 3yrs of interest to end of court case maybe prime +2%. Prime is 8.5pct at moment.
Not bad
Thanks Ed...my guess would slightly be in favour of including a claim amount, especially if we need to raise more cash.
As we are only 12.3m mcap in pretty sure any kind of a win say 500m to 1.2 billion is gonna move the 7p price UP A BIT,minus the fees for winning to the legal team per there agreements,no one would fork out millions up front if they didnt think they had a good chance 75% or more of winning and if we win big then we are in for a massive one off share bonus and increase in s.p to help out.what will this company look like in 1 or 3 yrs time with that amount of money in the bank to further there other interests,no need to wait for funding or raises needed going forwards,a great long term play for lth.
I have taken my position. Now time for me to switch off.
Sounds like it could be a couple of months before we get the claims amount.
Time to start looking for the next thing.
Thanks a lot for sharing that @edhallas, always good to get a steer on where things are at. A $1b claim will certainly get this moving into a new trading range given the market is currently pricing in a 1.5% chance of success. This is my favourite sleeper on AIM, ticks all of the boxes for a mutlibagger. I've managed to switch off for the last couple of months, helped significantly by the work of @gallmat & others on this BB. Fingers crossed we get the news we've been waiting for very soon.
He later replied with this
"BTW, in fear of grossly oversimplifying the precedent case law, the applicable ‘interest’ is the cost of capital applicable to the investor. For example, the WACC from the date the expropriation for a small cap gold company."
Thanks again Ed. Could somebody put that into pounds,shillings & pence please....
Rns 27th September 23 gives some coverage on expropriation date..
I am not sure i agree with this.
I read some cases that they had prime plus 2%. Another used 10pct when euribor was sub 2pct.
The weighted cost of capital is
Debt % × cost debt *(1- tax rate) + equity % x cost of equity.
For a junior explorer the cost of equity can be very high. The rf could be 5pct and the risk adjustment for our stock is very volatile vs an index, high beta.
We might be talking 15pct+ but i would have to review my old CAPM theory and latest approaches
I cannot really argue against the comment of the lawyers ( even if i see exceptions)
If you assume exprop in 2021 and 3 years to settle 2037. 1.15^6 = 2.3. So 2.3 times our 2021 amount.
This is a significant comment.
Personally i would expect that over time a small cap explorer would become less volatile as it grows over time. So it might not make sense to compound with that cost of equity over the whole prriod
Rules in law do not always follow economic sense.
If it is true. This is important
This seems a bit confusing to me. Indiana is prime +2 pct from date of award to payment.
This is implying something else. Whatever it is, i think the cost of capital of a junior minor is quite high.
One for the lawyers
Hey @ Gallmat many thanks for taking a look....its all way way over my head
Think like this.
What interest rate would you use to lend money to a junior minor operating in india. Probably a high rate. This is cost of debt.
What would you need to give equity as expected rate. Probably more than debt because bondholders get paid first.
Without doing any analysis we are being told the rate for calculating interest could be quite lending money to junior miners are risky.
I cannot quantify it as there are many assumptions, but my conclusion is it is good for our claim.
Our CEO has background in valuation.
Like everyone else I can only guesstimate. Using some cost figures ( pro rata) from Allenby's last research notes I sit here....and if I am out by 50% ...either way still happy days!
Net claim award £800 million.
Shares in circulation at award date 225 million.
I could live with that
Having read the comments posted. I really think our claim could end up being 1.5bn usd.
The wording cost of equity for junior minor, just implies something with a high risk premium.
I am starting to think we would easily be having an interest rate of 15pct+applied from 2021 to 2024. And i think in 2027 we might end up at 1.8bn usd.
This feels bigger than greenx and also cleaner.
1. No environmental issues
2. Local demonstrations.
3. No worries we could not develop capital ( expensive infrastructure is there).
What argument can GOI give for not passing us the license. They had a court case and came up with reasons like you changed your company name ( like google and facebook did).
How can they say we should not have given it to us, when they made an agreement to give it to us if we dropped our legal action.
My autocorrect is going nuts.
I think the compound interest from 2021 to 2027 is going to be really powerful here.
I read up on numerous other mining companies with arbitrations and they all feel like the have red flags. I just cannot find one argument GOI has announced that makes sense for them to stand behind.
They went to court and just provided BS reasons which i am sure our lawyers can rip apart.
Other cases.
Gabriel resources. Nationwide protests. Environ issues. Unesco site
Equatorial resources. Lost permit but they needed to build bn dollar railways to get project going. Others in country accused of bribing.
Cascades. Some inveators in company had prision records, arbitration via local law.
Gallmat, 10 to 15 % interest rate sounds about right. Also, agree the claim figure anywhere around $1.2B - $1.5B
@gallmat, have you ever looked into reko diq?
https://www.reuters.com/article/iduskcn1u80gs/
several apparent parallels with bhukia, and tim hargreaves who is a pat director was ceo of tethyam copper from 2005-2007!
it also makes me wonder whether india's auction tactic is based on avoiding a similar fate to ****stan where billions of compensation had to be paid & the mine ended up being a 50/50 jv with barrick...
i did some research last summer but perhaps time for a further deep dive
working link
https://blogs.lse.ac.uk/southasia/2019/08/14/long-read-the-reko-diq-fiasco-in-perspective-****stans-experience-of-international-investment-arbitration/#:~:text=on%2012th%20july%202019%2c%20an,for%20the%20reko%20diq%20project.
Thanks @sheer
The whole thing seems like a monty python play!
That case and ours