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A basic on the present situation, from RIG:
"We, the Rambler Investors Group (RIG), have been following the recent developments surrounding Rambler Metals and Mining (RMM), a copper and gold mining company based in Newfoundland, Canada. It is our view that RMM is a unique company that requires a different approach to the usual CCAA process cases.
RMM's financial distress is due to balance sheet and working capital mismanagement, rather than the assets themselves or the operations not being economically viable. Rather than simply selling the business for the value of outstanding debts, we believe there is an opportunity to at least sell the business as a whole utilizing a proper marketed disposal process. This would allow for the settlement of all outstanding debts whilst offering a return to ordinary shareholders. RMM would make a very attractive acquisition target as it also has substantial deferred tax assets ($32m at the end of 1H22) that would be highly monetizable by a buyer covering most of the outstanding debt. There are several factors that support our view.
First, it can take a very long time to develop a fully functioning copper mine (up to 20 years), making existing mines like RMM's Ming mine a valuable asset. Second, the cost of building new copper mines has increased significantly (more than quadrupling since 2000), making the cost of developing new mines much higher than in the past. Third, Canada is a triple-A credit rated country with very clear rule of law, making it a stable and safe jurisdiction for mining operations (most future mining projects are in developing countries). Finally, RMM's copper resource is of high quality and grade (~1.8% grade of Ming mine is 3x the level of operating mines and 4x the level of projects under development), further increasing its value as a potential investment. In addition, there is also a second major copper asset RMM owns the Little Deer Complex, which could be further developed.
We believe that there are several options available to RMM that would benefit both the company and its stakeholders. These options include a sale of the company as a whole, an equity raise benefitting all shareholders, a convertible debt issue, or an operational turnaround strategy (helped by copper prices that are near all-time highs). Valuation approaches like net asset value, resource based, peer group comparison and multiples based like EV/EBITDA all support a much higher valuation than the current debt outstanding, making it clear that RMM is significantly undervalued.
Cont ..
To ensure that the company's shareholders that have funded the substantial turnaround efforts of the last years are given the best possible outcome if an actual sale is pursued, we recommend that a smaller Canadian mining-focused investment bank be used to sell or at least come up with a marketing document to better help advertise the asset given its unique nature and superior potential. RMM has flagged that the "resource base at Ming Mine could be sufficient to support an operation 2.5 times its current output (?20,000 tonnes Cu p.a.) and still have a +15-year mine life. It is essential that RMM shares do not go delisted on the AIM stock exchange, which there is a risk of happening in late April (reducing the company's options unnecessarily). Therefore, it is important to consider all options available and make informed decisions that protect shareholders' interests. Ideally by capitalizing on the recent strength in copper prices a solution is found to reprofile creditor payments making them more managable (whilst covering their full outstanding value) allowing Rambler to continue to operate independently. This would provide the biggest benefit to all stakeholders. As highlighted there are many options here to make the business work and succeed."
Not financial advice, do your own research.
The best thing about RIG Monkey face…… is tools like you aren’t in there :)
Selling the mine to repay debtors is the most probable action. Isn't going to help the shareholders, the management effectively sold the mine to the lenders and its too late now.
@Smart
Genuine question. As this came up before and wasn't answered...
If Rambler owes (say) 50m, & the action is to sell. Let's say a couple of buyers recognise that the resourse is a good one and if run properly worth far far more.
If a mini bidding war happens and the sale realises 70m for arguments sake. Once the debtors have their 50m. Who owns the extra 20m?
Basically if it's the debtor's, as you imply that they now own the resourse - due to the defaults. Then why would they settle for only the 50m, if they may be able to get 70. This seems odd to me, unpalatable as it would still be for us of course.
If however they can only get back the debt they are owed. Then clearly if they won't wait and want the 50m. Then yeah, why sell it for 70, as they have no interest in us, the shareholders of RMM. So they won't press for more understand.
What's the legal situation, if you know?
Ta
The lenders dont "own" the mine. They can only recover the exttent of their debt + interest from the sale. Any surplus goes to the shareholders after the costs of the process have been deducted.
Yes. That seems logical to me.
But Smartpunter seems to repeatedly make the point that the resourse is now with the debtors. So just seeking to clarify?
Cheers.
you should join the discord group
That right they don’t own it only if they can’t pay so on like that rig team and I working on it. Well done so far
Keep up the good work moon
@StrummerJones
When I researched what happens next - if the only option for the Administrators to pay off the creditors is through a sale - is that a sale would be achieved by public auction.
https://laws-lois.justice.gc.ca/eng/acts/c-36/page-1.html#docCont
Restriction on disposition of business assets
36 (1) A debtor company in respect of which an order has been made under this Act may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained.
Marginal note:Notice to creditors
(2) A company that applies to the court for an authorization is to give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.
Marginal note:Factors to be considered
(3) In deciding whether to grant the authorization, the court is to consider, among other things,
(a) whether the process leading to the proposed sale or disposition was reasonable in the circumstances;
(b) whether the monitor approved the process leading to the proposed sale or disposition;
(c) whether the monitor filed with the court a report stating that in their opinion the sale or disposition would be more beneficial to the creditors than a sale or disposition under a bankruptcy;
(d) the extent to which the creditors were consulted;
(e) the effects of the proposed sale or disposition on the creditors and other interested parties; and
(f) whether the consideration to be received for the assets is reasonable and fair, taking into account their market value.
Marginal note:Additional factors — related persons
(4) If the proposed sale or disposition is to a person who is related to the company, the court may, after considering the factors referred to in subsection (3), grant the authorization only if it is satisfied that
(a) good faith efforts were made to sell or otherwise dispose of the assets to persons who are not related to the company; and
(b) the consideration to be received is superior to the consideration that would be received under any other offer made in accordance with the process leading to the proposed sale or disposition.
Marginal note:Related persons
(5) For the purpose of subsection (4), a person who is related to the company includes
(a) a director or officer of the company;
(b) a person who has or has had, directly or indirectly, control in fact of the company; and
(c) a person who is related to a person described in paragraph (a) or (b).
My general sense of the situation is that having the Court involved gives us the best chance for a reasonable outcome. Few people are ballsy enough to do something illegal while under the scrutiny of a judge.
Thanks @Hippo, for the detail on a public auction.
So, on the assumption then that the auction reserve (set by the administrators) is the owed debt, say +-50m.
The left overs come down, as with all auctions. To if there is competition for the resource. If there is then extra monies accure. If there isn't it's sold for the debt one assumes.
I was simply trying to cut through as well for public info on who that extra monies may go too ( if that's the result). As of course there has been this ongoing view from certain individuals that we (RMM), by defaulting have forfeited the whole resourse.
As a non legal type (I am a technical guy by trade), it's not easy to see the truth from the ubiquitous trolls, as ever on this BB.
Cheers.
Anything left over after paying off loans/ creditors/ pension deficits etc, goes to the shareholders.
(as far as I would expect). I do not think Newgen have possession of the assets of the company, merely securtiy. Obviously have to check the loan documentation to know. It would be quite radical for Newgen to have possession of the company's assets due to a default on a loan payment. That would be like losing your house to the bank because you didnt pay your mortgage one month. That would be a calamitous deal to have signed, so we assume RMM did not do something that stoopid.