Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Blackrod - you kinda worked out the answer to your own question dated 21st September all by yourself within your statement last Monday (3rd Oct). I hope you bought 'heavy' as you will soon reap the reward. Someone somewhere on this Board asked a stupid question some weeks ago along the lines of why would anyone sell at 34p when they are about to receive 36p per share. (Will anyone own up to that stupid question??) Hmmm. Let me think about that one........ Answer - because it went low low low to 26p and then the (stupid?) sellers bought back in again and will receive the aforementioned 36p Good luck my friend
Assuming Iluka and the Germans play ball, this is a fantastic stock as you can buy at 26p today and Iluka will take it off your hands for 36P!
and an exploitation licence sought from the authorities as early in H 1 2017 as is possible. I wonder what the Germans may have to say about that; EU free trade and all that!!!
Since 2011 all the H1 results for SRX have been unaudited and none have been left to the last minute allowable under the AIM rules. I have never come across cynical SRX write downs in the last five years and if there have been write offs none which can be reversed. So they have disclosed the selling off on the cheap of over $6 million product which had been dampened which could have been dried out; they have also written off as impaired over $5 in respect of the agriculture business which might be written back in in the future. And there are also sales which may (repeat may) have been included in H1 which will appear in H2, Anyway hey ho I sold a while ago and have moved a large amount of the proceeds into Finn Aust (FAM). It reminds me a bit (before I invested in SRX) when the SRX share price was in single figures. I hold just under one million shares. The company is not in production yet but they should have JORC compliant resource out by the year end or early 2017. What I do hope that they will have out much much sooner is the detail of a metallurgy report giving official grades but there is enough on their decent website titanium.gl to tell you that the sands are very firm and containing ilmenite with high quality titanium. As to resource and mining the first is technically available in perpetuity (created by Mother Nature off the glaciers as they melt) and no expensive mine is required (no Lantis no Gangamas no feasibility study for Sembehun and no building of a Sembehun) and therefore no debt or need for it for the building of mines. Why? because the sands are on the beach or in the shallows in North West Greenland. Instead of mining per se with a large workforce the plan is to use dredgers to "hoover" the sands and ship them off for sale. And what is more there is little processing required because Mother Nature will also have done part of the job. There is also a deep water port available for boats/ships to moor up waiting to dredge. But is there not a problem with regard to the climate in Greenland? The downside to having to rely on glaciers to in effect produce the sands is that the country is cold for much of the year. But we are told that it is possible for work to be done for seven months of the year; one month to prepare the ground one month to clear up and off leaving 5 months for dredging but that is not just 5 months since this is a part of the world with 24 hour light; therefore work time with shifts is the equivalent of ten months of the year. It is understood that ships used could carry 300k tons of high grade sands at a time off to buyers.So one is not talking about 120k to 130k tons of rutile a year but multi thousands tons of sands per year. Iluka bid £215 million plus debt for SRX; at one point the company had a MC of over £400 million when the share price touched 80 pence. Against that FAM has a MC of just over £30 million.An SIA and EIA are in hand and an
All your points are very valid and well made. I may well be completely wrong (and time alone will tell) but my own view is that Iluka and SRX are jointly scripting every update/RNS/communication and both parties know the likely outcome. I still believe that Iluka have SRX (PALA) in their back pocket. Don't forget that Iluka tried (and failed) to buy Kenmare. Would the shareholders of Iluka ever accept that the Directors have failed yet again? Personally I doubt it. Therefore they would all have to fall on their swords which I don't see happening unless they have once again made a mess of things without doing their homework.. I completely agree that the drifting share price is an interesting one. Everyone' potential (re) entry point will be different. The unanswerable question at this point is - did the share price start rising a few months ago due to the performance of the Company versus the 'rumour' that Iluka were about to make a bid. If one can work out the answer to that question, then that should be one's own entry point. I still believe the deal will go through which logically is why my entry point will be higher than yours. If it doesn't go through then you have been proven right and I will have bought at too high a price.
How much influence can Iluka have on the results of a Company they haven't taken over (yet) If I were a Director of Iluka It would be awkward explaining how the Company they are proposing to pay £200 million + for is losing so much money (the write downs in inventories is because they have under recorded cost of production previously) I still think there is doubt that the deal will go through hence the current SP - if it drifted back towards 20p I may have a punt
Ricky You may well be right but the cynical and older (wiser?) ones amongst us would know that regardless of the size of the Company or the Industry that it operates in, the new Management in any scenario will always do everything that they can to place the blame on the previous Management. Put yourself in Iluka's shoes would you want to inherit a 'glowing' Company or a 'failing'Company? Fast forward to what the juicy second half may look like with the additional revenue from the 'sales' after the reporting period ending as well as the additional production loaded to the second half of the year. Bring out all the bad news before you inherit it and the only way is up.... To be honest I can't be bothered checking back but has there ever been an RNS stating that the half yearly accounts are/were unaudited? Have they ever been reported on the last day of the rules of AIM accounting reporting period? de da de da de da. As with any AIM stock you pay your money and take your chance. One thing for sure is that rules and regulations are pushed to the limit - or even ignored. That said, at the current price it might well be worth an additional punt. Rhetorical question - if you're that sure of the 'not so bad' 36p deal going through why not take an additional punt on SRX at the current share price.
Horrendous results - I know there 'one off' write downs but 36p doesn't seem so bad after all!!!
Can anyone confirm that if buy SRX at 29p now will Iluka take my shares for 36p when the Germans Chapter 2 is done? Seems like a win-win to me!
FAM had full year's results out today which should give you an insight and their website which you should find on titanium.gl provides decent information. The company recently acquired a couple of projects in Greenland from Cairn Energy which are copper etc but these are on the back burner because the company is concentrating on the Puff ilmenite project. The key imo is the purity of the sands and the quantum which will be replenished when the sands are dredged, hoovered and placed in boat to take away for processing. When you mentioned Oz you may have been thinking of Western Australia which owned Bluejay and it was Bluejay which Finn Aust acquired from Western Australia. Hope you are coping. Sorry folks for the off topic. Will SRX produce their results by 30th September; even if they do they will be unaudited.
thanks-there was another i looked at in greenland for years, weather put me off :-) cant recall its name ozzie and linked with pala? at some stage or another major, there was mention of it on iii a few years back-u got me thinking who it was now that was backing them.....
For what it is a worth and since I have sold all my SRX save for 50,000 in my SIPP, I thought that I would let you know that I have built up a little stake of 800,000 shares in Finn Aust (FAM) just in case it is of interest to you. What I like about is that the company has a decent project in the north west of Greenland with a CEO who became ceo following the acquisition by the company of Bluejay where he was ceo as well as ceo of Western Australia who owned a big slice of the Bluejay. Western Australia are thus a corner stone investor with just under 40% and are available to give advice if ever needed. The company as an exploration licence in respect of stretches of sand in NW Greenland and have been actively exploring what the project contains. The sands contain a very pure Ilmenite which may not be of the same value as rutile on a pound for pound basis but is possibly either one of the largest deposits in the world but also with some of the highest purity. If the company obtains a licence to exploit the sands (an application is expected to be made in earlyish 2017) the idea is as far as I can tell not that they build a mine per se but use a boat or boats to hoover the sands i.e. dredge and hoover. A comparison can be found with Tormin off south Africa. The sands when exploited will be replaced naturally by the melting of glaciers as winter ends and spring and summer befalls Greenland. The company has this summer employed a bona fide and well respected appraisal company who have been on site and have done the necessary work to prepare for a JORC compliant resource which should be available by the year end. The key is the metallurgy. I have compared SRX with FAM and the following differences have occurred to me. First there is little chance of civil unrest. Greenland is sound geopolitically. There are few people living and earning a living in that part of Greenland. there should be no opposition from the walrus and nharwal population. The country is not threatened with Ebola. There is no need to build a fixed mine; cf the cost of Gangama by example was $80 million and so no expensive loans. Western Australia should be a better cornerstone investor in comparison with Pala. The company is not the subject of the BVI jurisdiction. It is dual listed AIM and Frankfurt. The company is not dominated by its cornerstone investor which is contrary with the way Sierra Rutile worked out with Pala calling the shots imo. Whilst SRX has a very large deposit the FAM sands are capable of and are replenished if sections are removed. The above views are mine and are given believing the detail to be true but as ever DYOR.
Im big in KMR We saw off iluka by finding OMAN investor Have a small holding of SRX V surprised at the deal when all seemed to be heading in the right direction for SRX
and luka hasnt got enuff in future deposits and wants ours, the worlds largest, natural deposit, for peanuts. how many monkeys in sierra leone? how many looking after investors interest in srx on aim? i ask...... corbs:-)
and luka hasnt got enuff in future deposits and wants ours, the worlds largest, natural deposit, for peanuts. how many monkeys in sierra leone? how many looking after investors interest in srx on aim? i ask...... corbs:-)
Whatever the outcome The market for rutile has turned http://www.indmin.com/Article/3586243/Ilmenite/Rutile-and-ilmenite-prices-increase.html
Now this could prove interesting. Today's announcement means that the parties have 30 days to further discuss the merger. The AIM rules provide that the H1 results should be disclosed within 3 months of the half end i.e.by 30th September slap bang in the middle of the 30 day period. Others may know more than me but I am not aware that an uncompleted merger can interfere with the release of those results by the board. I consider that most LTH believe that with Gangama in production H1 2016 will see a marked improvement on H1 2015. Whilst the results are unaudited, the auditors still have to do a professional job.
The Germans are acting on behalf of Kronos who make pigment and are the largest users of rutile in the world. Iluka and Sierra Rutile are currently the main suppliers and a merger could lead to a dominant position under EU competition laws. Countering that position Iluka will argue that in future they will have much reduced rutile production as their mines in the Murray Basin are closing. and a merger will lead to increased supply in Sierra Leone.
Local feeling is that there may be a bit of load-shedding of staff and a slow down in production. Why take on an $80m debt, increase production and depress prices? Possible reason Chapter 2 was invoked. As mentioned elsewhere, whats it got to do with the Germans?
Perhaps German Anti trust authority had to be involved because of the sales to the European market and competition law..? I note Appendix II also made the following provision :- Iluka and SRL reserve the right to elect to implement the Merger by means of tender offer, offer, scheme of arrangement, plan of arrangement or consolidation." So they may go down this route instead and go private ? BVI takeover guide http://www.ibanet.org/Document/Default.aspx?DocumentUid=94DD6211-DC3F-41AB-B97F-6282C5DDDEA8 xj
Xanadu posted an excellent document regarding the FCO. I will admit that I have not read every word of it but I still don't understand why Germany has the power to potentially veto a transaction/merger involving a Company in Sierra Leone and a Company in Australia. 'Just cos' doesn't seem like an acceptable answer. So rhetorical question. Germany write a global rule/policy that states (in laymans terms) that we can potentially block any Global takeover/merger transaction that we want to. Why can the Sierra Leonean or Australian Governments not just write a counter rule/policy that states that we will ignore anything that the Germans want to impose. What or who trumps what or who? If I'm missing the point somewhere, I'd be the first to admit it.
At the risk of sounding like a broken record, when Pala gave an irrevocable undertaking to Iluka it became a done deal and very difficult for any other party to get involved. I think we are all very frustrated by what has happened but maybe the Company had been touted about and this was the best offer that they could achieve. Do I believe that? - NO, of course not. Also, I can't remember anyone mentioning this before but we should also bear in mind that the Company raised USD 20M (I think) in April by issuing shares at 20p a shot. In my opinion, there was absolutely no need to raise the funds at that time however I think it fair to say that Iluka and Sierra would have been in discussion at that point. So in other words we (Sierra Rutile) will dish out a wad of shares at 20p a go to the 'closed shop' II's and a few months later we'll all sell them for 36p. Almost doubling our (their) money. Me Cynical? - Never. In the scheme of things maybe not huge but assuming my maths are correct I'd be delighted to convert 20M into 36M in a matter of months and a nice wee softener to gain a few yes voters. Blackrod - How did your Broker get on trying to get your 1M shares at 30p. I was hoping it might pump the share price back up to the 35p mark so that I could sell the chunks I bought last week......... To answer your question about worth a gamble? Yes I did. Update on me asking the Company when the half yearly accounts will be published - Silence. Has anyone else asked?
The reason that I asked is that I was very surprised no one came in with a larger bid. Why was that. A friend of mine came across a broker's report (could have been Mirabaud) which had SRX on a forward PE of 3 in either 2017 or 2018
Hey Corbs....Think there will be several companies anxious about this merger… Dara, I am wondering whether the new merger may be seen as creating / strengthening a dominant market position for Illuka Newco, the mineral sands market is expected to tighten, could a dominant company have an overall affect on pricing ?? 50% of Sierra Rutile’s Market in 2015 was Europe.. As Corbs & Blackrod have mentioned downstream companies will be watching this Tronox, Rio etc also ? The following gives a more in depth look at what the FCO looks at & ARC (restricting market dominance) http://www.bundeskartellamt.de/EN/Mergercontrol/mergercontrol_node.html http://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Others/GWB.pdf?__blob=publicationFile&v=3 http://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Brosch%C3%BCren/Brochure%20-%20About%20the%20Bundeskartellamt.pdf?__blob=publicationFile&v=19 All imo... :o) xj
Du Pont wont like it? :-) Black rod-whats the feeling from the employees? locals?