Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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@croissant
The Sept 2021 conversion was largely to a different investor group and not related to these loan notes, but I agree that these will convert.
I’m sure the CLN would have been structured in a way to avoid triggering a takeover bid so I am skeptical (slightly!) on a takeover upon conversion, It will be on their on terms regarding timing not through conversion and I also think there is still a lot of project risk and things that could go wrong so would you want to take on that risk so far away from production? I’m not sure, but then again I am more of a skeptic so you can flog me for that..!
Good evening croissant. In your opinion, what would be an acceptable takeover bid if one was made by CLN?
@ TUNX - base on the first CLN which matured in September 2021, the entire amount (principal plus accrued interest) was converted to shares - that resulted in a 20% enlargement of the share capital. I think it will fall that way again, and is likely the best option for the financial health of TWL. At max 3p per share the CLN holders aren't diluting themselves, (given we have a project with an NPV of circa £300M and we now have the MPF permit) I'd describe it more accurately as "making out like bandits." Once the shares are issued, that's when I think we'll see a take over bid from the same players. They need 30% of the shares to trigger a bid. If you follow that logic you'll see some price targets and you can gauge whether this is a hold or not.
Personally, I will be participating to the max in any share offer made to shareholders during the upcoming funding round. Any money you contribute purchasing additional shares at that point goes straight to the company coffers (minus costs) and helps secure TWLs finances going forward by reducing their debt load. You are literally helping to de-risking the project.
Any takeover bid by the CLN holders will follow on from the equity raise and the full conversion of those notes to share equity , so I think it will occur around Feb 25 (if its going to happen).
More tea leaves, Vicar?
ATB
@Vis - it is looking good. The CLN holders should be solidly behind this now - however, nothing is guaranteed. The NPV sensitivity to ATP price is given in both of the FS's in chart format. ATB
@New5 - The original FS used a W price $330 per MTU WO3 concentrate. FS2.0 used a W price $340 per MTU WO3 concentrate. Based on the latest graph I've seen from NG we're now looking at $350 per MTU. The latest RNS maintains the deposit mine rate, so that's possibly another 3% they can justify to the NPV. The increased W price is of course very welcomed, but may not have as big an effect as you might expect.
If you look at the latest RNS Stobie states "The main focus of the FS, which builds upon work undertaken in the two previous studies carried out by the Company, is on optimising the capital expenditure required to restart operations and the resultant operating costs." - this is where they are focused to increase value. He's looking here because in FS2.0 they raised the reserved estimates and accounted from revised output, concentrate grade and added $10 to the MTU price. There's really not much more they can do with the reserves. That deposit has had close to 7,500 cores drilled and so its very well understood, as now is the product concentrate quality they'll achieve with this new circuit.
They might be able to squeeze a few quid out of the setup costs, and could perhaps bring the schedule forward to try and recoup lost time due to the extended application time required to secure the MPF permit. Then the biggest impact IMO will be the ongoing running costs, which over LOM could be quite large. This looks like Stobie's area of expertise - another good hire.
All told if we see a 10% rise in NPV I'll be impressed.
Another large impact will come from the Aggs business. However, it's not permitted in the MPF permit. None of the financial elements/benefits associated with the Aggs appear in these FS nor form part of the NPV calc. NG talked about an annual road cap of 300kT and implied if the business got bigger then they would need to look at other means to get the aggs off site (@Vis - the inside track). If they can improve their margin from £1 per tonne to between £5-10 per tonne (which seems very little based on the market price and demand and the quality of the TWL aggs), the volume could be raised as high as 3.5MT, which could input around £20M+ pa - that would be similar to the Sn income stream and so could be a huge additional chunk over LOM. The Aggs business will only get acknowledged by year three of production once they've fully ramped up the W and Sn, and they've got that activity permitted.
I completely agree - a good long term hold.
ATB
Croissant
Given the note holders have provided the cash in tranche B,C, D, when the risk was v high, i.e. before the permit was announced it is a bit unlikely they will pull the plug now.
I expect the funding round needs will change if the FS changes the flow sheet again.
The operational gearing on this project is probably v similar to that of South Crofty, where a 10% change in the price of tin makes a 30% change to the project NBV. So as the price of APT is up around 20% the NBV may also have risen significantly. (Offset to some extent by higher costs)...................
Looking good to me.
Don't forget that all forward projections were done on a much lower W price. Future predictions will now look very different due to certain global factors. All this should be positive. Personally I would take the royalty option.
@croissant
Re: Funding split
Do you not think the note holders will push for bigger royalty rather than equity? That ratio would be a big follow on from them lot to avoid dilution themselves. They are already getting in at 3p a share.
@RDB - the next steps are:
1) Tranche E - expected e/o July
2) Feasibility Study Rev 3
3) Funding round: They are looking for £25M debt and £40M through and equity raise (that was the last recommendation as far as I am aware). SP needs to be 6p or more for this to work (imo).
I'm still expecting a takeover bid in JAN 25, but that assumes:
a) we see out this month and ride the CLN default
b) Tranche E gets secured
c) the FS3.0 delivers even more value (virtually guaranteed with Stobie crunching those numbers)
d) the funding round goes well.
We are now in the hands of the bean counters. ATB
And on the same site, look at the volume chart at the bottom. April was £1.2m in value and a huge volume vs any other month. Retail might come in once news filters. The asset is derisked, but has little funding. So as others have posted - there are steps needed to make this an attractive investment for those of a lower risk appetite.
Go to LondonStockExchange and you will see a different story. Looks like a 6.3p buy at lunch for over £10k and a lot of off book. Sadly AIM is wild west and I remember from Range resources people would speculate all kind of things the MMs were doing - buys as sells visa versa etc. It is what it is. If you have a trading account, the only way to know is test trades yourself
If you are looking at trades on LSE I'd not trust unless you have live feed - I have just tried buying and selling £5k blocks and the spread is wild. Its also remained close to 5p-5.4p for selling (small £100) and you cannot sell large volumes. So the MMs controlling, but the buys are not exactly in the £5k chunks (= 100k shares)
@New5 - Cheers! ATB (lol)
Corks popped. First major hurdle overcome. Long term this will be a great hold.
ATB
You may have noticed some hesitation in the share price because the decision from the EA has not been published on the website. I phoned about an hour ago and was told that they have not yet issued the permit. I was given a name of an individual responsible but he wasn't online at that time.
So I have just phoned back within the last 5 minutes and have spoken to someone from the EA who has now CONFIRMED that the permit has indeed been issued with very minor variations associated with the reporting for audible noise. I had a decent chat with him covering a few of the issues I had from the due diligence work - everything is fine.
POP THOSE CORKS!! ATB
I wonder why there is so much selling going on? Even if the SP didn't leap as hoped, I'm surprised to see such relatively large block selling going on when the medium term expectation would be to see large gains?
I don't know about champagne, Croissant, more like a bottle of rolla cola.
@HopefulDevon
The completion of the FS update will be another hurdle cleared and may have been at the behest of a funding partner (that is me speculating). So we could see funding plans announced at similar time to completion of FS, or a term sheet at least.
Two more years of cash burn for employee ramp up and a big capex project is a lot of cash that still needs to be found and could keep SP down depending on what terms the money is raised.
I personally think the best option for us is a takeover from one of the big outfits. They can have mine for £1 a share. Before money runs out.
@TUNX - when do you expect to see the SP to start heading steadily upwards?
@Gingy
There’s big overhang from the notes and maybe more to come if they need another tranche to take them through to close on the long term funding, so can’t get too excited on the SP imo. Remember the notes convert at 3p most likely.
Come on people. You can't possibly be happy with the share price after news like that.... really?!
Your a hard man to please gingy.lol.