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Esduk, I really have to go out now but I will look tomorrow. I think from memory large parts of that are correct. But its the repayment thats a constant not the shares they sell. As long as the £ adds up they sell the number of shares accordingly. Matters not to them how many shares they need to sell to reach said £ monthly amount. I'll catch up tomorrow
ffs 'true' not 'too'.
To be clear, I am not a fan of the financing arrangement which is definitely weighted in their favour (as they always are). I am also not saying that they care a lot about the long term direction of the SP (I wrote something about some limited incentives following the original RNS - there is a gainshare mechanism above 13-14p).
But I am saying that they will not always sell at the start of a month, and don't even need to sell their max quota (or any at all) in a given month if it means they lose money, as explained below. Given the terms are stacked in their favour they would need to be pretty dumb / unlucky to lose money but I think it's still a possibility if they play it badly/don't time their sells strategically.
It's too they make money regardless of the shareprice. But they also make more money the higher the price they sell (regardless of what they pay to WSG).
Or are YA and Riverfort the first companies in existance to not care about maximising their profit?
No that is not my understanding. I will take another look but they will not be worried about share price. thats for certain
Good attempt at an analysis - could be right but therein lies the problem - is so fooking convoluted that even intelligent peeps can't quite work it out.
Maybe you could ask the FD to summarise !!
But IMO, the more complex, its stacked in favour of the funder.
I may dissect it over the w/e but as I'm soley here for KSA, its relevance is limited to me.
Hope you all have a good 2m barby - don't forget to take your own poo bags!!!
Misty it took me quick a few goes reading through the complex financing arrangement in the RNS to (hopefully) understand it. Based on my interpretation of the RNS and the selling behaviour to date they are not selling the shares and giving 90% of the proceeds to WSG. If they were I would agree with you that they wouldn't care about the price.
The money they pay WSG and the sales proceeds from their share sales are not based on the same calc. They have discretion over when they sell their shares (up to a maximum monthly level which I assume is linked to general trading volumes). They don't have discretion on the timing of their payments to WSG, these are monthly and according to a set formula.
They need to make sure that on average their sells are higher than 90% of the VWAP of the 10 lowest SP days in the preceding period in order to avoid losing money. It wouldn't make sense for them to sell their max quota of shares for a month on a day where the SP they received was under 90% of the VWAP for the 10 lowest SP days in the previous month. I'm not by any means saying that they are investors, but to make their margin they do need to act strategically. I know this is as clear as mud so feel free to have a read of the RNS and let me know if you interpret it differently.
Whoosh
Esduk- I'm really not sure price is important to them. They just sell more shares to get the money
Good clarity Ed’s, makes sense! Admittedly I have little understanding to how these outfits strive to offload their shares
Nice post Smithers.
Just wanted to clear up a few things on the Ya/Riverfort selling situation which I think is being slightly misrepresented here (unintentionally or otherwise).
We have three holdings RNS's: 29th Jan, 2nd April and 11th May. The first was the placing of the shares (7m each), the second two reflect them offloading 1.25m each in the April RNS and 1.55m each in the May RNS, leaving 2.82% each or 4.5m each. The idea that they sell every month at the start of the month isn't correct, they didn't do so in February or March. Yes they did sell at the start of the month in April and in the first half of the month in May but in each case they sold into volume as I think yrabs pointed out.
They pay WSG a sum each month equivalent to 90% of the volume weighted average of the 10 lowest SP days in that calendar month. It therefore makes sense for them to time their sells in the following months for the days on which the SP is higher rather than blindly selling all of their quota in the first few days. They have done very well for themselves over the first few months as we had low VWAPs and they then sold shares into the market on the back of news at much higher levels. In June they will want to sell at a higher level than 90% of the VWAP of the lowest 10 days in May. So they are unlikely to sell any if the SP is below 9p at the start of June. They are more likely to wait for volume/an increased SP around the time of the AGM announcement.
Complex I know but I'm relatively sure that I have the logic right.
KSA is the key Jimzi, we were both big advocates of that last year as soon as PF released spilled the beans.
Iran would've equally sparked a decent step up as well - probably not quite the £1 we all hoped Oman would've returned, but long term managed service contracts are the key to making this work. Unfortunately there are too many little big men clenching their fists and puffing their cheeks in office around the world at current.
Last years delve into the port sector was very clever IMO and will hopefully continue opening doors throughout other sectors within Ghana, and other port regions around the globe. Francaphone Africa is seemingly an area we are very capably equipped to make some progressive groundwork in, and with the Chinese buying up Africa at the moment like its a game of monopoly, the region is tipped to become an economic breeding ground in the not too distant future.
KSA is the future of the middle east development, with ambitions to surpass what the UAE have successfully done over the last 30 years, tourism and trade will sky rocket in this part of the world, and closely held links with the Royal family, British Gov & Military will bode well for our very own Sgt Major CEO - the credentials of our JV partner in KSA are quite unbelievable.
And as yrabs has just mentioned - what a delight we find ourselves in, a global pandemic in which a a sector of our business supplies equipment and kit for . . . global pandemics. I'm expecting high volumes of orders to be coming in left right and centre at the moment, the only risk would be whether PF and co. have managed to pull their fingers out in time to develop the business infrastructure to handle the increased volume in demand.
At best - we'l see a significant increase in rev. this year for the co. from the upturn in containers passing through the final 2 phases at Tema, and the sales of fever scanners, detection/sanitisation kits
At worst - the scanner kit revenue will offset any lost revenue from SL, and rev will remain largely the same (which isn't too shabby at all given the current climate and how the majority of stocks will be recording record losses). Come back and get on board Jimzi, if the only reason you fled was through fears of the aviation biz :'(
Will hopefully be attending a socially distanced AGM, and will be passing on all details and notes to the board as per tradition,
And on a leaving note, don't get your hopes up that Heathrows fancy new scanners came from Bumbly towers, theres ramping and then theres complete insanity. They'l have their logo on their site as a result of some sort of very small minor business years ago - all for marketing illusion purposes.
Well it’s not cost of sales but overhead is too high. That’s why this will only move significantly if they land a KSA .
It's simple. His cost of sales is too high so bugger all profit
Hope WSG never use Experian for a credit score!
well AML changed CEOs and the sp went up 30%...…… still think Pete needs to go join the other dinosaurs as he aint got a clue how to operate in the wild west of AIM...….. maybe he doesn't really give a 5h1t. B
well lets see;
trust, BOD, history, no convertion, 700% plus dilution in 10 years, market fatigue. Theres probably a few more I've missed
whats annoying most is that wsg are continuing to take maximum advantage of the companies making themselves covid compliant yet the sp is heading in the opposite direction to the likely sales being made. In fact another day like today would wipe out all the gains made from the near 700K contract or 5% in value of market cap... it all kinda don't make sense, so why so friendless?. B
yrab- I don't think they did on Tuesday (just my view) They will be present on Monday and the AX will switch accordingly.
SP Angel are probably the worst nomad out of London? I think so. So don't worry about rules
Mike, yes combined and I worked on a 3% reduction down from 8.7% to 5.6% so each % is about 1.5M shares [150M ion circ at time], so 4.5M...… either way still about 5M to go as I suspect they sold a chunk on Tuesday. B
Apologies Yrabs,... think you were looking at Riverfort and YA combined?
Even so... probably a little higher...than actual, as per RNS,... and the RNS's back up the circa 1M/month... each shares.
yrabs...
i'd check the RNS's if I were you as the figures you put up are wrong.
Riverfort position;
1st April 6M shares---3.8%
11 May 4.5M shares-2.82%
So 1.5M shares in 6 weeks NOT 4.5M shares.
A good point that I has missed, thanks yrabs.
With the increased newsflow and price action expected over the next few months, 1.1m isn't going to be an issue.
the 2 rns for holdings show they went from just under 9% on the 1st April to 5.6% mid may, so about 3% or 4.5M shares in 2 months.... doesn't feel like 1.1M a month to me...….more like what they can get away with as they have to pay wsg monthly irrespective of sp......B
Not really because they have a month to sell them. They aren't likely to dump the full 1.1M in one day unless we have a unusually high volume day.