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Been thinking of all the possibilities:
A) Ganfeng don't make a formal offer
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Reaction: The share price will most probably initially dip, however I do expect the price to recover, perhaps back to at least current level of 55p
B) Ganfeng make a formal offer
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B1) The offer comes in at 67.5p
Reaction: The share price will jump to 67.5p
B11) Offer accepted
Reaction: The share price should remain around the offer price of 67.5p
B12) Offer rejected
Reaction: The share might initially dip, but may recover to at least current price of 55p upon the realization of the potential of the asset, and the recent raising of the company's profile
B2) The offer comes in over 67.5p
Reaction: The share price will jump to at least offer price
B21) Offer accepted
Reaction: The share price should remain around the offer price
B22) Offer rejected
Reaction: The share might initially dip, but may recover to higher levels
C) A White Knight walks in with a superior offer
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Reaction: This will be an interesting turn of events and will increase the interest in the share and therefore the share price will most likely increase to around the White Knight's offer price.
Thoughts welcome on whether I have captured all possibilities and events that may follow.
I agree @cmsammy.
I too can't see why they would need additional cash, now that they will be awash with the proceeds of the stockpiles, as I had eluded to in a previous post of mine, I think 27% is the max. we should realistically expect to get.
But as they say, never say never !
@Lindi
In short, KDNC seems to have recently turned a corner, and IRONically (no pun intended) it isn't to do with Lithium. The Amapa project seems to finally come good, and we have started selling and shipping iron ore. The agreement with the banks is still outstanding but in light of the RNS from this morning, seems the delays are due to COVID running rampant in India.
Separately, BCN has received intention of an offer from Ganfeng, which has also had positive effect on the share price.
With regards to how high this can go, most LTHs here will know the full potential of KDNC, but this is likely to materialize in stages. Looking purely at Amapa, my personal opinion is that Amapa is worth at least around 65p to KDNC's share price, and therefore it should rise to around 70-100p+ once the 20% is in the bag.
As always, DYOR.
So WHEN (fingers x'ed) the current offer is rejected, do you think the BCN share price will re-rate to pre-RNS at 45p?
Or will this fiasco have increased the profile of BCN enough to support a higher price at current levels?
Does anyone here know?
I am keen to understand what the figure is - surely it'll be negligible in comparison to the price of the Iron Ore stockpiles sitting ready to be shipped. With the shipments having been started, the risk to the banks has significantly reduced, and therefore I can't see a reason for the banks to drag their feet.
Can't see what all the fuss is about.
Hey Folks,
Yes I did ponder immediately after my post RE the £23M that BCN will receive for the 53M new shares, so agree my maths was a little bit off.
But the interesting thing on that is that IF (BIG IF) the deal were to go through then, from what I understand about M&A activity, that money would circle back to Ganfeng as part of the the cash held by the company, so in effect Ganfeng's offer of 67.5, which is low by all standards, ultimately hands them their £23M back !!! Brilliant planning by the Chinese, and a double whammy for shareholders.
Finally, the current low share price has got to be with the fact that the market simply does not see the deal going through with the current terms - I think that's great news !
As many here have already mentioned, I too initially thought that buying in at current levels of 57p would be a no-brainer as the offer price is 67.5p and therefore easy money can be made. However after having done some calcs I think the market is correctly pricing BCN.
Here are some calcs:
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Current ownership of Ganfeng @ 17.41%
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Total Shares = 330,811,568 (from RNS of 3 Feb 2021)
Ganfeng's 17.41% = 57,594,293 shares = £38.8M (at offer price of 67.5p)
Remaining 82.59% = 273,217,274 shares = £184.4M
Total BCN valuation = £223.2M
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Future ownership of Ganfeng @ 28.88%
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Total Shares = 384,144,901 (from RNS of 6 May 2021)
Ganfeng's 28.88% = 110,941,047 shares = £74.8M (at offer price of 67.5p)
Remaining 71.12% = 273,203,853 = £184.4M
Now, the valuation should be equal to £259M (384M x 67.5p), however treat this transaction as very much a dilution of shares as new shares will be issued, with no change to the underlying valuation of the company, therefore the share price adjusts downwards accordingly i.e.:
£223.2M / 384M = 58p
So in short the market is, IMHO, correctly pricing at 57p.
Oh and BTW, I too think the Ganfeng offer is a joke. Let's reject this !!!
Agreed @EyeGuy.
With that kind of money being available from current assets, sadly I can't see KDNC ever getting to 49%.
27% should follow after 20% is secured, but new money won't be required and hence little chance of KDNC increasing their ownership IMHO.
Although BCN is currently domiciled in the UK , it wasn't originally a British company. Furthermore, most (all?) of its assets are outside of the UK ........
..... Is BCN really a British company? Does the UK Govt. have any powers to intervene?
Regardless, I still think the Ganfeng offer is an insult. £190M for a company that owns 70% of a $1.2B asset (and a couple of other assets bolted on). The management must be crazy to recommend !
@Ivans - several folks have had a go at KDNC valuations in the past. Someone did a really good (and extremely detailed) job of it but I forgot who it was (apologies, and hopefully someone will refresh my memory!).
Here's what I can contribute:
1) BCN
KM has said in the past that the value of KDNC's JV is 30% of 70% of BCN market cap. Using Ganfeng's "cheeky" offer this will be around £54.6M (70% of £260M = £182M ; Then 30% of £182M = £54.6M)
2) EMH
This should be easy as its 12% (I think) of the EMH market cap. So 12% of £133M = £15.96M
3) Amapa
I had done some calcs recently (feel free to look up historical posts) which evaluated the value of KDNC's 20% ownership ONLY using Anglo's impairment value of $660M. This came out to be around £96M (which BTW would contribute 64.7p on its own to KDNC's share price). Granted this is a very conservative valuation as it does not take into account the recent surge in Iron Ore prices, but I'd rather be conservative in my estimates.
4) Hastings + McArthur
Not doing the detailed calcs, but I'd again be conservative here and add another say £2M for these assets.
5) Copper
Do we have any Copper assets?!
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TOTAL = £168M
KDNC share price = £1.12
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I see the above as a very conservative valuation, owing to:
- Use of Ganfeng's cheeky offer price
- Surging Iron Ore prices
- Use of Anglo's impaired valuation
Happy for everyone's collective thoughts on this.
Agreed MrC - I recall some analyst once saying that BCN is sitting on $1.2B of assets.
Not sure if anyone's already done a valuation for BCN, but I would think its probably worth at least double the price offered by Ganfeng.
More good news on the Iron Ore prices. We need that agreement with the banks !
https://www.bloomberg.com/news/articles/2021-05-05/iron-ore-s-blistering-rally-sets-sights-on-200-as-steel-booms?utm_medium=social&utm_campaign=socialflow-organic&utm_source=twitter&cmpid=socialflow-twitter-business&utm_content=business