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How else would they pay the $100m? Chinese companies aren’t renowned for their benevolence, they want the asset and wouldn’t allow a situation to arise that Kod could end up with everythin and take years to pay it back from a mine they paid for. A placing or another investor would be the only way, it’s a far more accurate depiction of the situation than Laverda’s.
Lav, if the transfer doesn’t happen Hainan can claim the $100m through the warranties and indemnities Kodal have given. As Kodal wouldn’t be able to pay in cash then it would be a share placing of over 20bn shares at this price. In all likelihood if the two year deadline is approaching and the licences haven’t been transferred the share price will collapse as it will be evident that Hainan will make a claim, they won’t let it lapse as that would mean they could lose everything. This will mean it will be far in excess of 20bn shares which would give them near full ownership of Kodal. As such they would own the mine and all the licences that Kodal have outside of KMUK for the small outlay of $100m.
Howey, my point was the RNS does say something. Hainan have 2 years to make a claim whilst the licences aren’t transferred. Laverda made the toddler like claim that if the licences don’t transfer Kodal are in a better position as they can pay back the $100m over 2 years from the mine. This is complete fantasy and a significant point to get wrong. Understand the risks, they explain the share price.
You seem a well thought out poster George, what are your views on the 2 year period to make a claim? Do you think the RNS reads that Hainan can make a claim at any point in the next 2 years if the licences haven’t been transferred. Or do you agree with Laverda that Kodal have 2 years to pay the $100m once Hainan have made a claim if the transfer fails? It’s quite a significant difference.
No Clapa, I didn’t invest in Prem because I analyse all risks rather than viewing everything through rose tinted glasses. I’m simply discussing the points rather than making overly positive claims.
Have to wonder why the positive brigade won’t discuss these points, it’s as if they don’t have the answers. Nothing and nobody on here can influence the share price I just find it more constructive to consider the risks rather than ignore them.
Not very bright! I’ve simply called out all the mid truths you have told Lav. 2 years to repay if conditions aren’t met, wrong. Cash balance greater than market cap, wrong. £2m share buyback could increase share price 10 fold, wrong. People can check back and see these claims you made.
I have highlighted the reality and why the share price is where it is. Kod still carry all the risk and Hainan have none. This is why large investors won’t be buying in here until the transfer is complete, then Kod will be de risked and debt free.
Don’t engage in debate on a discussion board, genius idea. If there were conditions that protected Kod other than a good relationship with Hainan they would have been specified. It was Laverda that didn’t understand the RNS as he claimed Kodal had 2 years to repay the money if licence conditions weren’t met. Read the RNS, that is simply not the case. Don’t take issue with me, I didn’t make the agreement but it does she the difficult situation explorers are in.
Nothing in the RNS outlines the details of what can trigger a claim for the $100m. It reads as if Hainan can make a claim at any point in the next 2 years if the licence hasn’t been transferred, that is why there is such a risk. If they claim after a large chunk has been spent Kodal have no way of paying. I’m not saying this will happen but it is a big risk as Hainan will benefit.
George, I agree it will most likely happen but I was pondering what would happen if not as I like to consider all outcomes when investing. In any construction, especially mining, deadlines and budgets are rarely hit so it is worth analysing the possibilities. I took issue with posters questioning my ability to read or understand the basics when they are fully aware the details haven’t been given by the company so can’t be understood.
Pointless positivity at the expense of fully understanding a situation and claims based on fantasy don’t improve the investment case.
I do understand that the licences are held in trust until transfer is completed to give Hainan peace of mind. I also understand that the warranties and indemnities make Kodal liable for the $100m if the transfer doesn’t complete in two years. What I don’t understand is the details of the warranties and indemnities and how Kodal will cover them as the company haven’t given any details.
If you can’t explain something you seem to just tell me I don’t understand to make others think I’m being pointlessly negative, whereas the fact is you just don’t know the answer either as the information has not been declared. It is a genuine concern as if the licences aren’t transferred in time Kodal will most likely be lost to Hainan. 2 years seems a long time but they have already taken 6 months longer than expected.
The joys of putting a positive spin on everything is that nobody questions you.
Lav, I have justified everything I said with what is in the RNSs but I haven’t made any positive assumptions like others. It is you that failed to justify your claims that there is more cash than the market cap and a £2m share buyback would increase the share price 10 fold.
Hainan haven’t miscalculated as they haven’t paid for the licences, resources, data or knowledge Kod own. They have put $100m in to build the mine, which is what it will cost with a bit left over for exploration to extend the life of the mine. So essentially they haven’t put a value on the assets but paying for the plant to get future revenue. That’s not to say it’s not a valuable resource as it is needed for the plant and what attracted them but they haven’t paid based on the asset value but on the construction costs.
They haven’t made NAV calculation mistakes, the mistake lies with investors expecting the market cap to match the NAV. NAV won’t drive the share price.
Hainan haven’t made a mistake in their acquisition pricing as they have got an excellent, risk free deal and if the licences don’t get transferred it becomes an even better deal for them. It may not be debt on the balance sheet but it is debt until the licences are transferred.
Lav, I don’t hold other Lithium stocks as I believe in a balanced portfolio. I can decipher the RNS’s which is why i questioned you about the details of the indemnities and warranties, you claim they were detailed in the RNS but they are not. You are aware of this which is why you told me it was not a public service rather than discuss it, what’s the point in that? You happily highlight the potential positives so what’s the harm in discussing the potential negatives. Maybe I over analyse but when a share price doesn’t perform as expected there is often a reason rather than the market being wrong.
Lav, you say it will be repaid as per explained in the RNS. Could you explain the details of the warranties and indemnities because I haven’t seen the real mechanism explained in an RNS.
The point of my posts is to highlight the situation and be pragmatic rather than negative. Aim is littered with promising situations that didn’t come to fruition. Do you not have any concerns about this company?