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@Pickedpick Yes thank you I have revisited the Indico tender, which has a very good map pinpointing Indico-1, Sol-1 and Aguila. As you say the road network looks pretty good. I still think the rig move would take some time but it is unlikely to have a substantial affect on the overall time period.

That being the case I am back to the proposals and discussions between the partners being the likely cause of the lengthier time table between Calao-1 test result and Sol-1 spud (46 days). If that is the case then perhaps we should be looking more towards the time frame between Indico-1 result and Calao-1 spud (assuming that the partners were indeed in agreement on the next drill).

If so then we should talking around 33 days. Today is day 30, so if that is indeed correct then the spud could well be announced from the start of next week.

That would certainly concentrate the minds of any potential suitors trying to strike a low deal.

@Bigsmoke Having read through the takeover Legal Guide that I posted here last Friday (which is a fascinating insight into the Takeover Panel process I might), the key take away at this stage is that there is no current deadline for a firm offer to be tabled. The formal sale process put pay to that when it removed the Put Up or Shut Up 28 day rule.

That said I would think that AMER will now look to establish some order to the process and I would not be surprised if they have given all interested parties the same 28 days that is reflected above. the 9th August announcement signaled the completion of the bidder list.

If 28 days has indeed been given then that would place the firm offer at around 6th September. However, I suspect with additional newer bidders now at the table and AMER wanting to secure the best bid through negotiation, the bid process may push out towards 42 days, so an announcement around 20th Sept.

Guessestimates aside, another key consideration is that any firm offer must be followed through by the bidder. Any negotiations that lead up to that firm offer are just that , negotiations, and therefore do not need to be announced.

That allows AMER the opportunity to 'discuss' possible offers and likely allow bidders who simply aren't in the ball park to fall away using a 'down tools' dispensation from the Takeover Panel.

Everyone involved will be walking a fine line because if rumors hit the market or the SP starts to move substantially then the Takeover panel may rule that an announcement needs to be made to ensure that all shareholders receive equal information on developments.

However, if AMER manage it well then there is no reason why we won't end up with 1 announcement of a firm offer from one party (possible sell off individual assets accepted) and that the BOD will both recommend the offer and give irrevocable undertakings for their shares with highly likely a number of major shareholders having already joined them.

The key of course will be how far the failed bidders are able to push the true bidder, a process we may never get to see. Although if the end price is palatable I really won't care too much.

@cautionyourblast Working back through the pasts over the last few days I noted your opinion on the timelines for the spud at Indico-2.

My own thoughts are that the Calao-1/Sol timeline is likely the best guide for the time that ONGC are going to employ to get the Indico-2 drill going. I base this merely on the fact that the 2 drills are the closest match to the distance between Sol-1/Indico-2.

However, even then Indico-2 is a good 3-4 kms north of Calao-1, which is 50% more distance than that between Calao-1/Sol-1.

That's not to say that the distance is the key here, after all we are talking 46 days between the Calao-1 result and the Sol-1 spud (11th May - See RNS dated 14th May). That said I have no idea how the terrain is or how convoluted the path is between these pads but at the very least it cannot be all that straight forward.

Whatever the case Calao-1/Sol-1 is the most relevant example and as I have said it took 46 days between the two. However, as I have said previously there was clearly some discussion between the partners over the next drill site because AMER actually announced Indico-2 as the next drill when the Calao-1 result came in.

JW said at the time ;

"Amerisur has recommended to the Operator that drilling focus should return to the Indico structure for the moment, with the drilling of Indico-2, a low risk appraisal well. "

To date it has been 29 days since the Sol-1 result.

Opinion wise I lean towards the drill starting sooner than 46 days with spud within the next 10 days or so based the average performance across all drills since the Indico-1 test result but somewhere around 46 days shouldn't be ruled, as excruciating as it may sound.

@cautionyourblast The notification of results last year was on 7th Sept and the results 25th Sept. The date you have employed refers to 2017 when the notice was 24th Aug and the results 13th Sept.

Your post prompted me to visit the AMER website, which I noted has been overhauled. Perhaps this was already under construction prior to the takeover process starting but still of small interest at least that they are still concerning themselves with such things.

@Rosannan Fair enough. Your opinion is respected. In my view Indico 2 will deliver a substantial uplift in reserves and will boost the confidence of the market in CP0-5. Therefore, the current valuation of circa 17.3p holds no demons for me.

My plan was always to review my investment at the 2 year stage, which is circa end of 2020. Whilst things have been much slower than i had hoped for, I cannot see 2020 being anything other than a very busy year for the blocks AMER are involved in.

In 2020 ;

OXY will drill the Putamayo block ;
ONGC as slow as they are are clearly setting themselves up for a substantial increase in drilling activity on CP0-5 ;
Put 8, which is currently awaiting regulatory approval for change of ownership and drilling inside the block acreage, should achieve this by year end, setting things up for at least 2 drills in that year.

I am more than happy to wait that out. Those developments even in a restrained oil pricing environment should see some good value added from these levels. The sort of value that should have come this year.

Yes there is argument that AMER is a serial underachiever, but in 2020 much of the work is out of their hands and there is an argument to be had that 2019 was needed in order to enable 2020 to really deliver.

So whilst there might be some short term pain, I don't have any concerns. I have a greater concern that the BOD bail at a level that is too far below what all of that 2020 could potentially achieve.

As for the market getting the valuation wrong, well what exactly does it have to go on?

At the moment we have one "possible" offer but no firm offer and an intention to move forward with such an offer. Other than that we have a confirmation that "multiple parties" have agreed to take part on the process.

Therefore, the market has to factor in the possibility that these parties may walk away from the table. If so we are back to valuing AMER on what it has and what it is achieving to add further value to the business. Prior to the offer that was valued at 12.1p. Since then we have had very little to add to that and Brent oil has pulled back a couple of dollars.

Therefore, the market is highly likely hedging its bets until it has more information to work with. So to say that the market is factoring in a good percentage of the final valuation is for me incorrect. It is more about the risk reward between achieving the rise and suffering the fall should the process fall through.

One other key point I would like to add is that whilst AMER operational progress has been limited this year, there are at least 2 sizeable drills that are on the horizon, they being Indico 2 and 3 appraisal wells.

If the takeover isn't completed fairly speedily then at least one of those drills could well be completed. If it delivers the sort of additional reserves that have been strongly indicated in the previous CP0-5 updates, then the whole valuation will need to be reviewed, as will the starting point for it.

That may or may not be placing pressure on potential suitors interested in CP0-5 to finalise and position their bids at an appropriate level to ensure that their bid is accepted and Indico-2 never influences the process. If I was on the team of one of the suitors it would certainly be on the agenda.

That is yet another factor that throws any assessment of the market's valuation or indeed the willingness of the potential suitors to push their offers higher than the norm. For all we know they may factor in circa 50% of a good success at Indico in order to ensure they get it over the line and achieve the greater overall prize.

We are very much in a wait and see stance with the market likely to react as the risk is seen to either dissipate or grow.

Rossannan As it stands, I tend to agree in part at least with your general direction.

This is because my previous experience of AIM listed takeovers tends to demonstrate that the sort of fair valuation that PIs believe should be achieved does not normally come to pass.

However, there are several differences here that should not be so easily written off simply because history says that is not the normal way of things.

Firstly, there is no hostility being demonstrated by any interested party. By that I mean M&P own no shares in AMER at this point in time and with the takeover panel in play, they cannot purchase shares without it being notifiable. Under takeover panel rules they also cannot hide said purchases through other parties, so the chat about funds purchasing on behalf of them (which I was involved in too) was incorrect. Assuming of course that everyone is playing with a straight bat, which I do until demonstrated otherwise.

If M&P intended to go down that route then they surely would have started to accumulate shares prior to making their approach public and allowing AMER to trigger the strategic review thus making everything public.

Secondly, AMER are choosing to strategically review the business, which includes a possible sale of the business, be it in parts or as one entity. At the end of that process if they have not received an offer(s) to their liking then they do not need to sell.

The combination of these two facts means that the process comes down to what someone is willing to pay and the BOD of AMER openness to accepting that offer, knowing it has to be put forward to all shareholders.

Of course the key is winning over the BOD and getting an offer recommended. Experience elsewhere tells me that this can be done at a level that is significantly below that which PIs would believe to be acceptable. However, it will be about balance and what the major shareholders indicate is an acceptable point to bow out.

But as i say the fact that no interested party holds any position means that the starting position of 12.1p (18th July day prior to Strategic review announcement),is not entirely reliable as a start point for your argument. Nor do previous historical cases including the ones I have seen hold a great deal of bearing either.

This is especially true when we fact in the company statement that "multiple parties have now agreed to participate in the FSP through the signing of a confidentiality agreement" (RNS 9th Aug). That fact alone ups the anti and removes a good percentage of all previous "AIM oiler" takeovers.

So to simply base the result of this particular process on previous experiences is for me a mistake at this time based on what we know to date.

That said I remain cautiously in the range of 24p - 30p camp because I expect the final price to fall significantly below the 'independant' valuation because that's AIM life. However, AMER has as good a chance as any to buck that trend.

I am acutely aware that we are attempting to define something that likely cannot be defined. It is merely fun to try to work out so my post shouldn't be taken too seriously.

I am certainly of the opinion that this i all about Lombard and that their actions of holding the price around the 50-55p mark would at the very least put off other potential warrant holders because the return on their warrants would simply be too limited to justify giving it away and having to commit t paying for them.

They are a free carry on the drill and until they deliver a healthy return I do not believe they will be introduced. Even the 40.7p ones were 'only' circa 30% in the money, which for me is the sort of minimum threshold we should expect. However, if so then where are the declarations. We haven't had a single one to date.

This is possibly because as I say they are a free shot at a very high return if the drills come in, so why waste them in and around 50p unless you are someone like Lombard who has a very large pot that was acquired at levels well beloe this and so can book circa 35-40% profit and not lose anything along the way.

Whatever the case I am sure this particular process will end abruptly and the SP will spike at some point because as I say the current price is very attractive and the closer we get to the drill result the more interest the chasm between the two points will drive.

@sankeys Appreciating it is all just opinion and no one but Lombard can really say what their strategy is, I would offer this.

To date since Lombard took ownership of 6,058,407 shares on 10th June for their £3m commitment to the junior funding, they have sold 2.02%, which equates to 1.89m shares.

Less than 1 month prior to this date (13th May) Lombard were increasing their holding to 13.14%, which was the position they were at when they committed to the additional £3m in funding to help get the junior facility over the line.

Given that they will have known that the drilling was due to commence by at the earliest mid July, it would be a little strange for them to be increasing if their intention was to then start dumping what is a big holding once the spud on what is a short drill period, began.

What that says to me is that they are more likely simply de-risking the £3m investment, an investment they clearly never planned to make, by either clawing back the £3m in order to leave themselves with a free carry element or by offsetting the £2m of warrants they gained for their funding.

For case 1 the target could be the £3m and the desire could be to achieve as high a price as possible in order to maximise the free carry share element. 1.89m at circa 52p average sale price (the evidence shows that the majority of sales have come above 50p) delivers around £981,000, so they are potentially one third of the way there.

If so and they keep to their strategy then there are another 3.88m shares to go at 52p average. That may seem a lot but as the drill result date moves closer it is not unfair to expect that the buying pressure will increase. If the drill takes the full 30 days, then there are around 18 trading days to go until the result, which is on average 215k of shares a day, which is nothing in the grand scheme of things.

In the second case the £2m of warrants at average 48.1p would be equivalent to 4.16m shares, which would mean they have circa 2.28m shares to sell over 19 days = 120,000 per day.

Of course their strategy may be a combination of both but in the case of the warrants it is a no brainer because they can sell 4.16m shares now knowing if the first drill is successful they can acquire them back at a guaranteed price, which they know doubt will, likely shortly after they have sold them for a tidy profit.

So for me the minimum target is 4.16m with circa 2.28m to go pre-drill, with the possibility that there is another £3m to go from the placement, but as I said before their apparent comfort zone was 13.14%. 4.16m shares equates to 4.59%, which when taken from the 17.92% = 13.33%. So not far away.

Who knows?There are many options and only Lombard truly knows. What I am certain of is that as a minimum they will sell those 4.16m shares because they don't need to take the risk when there are warrants guaranteeing them that stake later down the line.

@Rosannan With all due respect there is no merit in comparing previous unrelated strategic reviews and their affect on valuations with AMER and attempting to establish a direction. None of them from what I can see even received an initial offer.

Each situation is unique as I indicated in my earlier post. Hence why I only focused (fairly loosely) on the average timescales it takes to review a public listed AIM company.

You are entitled to go in any direction you wish but in my view it is energy wasted.

Looking more closely at the Takeover rules I see that my thought process from earlier cannot be entirely right.

Even though M&P never made a formal approach their communication to the BOD that they were considering a possible offer was enough to trigger the Takeover process and would have required them to make a Put Up or Shut Up offer within 28 days of the initial announcement.

The commencement of a formal sales process by the AMER BOD interrupted this process and means that the Put Up or Shut Up rule (28 days) has been removed from the equation.

However, an announcement is required "when a firm intention to make an offer is notified to the board of the Target by or
on behalf of the Bidder (Rule 2.2(a))."

Furthermore, an announcement is also required when "the Target is the subject of rumour and speculation or there is an untoward movement in its share price and there is reason to believe the Bidder's actions have caused this"

"The financial advisers involved in the takeover offer will closely monitor both the Target's share price and sources of information relating to offers (such as newspapers and 6 newswires). The Panel must be consulted whenever there is a significant movement in share price over the relevant period or rumour and speculation about the possibility of an
offer, so that it can determine whether an announcement should be made."

So whilst the negotiations will remain behind closed doors, what each bidder cannot do is avoid a firm offer being made public. Therefore, the process has the potential to unfold far more openly. It will be interesting to see how that plays out in reality.

As it stands until there is a firm offer there is no deadline and the strategic review can in theory go on indefinitely.

file:///C:/Users/KRISTL/Downloads/Guide_to_UK_Takeovers.pdf

@MadasaHat Thank you for coming back to me. I understand a little better now. Lets not over complicate things. September isn't all that far away so lets wait and see. I look forward to reading your updates in due course.

@Rossannan I haven't gone that far with it and do not think it would be of worth. Each process ran completely different to one another. each company was is a different position in terms of stability, stress, valuation to NPV etc etc. So it wouldn't for me add anything.

I merely wished to establish a rough expected timeline for the strategic review so that I can appreciate that within the context of where we are. It does look to me more than possible that all of the offers and counter offers will take place behind closed doors and it is the conclusion that we will see, be it to our exact liking or not.

After conducting a search of AIM companies that have completed similar strategic reviews and sale processes, I have thus far found 5 examples.

Company name - Strategic review start - Strategic review announcement - Time period

1. Netscientific - 26.11.2018 - 15.02.2019 - 2.5 months
2. MySale - 24.06.2019 - 20.08.2019 - 2 months
3. Realm Therapeutics - 29.11.2018 - 15.02.2019 - 2.5 months
4. EKF - 02.04.2015 - 18.08.2015 - 4.5 months
5. Frenkel Topping Group - 03.04.2017 - 27.06.2017 - 3 months

The comparison isn't perfect and the circumstances certainly cannot be declared as being the same, although there is some evidence of discussions with potential suitors. What is immediately clear is that the shortest time frame was 2 months and something up to 2.5 months certainly isn't uncommon.

AMER announced their strategic review on 19th July, so we are just 1 month into a process that is demonstrated as taking normally at least twice that time period.

It will be interesting how that times itself with the Indico 2 spud and drill result because from what I have read of the other strategic reviews, be they a limited list, the end of the review tends to deliver the result of how things will move forward.

One sizeable caveat is that AMER has declared more than one suitor that may or may not want parts or all of the business, which makes it more complicated.

The Frenkel Topping example was similar and their process took 3 months and ended with them accepting none of the offers put forward, although from what I have read of their review they look to have entered into the formal sale process in order to control the strategic review process and were not actually looking to sell out. AMER is clearly very different and look to be at the end of the line.

Still it sits as an example of how long a process can last when several potential suitors are involved. It also demonstrates that the conclusion of the review could signal the end of the process and deliver an offer(s) and recommendation from the BOD. Who knows? But for me another month or two should be allowed for before any anxiety over updates kicks in for sure.

@MadasaHat Apologies, I have only just picked up on your thread in full dating back to 21st May 2019. Firstly, thank you very much for your efforts and willingness to share your research and findings with us here.

You provide some very accurate timelines, which sits outside of what I understood them currently to be, which if true could improve the first production date that I currently anticipate for the plant.

Following the Q2 update searched high and low for the final EIA submittal without success. Do you have access to a document that can be shared here to verify this date?

Furthermore, how are you able to be so sure that the final sign off will be on or around 9th September? Please excuse me if these questions come across in a doubting manner, that is not my intention, I am a facts man that is why I always try to include documentation with my posts to verify my points, and so would always seek the same from others.

If you don't feel able to share this data then I understand. If we don't ask we don't receive.

Well that is certainly debatable.

In very simple terms if one looks at the current assets ($25.3m) v current liabilities ($26.1m), then there is very little to choose between the two. The trouble is the timing of the payments with the $11.5m outstanding payment for Coringa being the key headache.

However, on the positive side of things the company is holding nearly $7m in inventory, which potentially should gain some good value given gold prices are circa 15% higher. In addition, the company has another 6 months or so of earning potential prior to that final payment being made.

In addition, a good lump of the current liabilities is their outstanding secured loan, which going by the 2018 accounts, should also decrease by a good margin over the second half of the year. Therefore, their ability to re-negotiate or indeed replace this facility will have increased, particularly as they have now swung into profit and revenues are expanding.

That all said, I am not writing off dilution completely, but if it comes it should be fairly limited in comparison to the assets that it would be designed to acquire and the path those assets would then set SRB towards.

Coringa also requires development costs but again we don't know for sure how they intend to proceed, be it with a strategic partner or alone etc. What we do know though is that the PEA will confirm further sizeable resource, which can be employed as a security for further more expansive finance and this can only be helped by the increase value that higher gold prices will bring.

For me the gold price whilst perhaps seeing the odd correction along the way, will only strengthen over the next 12-18 months, which will fit very well with what SRB are attempting to achieve both financially and production wise.

So personally I do not have any concerns over dilution if it comes because the company's financial position looks solid and so the risk of the need to raise sizeable funds is limited, and the benefits of said finance far outweigh any loss of ownership along the way.

Good morning all,

H1 results demonstrated an average achieved gold price of $1,287 per oz @ R3.83 average = R4,954 per oz.

AISC was $1,085 per oz = $202 per oz gross profit = R774 per oz.

The Brazilian gold price over the last 9 trading days has averaged a price consistently above 6,000 real, which means that the average H2 price of gold as of today (53 days into a total 184 day period) = R5,497 @ R3.86 = R5,497 per oz.

That equates to a R543 per oz difference, which in theory currently increases that R774 gross profit by circa by over 70% and that figure is rising by the day.

For instance, a hold at circa R6,000 per oz and R3.86 exchange for the remainder of Q3 (39 more days) would deliver an average gold price of R5,710, which would equate to R756 additional gross profit, which if the same AISC cost is maintained would be a circa 98% increase on the H1 average.

The analysis isn't perfect as there are no doubt other costs attributable but then it doesn't need to be. One could easily argue that the current guidance should deliver increased production in H2, which will further reduce the AISC.

The key point for me is that H2 is well under way and each day the gold price is consistently above the current average price for H2, which itself is leaving H1 in its wake. That isn't reflected in the current valuation here or indeed the level of trading we are seeing.

I accept that the company has finance to find to pay the remaining circa $11.5m Coringa purchase cost by year end and that question mark may just be keeping the interest tamed. However, a consistent H2 in line with what I have just described above will certainly go a long way to assisting that cause and the strength in gold prices should give SRB better options for how they raise that finance also.

@Fyoz with all due respect I believe you are over simplifying things.

As it stands the capital outlay to achieve 8,400 mtV actual production (10,000 mtV production nameplate capacity) will, in the case of Vanchem, take up to 5 years to execute. This decision was clearly taken in order to respect that same vanadium price cycle that is referred to under item 3.

Even on reduced earnings, which will highly unlikely remain the case over a 5 year period, the company is going to generate more income than it requires for the $45m refurbishment of Vanchem. It is therefore, as is the case with the majority of public listed companies, going to set aside a fair and reasonable cash balance that has sufficient additional leverage to ensure that this goal is indeed reached along with items 1 and 2.

Over the course of those 5 years there will come a point when the cash flows outstrip that amount. This is particularly true when one includes the additional staged production increases that will be achieved at Vanchem plus the additional revenues that a fully operational electrolyte plant will deliver. Therefore the situation will be one of expanding income and fixed (contingencies respected) capital investments requirements. Hence why the dividend will at at the appropriate time run hand in hand with the expansion to 10,000mtV nameplate capacity.

As time passes these dividends should grow and act as a means to demonstrate to the market that the company is expanding thus driving higher valuations.

If as I do you to date trust the management of BMN then any decisions on further acquisitions, whilst worthy of review, should be taken within the context of that trust, BMN's desire to build a substantial business and what that acquisition would mean for where we will have arrived.

After all they hold the rights to over 440m tonnes of vanadium and at 10,000mtV nameplate capacity will be the 3rd largest vanadium production company in the world and the largest outside China. So if they then decide the demand is there to expand further beyond that level of production then it will mean that the energy storage market has been realised and is large enough to cope with it. If so then by that point BMN will be at a higher enough valuation that any further acquisitions or indeed investment wouldn't take the shine off this story, whether there be dividends in play or not.

@Fyoz Nowhere in my last post did I refer to dividends. My post was centred around the company achieving closer to its true value once it becomes fully integrated and can demonstrate the revenue streams that come with that.

That aside the list you have enclosed refers to an order of priority but I have never believed that the company means one item needs to be completed prior to the others being activated.

In the end it will all come down to cash flows and that will be enhanced along the way by more production, alternatives sources of income, or indeed higher vanadium prices. The company's plans will have a fairly robust set of calculated costs against them. Once revenues start to exceed a level that gives the company security of its position on items 1-3, then item 4 "return cash to shareholders" will be activated and not before.

Vanchmem Acquisition RNS dated 1st May 2019

"The Company plans to finance the entire Consideration and associated capital expenditure from the Company's existing cash resources, future cash flows as well as, to the extent necessary, debt facilities which are currently being negotiated."