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Sorry to hear about such a loss Isphahan; though im sure it's little consolation you're in company here with others who have sizeable ongoing losses as well. I agree that we will struggle to take the project much further. However on the face of it, the market is valuing the transaction at exactly the upfront payment of $15m, which quite coincidentally equates to around a penny a share - a level almost it seems deliberately designed to ensure that every single holder is underwater and is somewhat incentivised to hold such that RY and the BOD can sally on into the sunset to find a new asset and bring it to fruition. The cynic in me sees this for exactly what it is.
I can only think of the actual sale price of this transaction equating to $15m. I would behoove every other holder here to see it in this light - not the $105m staggered, personally guaranteed payment structure.
All the best
CBS
Hi all. I've had some thoughts recently on all this - took some time to digest and think on it - I do with these things. You look at a problem, step away for a while, look at it again - step away - and I think I've finally come to a few conclusions. Will cut to the chase: think I've got to go No on this one. With deference and true regard so many of the posters on here - many whom ive had personal communication with, who will disagree, I'll lay out what I think is simple enough for me to understand. WRT:
1.) My understanding from the interview and from the RNSs is that BOD have identified near production assets they can buy. That's all fine, but our guys aren't exactly stock promoters - they're mostly geologists. Outside of TB's experience, they're good at finding targets to dig up, so what value they'd be bringing to the setup is hard to understand. I find it hard to understand what they could buy with $15m in the bank and some personal guarantees for a near production asset that's any good.
2.) What other deals were turned down that made this one so attractive? Let us imagine a straight-up $105m offer. That's terribly unattractive for an always under-invested BOD. Should that take place, and a wind-up ensue, it means these guys would have to start all over again. A deal that ensures a $30m stream over ten years keeps these guys going, they don't need to bother with the tiresome capital raises. They can pay out what they will - see TDT's prior examination of intentions here. If I was one of the BOD, I'd want the deal to look a bit like this.
3. If $ funding is the reason this deal is structured in this manner, then how it is that $60m can be paid after four years? Surely that's too much too soon if there must be trailing annual 10 year $3m payments? It is hard to evaluate this without returning to the cynical conclusion this was structured to compensate a BOD that has always been lightly invested.
That is honestly about it. I cannot see this deal having been structured in any other way than as
1.) a second chance for a BOD that was always under-invested here, and for reasons legitimiately beyond their control (other than say owning lots and lots of shares) their payout will be low on this deal.
2.) sychronously giving the buyer a reason to make a quick purchase given the remarkably odd structure. I wouldn't be all that surprised if a version of these cash flows was presented to Spiv as an alternative to a similar all-out cash offer.
Imagine a world where an all cash offer was made at $105m. It looks me as though that means RY would have to head out cap in hand to raise funds on a new venture that hasn't been explored yet. This is a fast-track for him and the BOD to keep things running.
And honestly? i've got a fair whack here. This has always been a punt. And voting No in this situation is a punt - nothing's changed.
And again, all respect to other posters - these are simply my (very) basic thoughts.
As always
All the best
CBS
Indeed, I agree with you Sasa. Ill throw my literal tupence at this as well.
The deal is awful and reflects the reality that we are in wrt to the war/sanctions/etc...I wish I had some positive take away on this one but I really don't. The offer is low and opportunistic, however, that's how the dice has rolled this time. I could accept this much more easily if the cash was paid all at once and we could call it a day.
I hear that Rubarb - I think around this time of year we all believe in our patios a little more than a company!
I can see where you're coming from ART, but I think RY has been in similar dire straits before and didnt blink, notably during the GFC of 2008.
If there were debt repayments that needed to be made, then we'd be in trouble.
If we were reliant on $ funding, then we'd be in trouble.
If we had cashflow problems - which with a skeleton crew manning the ship, we don't - we'd have a problem.
If the corporate structure wasn't setup in the way it has been - Russian Co, Cyprus asset holder, BVI registered - then we'd likely have more of a problem.
If the Ni market was in the doldrums - perhaps we'd never even dream of a buyer in this environment
If we had infrastructure worth seizing, or cashflow generation that would aid the war effort - then we'd have a problem.
The actual problem? Yes, we're based in a country that has prosecuted a war everyone is (rightly against). So that eliminates Western buyers. RY has been saying for years that the buyer will likely be Russian or Chinese.
Sitting on hands - still the only strategy here - is the best to follow.
Anyways ART, best of luck
CBS
well well well...the Norilsk ADR is up some 1000% on the day apparently. But yes in response to wtf to do with this thing...
let's face it: the price now is essentially where the price was
- before someone in Euroclear started hovering these things up and
- before the bid (or asset sale etc...) likely related to that hovering up was outed.
AMC knows a market cap of circa £20m more than any other listed firm out there.
Which is to say the price is back to where the price tends to hang about unless there is something exceptional going on, which for this co seems to be very, very, very infrequently. And it's interesting to observe that as the price is back to pre-bid expectations, it seems there is no Russ-Ukr war discount in the price. Take that for what you will.
Which is to say: do what you've always done with this. Sit on your hands; the macro env for Ni is wildly beneficial, it's what we have, and if you've been invested here for any length of time you've become used to being patient with this.
All the best
CBS
Indeed TDT, at $15 /lb that should be more than enough to do it. Whats your opinion on how this price incentivises other players out there who may have put their operations into care and maintenance?
All the best
CBS
All conjecture. We barely have evidence of the first.
A competing bid from RCC makes some sense. As TDT previously mentioned, Tom Bowens sold his project to RCC some years ago. Tom is on the BOD.
Sensible Brookieboy. If you’ve been along for the ride this long sitting on your hands is pretty easy. All the levers are there for this thing to get snapped up when, inevitably, we get some peace. BOD are also rather good at sitting around keeping their heads down - probably their most useful skill set at the moment.
Dizzy - similar situation to you and I have to say I am considering a move to other shores for variously similar reasons.
best of luck all
CBS
Manuel: literally the only skill I picked up at school.
To Ronald and Roger: I accept your points here. TBH at the time just after the offer announcement I did query huge trades that were taking place any time the sp levitated toward 4p. I still cannot fathom how they could have been anything other than sells, and that neatly ties into the narrative that the potential acquirer, having spent some months buying quietly, used the offer announcement as a pretext to exit their position at what must have been a fairly substantial return.
All assumption on my behalf and as TDT has pointed out previously, the latest shareholder register shows that a large number of shares showed up in the Others account in the Feb update. What however may be the case for March I assume will be somewhat different. No idea.
That being said, lets examine the pros and cons here
Cons:
- KM is located in Russia, always has been, and that has forever weighed down the sp. That Russia is at war with Ukraine only amplifies this characteristic and I'm sure we can all agree that it is down to this that the sp has cratered recently.
- Minimal comms from the BOD: Again, nothing new here. Comms have always been quiet here, and perhaps no more so than recently where I would assume it's well-advised to keep quiet.
- TEO: official documentation has still not been released to the market when expectations for this as spelled out in a Nov 2021 interview gave the impression this would have been received and transmitted to the market by end of Q1 2021. Whether this would even be transmitted out to to the market in the current environment (see point above about keeping quiet) is another question. No idea.
Pros:
- Cashflow: There are few costs outside of RY's $ salary, and some other, much lower costs (rent perhaps, a study or two...) there are very few outgoings, and the sale of the NRR convertible note in 2021 secured $6,137,019 in July of 2021. Given the low overheads at the moment that's a good moat to bide our time with.
- Nickel: Obviously has done well. Whether the current quoted price of around $17/lb remains following the resumption of trade tomorrow on the LME is anyone's guess, however I don't expect prices to sink much and they could go much higher from here. Time will tell, but lets just say these aren't the $3/lb prices we saw back in 2018.
- Corporate Structure: Yes, the shares of Amur Minerals are quoted on the LSE's AIM. AMC itself is owned by a BVI registered company which in turn owns the Irosta Trading Ltd asset in Cyprus, which in turn owns the Kun Manie license. I believe this corporate structure was created to offset various risks such as those that we see today vis a vis action taken against Russian companies. May also work in favour of offsetting any suspicion that the asset may be yanked by the Russian gov't (Kun Manie itself is operated by Russian company ZAO Kun Manie), which is to say...
- Minnow: The co produces no cash, and the asset will no produce no cash any time soon. Not exactly worth the paperwork to se
Quite remarkable TDT, analogous in some ways to govt bailouts of financial institutions. Unlike printed money however, there can only be a finite of deliverable LME nickel at the SRB. I would imagine if the lowers that be go with that approach the market will smell blood and continue to bud higher. Nothing quite like the proceeds of throwing off a government operation that can’t possibly intervene endlessly.
Thanks for the article. If anyone else wants to read it the archived link is here:
https://archive.ph/JqCtd
another article from Andy Home here:
https://www.reuters.com/markets/commodities/nickel-devils-metal-with-history-bad-behaviour-2022-03-10/
Very mate. Heres another one from the WSJ that i've archived so you can all read it
https://archive.ph/IoiCw
Actually quotes a hedge fund that was long and it looks like their position won't be honored. I suppose thats in the terms of the LME, they can do that.
I'd say sit on hands. There's a gap to fill up to 11.87. The way things are going that's going to be closed soon I think:
https://invst.ly/xlkkk
Haven't posted here in a while, but have been actively involved in HUR since just after the court case and when signals from the bond price suggested this thing was gonna make it. Great to see that so many of you who were in back then and much longer before have stuck it out and are hopefully in a better position. Wheres my mate senseman? well done to you for keeping spirits up here (and wellintervention and divecentre amongst others).
Long may this continue!
all the best
CBS
for AMC, small mercies, but I think we keep our (modest, circa $6m I think) cash balances in GBP or USD, and our expenditure is likely to be in RUB.