Member Info for dictumdedicto

FOMO (Fear of missing out) finally dawning on people. I also think that a lot of the open offer switching around has probably finished (I also engaged in this) and that we are now seeing cleaner market activity.

Agreed. I don't think arguing about last year is very helpful given that 2023 is all about getting the best possible sale price rather than seeing the SP steadily increase.

I still think a share price equivalent value of 60 - 65p is possible but I don't think we will see that in the SP. My guess is that if we got 65p's worth of value out of a deal the SP would march up towards that but would fall short. Many will not wait for the cash distribution and could well sell on the way up, thus suppressing the rise towards full value. As for me I have not yet worked out the balance between selling a few after the deal is announced and waiting for the cash distribution to arise. Tax will play its part. I'll probably wait for the cash with those I hold in my ISA but sell some (or most) of those held in my trading account. As it stands at the moment in 2022/23 all my losses (mostly a CNR sale) offset my gains so I'm still left with close to £12k CGT allowance. It's a bit a puzzle and impossible to get anywhere near completing until we have sight of deal terms.

Meanwhile, it's good to see a few buyers back on the scene. As ever a handful can move the price.

I'm attempting to switch some shares from a fund and share account to an ISA but can't get a quote. Are others still experiencing the same thing?

I don't think people are too concerned about the SP given where we are. Also, it's so close to the offer price I think on balance it will more likely tick up a little rather than down. Anyone selling at current prices is guaranteed a loss. It makes a lot more investment sense to wait and see what unfolds. As mentioned already I've got a bit on money put to one side in case there are any day traders who think a few weeks, maybe months, is a long time. I'll be quite happy to pick a few up at 13p or 14p, not that I think it's particularly likely.

You have to remember that not all shareholders were eligible to participate.

Read my earlier posts on insiders buying. The directors would not take part to avoid the risks of being accused of insider trading. Knowledge of NDIs alone would be enough to form the basis of an accusation. I would have been stunned if any of the directors had taken part.

Agreed. When selling shares at 25% of the underlying value (and so close to resolution ) is taking place you know that games are afoot. I've got some cash put aside to pick up shares should the price drop below 15p.

I highly doubt that any insiders have been playing games - it's just not worth their while. Would a prospective purchaser of the assets trying shorting as a method of influencing discussions? I don't think it's too farfetched given how small a quantity is needed to shift the price in any direction. Maybe PIs playing with CFDs? Who knows?

Not too sure about the capital dividend aspect. The distribution could get a bit complicated depending on how they do it. Dissolving the company might be an option in redeeming capital as might purchasing own shares. We are getting into less well trodden areas here most of which require some sort of HMRC permission in one form or another.

https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm17580

After distribution the shell will have a value. It could be used as a vehicle for a reverse takeover by a company completely unrelated to mining. Thus you could end up with shares in a property, retail, leisure outfit. If this did happen you could expect some pretty significant watering down in the process, but you could still end up with something.

Of course JM/MC could also start another mining venture, perhaps retaining £10m as seed finance to kick it off.

I'm looking for about $150m, say £125m; about 60p asset value per share. I'm also assuming that the assets in their entirely will be sold in the vehicles within which they are held. In other words the Nic subsidiaries, the companies.

By the time of the sale at least £40m will be owed by the subsidiaries to the UK parent. This I would expect to be a cash settlement so you can knock £40m off the £125m straight away. Instead of having amounts due in CNR's balance sheet you have £40m in cash. The rest of the £85m, ex a few costs will be subject to UK Corporation Tax, currently 19%. CT is jacked up to 25% in the not-too-distant so I'm hoping that the deal is signed before March 31st 2023. Let's say £15m on taxes to round the numbers - there may be a few losses here and there to offset but I'm guessing that the losses ended up in the Nic subsidiaries (the loans). Take £15m off the £125m and you end up in the region of £110m, most of which will be distributable as a special dividends.

The share price should lift to a respectable levels once the details of the deal are out. It's highly unlikely it will hit 60p. I'll take a run at this and suggest that it will top out about 40p. If it does then none of the warrants\options above this level will be exercised so I'll guess that about 232.4m shares will end up in issue. In other words a value of about 47p/share but a market price of about 40p. I, and a lot of others like me, will probably sell a few on the way up leaving a rump for a dividend distribution. In other words minimise personal CGT and dividend taxes. I've taken some gains and losses this year but still have a net CGT allowance. I intend to use all this up before taking any dividends. I'm also sitting on a couple of other losses so can effectively clear all my losses with (hopefully) some moderate gains on CNR.

I've got a feeling that this will run to the wire at the end of this tax year so we could see CNR tread water for ages before sudden volatility as we come to the end of March.

Looks a bit strange, however you look at it. £32k sold at 15.10 and below the bid? Not to mention why you would sell guaranteeing a loss when millions have just been allocated at 15p.

I think everyone has had the same thoughts over the last week or so. It's tough committing more funds when the SP is so low. You tend to think that the market knows something that you don't, notwithstanding the fact that short term prices on almost any share can go anywhere. I can understand anyone holding fire. I've actually taken them up and have liquidated some other shares for cash in case it drops below 15p. In essence I struggle to validate current market cap on any other basis but short term sentiment plus a bit of lower cost positioning. If you take the land and mill off the £25m or so marcap you end up with a BFS P&P M&I off less than $25 vs. an industry average of $160. I just can't get my head around the delta between what the industry thinks BFS resources are worth and what the current marcap is. I went for the offer because I think the underlying assets are being fundamentally mispriced by Mr. Market. A sharp reversal is due.

I'll go for the 'business needed the money and the price were the warrants argument'. I think that would be a fair rebuttal.

In a nutshell, exercising warrants\options is prohibited during a closed period (I'm assuming Feb\Mar 2023 on this one) and carries 'risks' beforehand, given the situation with the asset sale. Under the Market Abuse Regulations exercising such would risk a presumption of insider trading.

As such I'm rapidly coming to the conclusion that any activity on the share front now looks unlikely. I'm not even clear how JM could exercise the warrants under the loan deal given his involvement in the asset sale process and MAR aspects. I have to assume that the lawyers have been through this and legitimised it.

Attached slide 17 answers the question I raised on options\warrants:

https://shareplanlawyers.org/wp-content/uploads/shareplan/SPL-training_MAR_28-May-2020.pdf

I'm also looking at the close period. The annual results were published on March 29th last year so this year's will probably start at the beginning of February. That leaves January and the next couple of weeks for officer\insider trading.

Why would you exercise options/warrants above 22p when you could buy on the open market, at least until the price reacted.

I'll throw this out to a discussion. I'll be interested in views.

Would you, as an officer or insider holding options of warrants above 22p when the SP is below that figure, buy in anticipation of getting a good return through a later dividend?

I'm also not clear on the rules relating to exercising options/warrants if you are an insider/officer involved in, or have knowledge of, the negotiations.

For the record I'm not too sure anyone holding warrants\options above 40p would go for it. There are a couple of million at 22p which might well be tempting.

Not much sign of a Santa Rally emerging this year. If anything the recent increase in interest rates to 3.5% is killing the general market as it anticipates interest rates putting us into deep recession in 2023.

As for Condor I'm in two minds about what might happen to the SP. On the one hand the thinly traded Christmas period could knock the SP below 15p, albeit I'm not clear who would want to sell and why anyone would want to sell. Selling above 16p to pick up 15p in the offer makes sense so there is some logic to the price dropping from 20p - 21p to 16p. I'm therefore coming to the view that the SP could well see a bit of an uptick. There will perhaps be a bit of profit taking on the back of a 15p base, although I think most investors will want something more significant than a penny or two.

Another thought has also crossed my mind. If the price stays below 22p for weeks, or months, there will be a substantial bonus in options not being exercised and warrants not being taken up. This would reduce fully diluted from 244m by around 30m to 214m. The benefit of lower dilution is greater than the cash raised by these freebies. These are still estimates as we can't really get to better numbers until we know how many open offer shares will be issued; info that should be available before Christmas. I reckon this could be worth 7p - 11p value per share on my back of the envelop calcs. Of course an announcement of a robust sale price would encourage a lot of buying, and selling, on the day of the announcement.

As ever, another wrinkle in this complicated scenario.

There may well be an RNS announcing the results of the fund raise next week. Whether it moves the price will probably depend on what Mr Market as a whole thinks is a successful exercise.