Time for a major miner....10 Aug 2018 14:22
Hi all,
I've said why I think the valuations provided are optimistic and I've asked about how we deal with the elephant in the room : our low market cap and lack of financial muscle /alternatives.
With £ 50M market cap and £3M cash, we'd need a massively dilutive rights issue - say, 2 new shares at 20p for each share held - just to get to £ 150 Mcap and £ 120M or so in cash as support for the net £ 1,000M that we want others to lend the project. Ain't going to happen.
We have half a desirable asset with a finite life, GLEN has the other half, and a reported aversion to greenfield sites....BUT with serious credibility , financial muscle and a host of trading interests esp.in iron ore.
Once there's a green light on the other pieces of the jigsaw, as gta5 has said, it'll be game on, since the players will know there's actually a deal to be done.
At that stage, from most people's perspective, ZIOC has served its purpose and becomes a complicating irrelevance.
The logical step is for GLEN to buy us out and use its resources to extract as much value as it can from Jumelles. In the short term, by 'flipping' it, in the longer term maybe by committing on favourable terms to an offtake arrangement for 'our' product....
Ivan reportedly doesn't like greenfield projects (which this will be). Fine, it doesn't have to be on GLEN's books for long, it's a trading asset. All (!) he has to do is prime the pump.
The question then is : how much would he pay ? With 14.3 billion shares in issue, 1 : 1 GLEN/ZIOC would be barely 2% dilution and probably wouldn't even need reference to shareholders. At £3.25, that would give an implied MCap of £ 1,872 M (288 x 2 x 3.25), far more than needed to support any theoretical bank lending. GLEN's own cash resources are already sufficient. In other words, GLEN can negotiate with any prospective buyer(s) from a position of strength, because it has credible alternatives.
At £ 2per share (cash or 2: 3 in shares), that's still an implied Mcap of £ 1150M.
It's a long way from the numbers people have been talking about, but it's a good return for the core shareholders (I guesstimate sunk costs of about £ 100M, so maybe 40-50 p a share). It's ahead of the IPO price of £ 1.56 for those who still hold; it's not clever for the punters who ran the price up to £2.12 or so, but they're getting most of their capital back (which is a rarety for AIM); and - I suspect for most of us later to the party, esp. Keith Everitt - it's a great outcome in a relatively short space of time.
ATB
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