Member Info for freefaller

@tomamara

RNS button at the top.

25 Nov - Operational Update

28 Oct - Abra Exploration

16 Oct - Quarterly Update

... And goes on.

I'm funnily enough on the fence with this, but certainly leaning far more to the go for it side quite heavily to be very clear..

It just seems unfortunate that the MTL share price over the last 6 months hasn't really reflected the no debt and cash flow value from the current mine. I think we put it around the 10p point from the top of my head.

If we had been at the value of pure cash, then to have placed that offer for CNR the dilution point (assuming the same value of offer) would have been less, the 33% just feels a little high as we have Abra already afterwards...

Dilution is going to be necessary, and I'm not against it in any way because we're all going to have a bigger piece from a bigger pie for sure!

I had hoped that some work with the local community miners in the other regions may have started and brought in some more revenue first firming up the share price more to the real current value of MTL.

On the flip side.... With CNR at 28p, minus ~10p cash, that's 4 MLT shares for 18p.. So a MTL share at a cost of 4.5p, compared to 5.7p ask currently.... If you can manage the risk of the deal passing or not.

Just a thought.

I'll bite (sorry hashing this out before I walk into work so won't easily reply until later).

IMO I don't think it's a great deal for MTL. MTL is already exploring other areas in the Philippines with a drill program and has other opportunities with helping local communities to assist their gold extraction in the country and get a revenue stream here. That's a great use for the money from the current mine.

I think this is a good deal to assist CNR in moving forward to get a mine going to form a group and bring that mine into production... So believe this is a jam tomorrow offer with the shares, but also CNR shareholders having the benefit of other MTL pipeline activities.

Was in 2 minds about posting this as some want less MTL discussion and talk about that company which I completely appreciate.

Sorry, have to stop the post here. I'll be back later.

Indeed, the issue CNR appear to have is that at the current share price of MTL they aren't getting enough 'Jam Today', when a lot if us LTH in MTL are acutely aware that the current SP is not reflective of MTL as it currently stands.

I wouldn't be surprised if MTL do not increase their deal (the number of shares issued then values a MTL share at 6.1p with the remaining mine cash (The £200 million from the current mine minus cash paid to CNR holders)) because CNR need someone to come and create the mine.

IMO CNR need MTL. MTL doesn't need CNR in the same way, especially with Abra. Eventually CNR will run out of road (20% interest on a £475000 latest loan), then it'll be down to the liquidator and from my last painful experience with that ... It doesn't end well for the shareholders who hold the asset ... At least the MTL offer let's them have a bit of Jam today and jars of jam in the future as well from other MTL assets

Indeed, profit is spread over a life of the mine and a seller always should aim for favourable terms, but at the same time say a buyer was getting a ready to mine resource and asked to pay the full amount of the expected contents minus expected cost to set up the mine on the day of purchase.... who'd be crazy enough to do that because you're taking on a loan to pay off (or refill your bank account) and it's only hedged against the (hopefully) rising price of gold. Just a pure extreme of a high payday compared to a lower payday at acquisition.

This is why I think that most of the value of the resource won't be seen with an upfront payment and will be more in paper.

At the same time, from the MTL side, more paper is more dilution and that's dilution as well of MTLs existing assets from existing holders. There are further prospects MTL are exploring as we speak, so as much as more shares are wanted, if these are updated sooner rather than later the number of shares offered could also be adjusted to be less if MTL has a rise as a £ comparison.

Thanks SurreyNot123 and slowlyslowly for the responses :)

Yes, exploration companies are notoriously loss making until there's either an asset sell, they're acquired or become a junior producer. Thanks for the explanation there slowlyslowly as well as I was sure I was missing something...

I can see where the distaste in the £60 million is coming from - however it sounds like it's the debate about what level of renumeration is desired now vs delayed through the actual actioning the mine. Also, the 4 MTL shares being offered are not restricted in only seeing profit from the CNR assets ... MTL itself is already banking cash that those 4 shares gain the rights to... so with the current mine MTL has a quick napkin calculation below :

MTL after CNR shares added has 2,946,120,867 Ordinary Shares issued.

MTL after extracting existing mine and is just a cash shell, minus ~£20 million cash given to CNR holders would be ~£180,000,000

Therefore, MTL shares worth 6.1p (ignoring anything beyond the current mine). 1 CNR share is now ~4 MTL shares, so 24.4p plus 9.9p already as cash is 34.3p given to CNR holders from MTL asset generating assets.

Then if the CNR resource is £800,000,000 profit (just roughly picking the number here.....)

That's a further 27.1p per MTL share against the whole MTL share issue..

So that's a further £1.08 per CNR share (ie 4 MTL shares).

I make that ~£1.43 per CNR share paid out with that offer and MTL taking the mine to production and then distributing the proceeds through MTL shares.

My only point here is that the value is achieved after the gold has been extracted and then is available to shareholders because the value of the asset has then been realised.

But CNR always has the option to build the mine themselves and return that mines profit to CNR holders

MTL LTH here, honest question but trying to understand why it's worth more the 33p in the offer, like the 44p or 60p mentioned here as desired by the holders on this board. Not wanting to cause any offence, but as much as you're all new to MTL, MTL shareholders are also new to CNR and just trying to fully see where you're coming from :) .

Looking at the last annual accounts, combining both 2022 and 2023 CNR had a loss of £4 million over the 2 years. The annual accounts show that the assets for sale are valued by the company on their own books as £44 million ish... . The 33p offer (ignoring the CRV) values CNR at £67 million. The CVR (covering the speculation of future findings) goes to 44p values CNR at around £90 million. (Not here to battle around pro/con of the CVR as I have my own opinions with that and it's workings).

The offer gives shareholders £20 million in cash (the ~9.9p per share) and 4 shares in MTL. So MTL are paying 50% cash for the assets being sold, hopefully turning it around from a loss making entity (my question with that is, if it could be done, why CNR didn't take it to production and just put it up for sale?) and giving shareholders on CNR 4 fresh MTL shares for the other 50% ... keeping CNR holders invested without having to repurchase on the open market to get future value from the mine ... as I am assuming CNR holders wanted to see these mines actually come to production?

If the assets for sale are worth more, then why is the book value on the annual accounts not representative of that? I'm assuming somewhere in the RNS' there is a JORC etc, but that's still just a qualified estimate. My personal opinion with ground resources is honestly, they're more appropriately valued when the gold is in your hand and not in the ground .... and I just think that's what is going on here and the offering containing shares in the purchasing company is to provide the mechanism to still gain future value for current shareholders.

99icecream, MTL have the cash in the bank from the proceeds already, it's likely to be that it needs a little bit of time to be brought out from a savings account.

The Drachs loan is likely to just cover the loans against CNR immediately as per their terms when accepted by CNR and a bridging loan is a fast way to cover that off as the lender is responsible for having the liquid cash available for the total amount of the facility at a very short notice.

My reasoning here is that the Drachs loan facility for MTL is £5.5 million, where as in the potential offer, the cash paid by MTL for the shares is a little over £20 million. The latter likely having a more suitable time frame for when it will be paid to CNR shareholders and meets the timeline for MTL to move the funds.

If you read some of the notes in the appropriate MTL RNS' it describes the payment timelines of gold sold by MTL to be around 5 days and they have over 95% paid within that time IIRC.

Even though MTL receive the money from gold sales in a short time frame (ref in the RNS'), CNR looks to have a few loans running - most recently a £475,000 facility for the next few months. This is due to be repaid by CNR immediately on one of the conditions being if the whole share capital is purchased. That facility is at an interest rate of 20%.

They're likely taking a bridging loan to a) MTL not changing their approach for dealing with sale proceeds received and storing that cash - especially if the offer is not made firm etc. b) demonstrates to the loan issuer of the amount to CNR that when the sale should occur they will have their cash immediately.

Lastly, it's at 10% rather than the 20% CNR have for that specific loan facility.

So, just ran some rough numbers to have it in 1 place ...

MTL 2,121,729,717 Ordinary Shares in issue

MTL 393,513,302 Ordinary Shares are held in treasury

MTL total number of voting rights is 1,728,216,415.

MTL Mcap : ~£90,000,000

MTL Shareprice 5.25p

CNR 203422778 Ordinary Shares in Issue

Offer. 4.0526 share per CNR share + 9.9p cash per CNR share. (Ignoring the additional share for additional resource).

= Additional 824,391,150 shares + £20,138,855.03 cash.

MTL cash holdings at 30 September 2024 were US$10.9 million. + ($/£..?) 5 million loan from Drachs (Can't find the exact RNS with the details but seen it mentioned below)

End result;

MTL current mine would have given £200 million cash at end of life (if I remember correctly).

So, it would be £180 million cash and subtracting further loan interest until paid off.

MTL Shares 2,946,120,867 Ordinary Shares in issue (up from 2,121,729,717)

However we'd gain the mine resources of CNR which from their RNS states "gold mines with potential production of 150,000 oz gold per annum". Which at a gold price of $2,700 for example is $405,000,000

These are rough numbers from quickly skimming though RNS'. Obviously DYOR with this, but my opinion is that if it goes through it's likely worth in IMO.

Hi Jholistic,

That's alright, glad we cleared it up. I'm a LTH with this as you are and see the absolute golden potential with this company.

The first message was in direct response to someone asking a valid question about a (in my opinion highly unlikely) outcome that if the company continued as is and because cash rich, what could be the outcome .... As we've said many times, a mcap of £200 million ish, so double the share price from here.

I agree with not pushing hypothetical/spurious points, however until an RNS states otherwise at Abra, that to is also hypothetical. In my opinion, I believe it will come good from seeing the previous decisions by the company and is why I remain invested here ... As well as what Lee mentioned about Darren looking over the last few years at helping the smaller scale miners that are village run.

Those two alone give much further upside to this business and investing is ultimately speculation and should be based on judgement of the current facts and where as an investor you see the company being taken as well as where you hope it to be.

In the light of where I see it being driven by Darren, my opinion is that he has mitigated the business from just running down the mine to just cash and that is the end, to now being a business with an acquisition mindset and approach with many avenues to explore.... But here is the key ... With it being able to self fund from the cash generated by this producing asset.

Again, I can only apologise for the confusion this morning... Shouldn't have typed that whilst having a coffee :).

A lot of upside to come with this one and I stand by my comment a while back that this is likely the best stock on the LSE at this time!

Who knows, maybe next years AGM we should all meet down in London (or wherever it is) as it's been a good journey so far with plenty more positives on the horizon.

Best,

Hi Jholistic,

Getting 50p at distribution was not what was meant to be implied.... Just purely that at this point in time with a market cap of £100 million you are buying a future £1 for a current cost of 50p.

Apologies for generating this confusion here!

Hi Jholistic,

For clarity I don't believe it would go the wind down route in the slightest, that was to answer the poster who started the thread that asked about it. Just re-read my post and there's likely missing punctuation... In the statement buying £1 for 50p I completely meant that if it was wound up and distributed you are doubling your money. Ie, you are buying £1 for 50p. Can see the confusion with the latter part of the sentence added on - my mistake!!

Lee I'm sure will provide a far better answer than mine, however as I see it...

The current mining has a period left (2.5 years) at their current rate. With the assumed reported grades and that they have looked at expanding and found limited reason to we can say that it is finite in that location. £5 million to close the mine. And circa. £200 million in gold profit from remaining grades.

This, at a mcap of £100 million means, as you say the company just winds up, you are buying £1 for 50p at distribution.

That is all just from memory and not from my notes but is the mental gist I keep.

As always, DYOR. The numbers can all be found in the historic RNSs

Yup

Hi All, a very long time lurker on this board and built up a strong holding - I've just sold a couple (still a strong holding left) to rebalance my portfolio and also enter another opportunity, but that's what caused the price movement today.

Still probably the best stock on LSE IMO...

Best, J

Purely an IT issue with RNS' today. Unfortunate, but again great results

"The London Stock Exchange’s RNS Service, airlines, telecoms companies, banks and media organisations went down in the early hours of Friday, reportedly due to an update issue with cybersecurity firm Crowdstrike that caused Microsoft 365 and Azure services to fail.

Trading continues to operate as normal on the London Stock Exchange. It said it is “working on resolving this issue as soon as possible and will continue to provide updates to our customers.”"

Hi Tyke,

Quick question, a lot of mention of FAB related to selling. Just trying to work out what FAB stands for/who they are.

Cheers

Cheers Aye, that was that I needed and worked.

@Geld, thanks for that but I think I don't have access to the actual server - comes up with a Discord error "No text channels or you don't have access".

Are you able to post an invite link to the server here?

Thanks again