Europa are delighted to link with I3E and look forward to early September Serenity appraisal spud. Watch the full video here.
Also to clarify when I say the warrants are staggered I don't mean by expiration date as they are 30 months.
I mean by the variable strike prices. Obviously POW could decide to exercise them all at once but given their cash constraints they'd only spend £3.375 million if they are in the money. Plus they'd only sell them if they stay in the money.
This is an important point as they would have to sell them orderly to avoid crashing the share price for their own good. Even then, the price they execute at would need to be 200-300% higher than today's for any of it to be relevant
Thanks for reply. To cover your points I'd say as follows...
1. The 1% NSR is fairly standard in deal acquisition. My understanding is the norm in the region is double that for a NSR but in any event if it gets to be applicable we won't give two hoots as to the NSR as well have done very well!
Sale premium - seems fair doesn't it? Especially given POW accepted the deal between 50% to 175% premium to the prevailing KAV share price and KAV bought 50% for effectively £1.8 m. If we sell for over £7.5 million then between 5-20% sell on clause seems to also favour KAV. Is it even likely..
2. Impact of warrants being sold - They aren't all available at same time. They are staggered is one point. Secondly, it goes back to my point about if KAV had to raise the cash in the market then it would be much higher dilution and selling. Your point IMO is a general point about placements of shares, rather than this specific deal. This deal has lowered the dilution and impact of warrants being sold as they'll be less of them. (As explained in first 2 posts).
3. POW still get access to 14% of the KSZ. Kind of but you could buy more shares at a huge discount to those available to POW right....we can all get greater exposure. You could add 14% extra shares to your total position right now to offset that at minimal cost if imagine. To me again it's not an argument against the deal but an argument against placements generally.
Part 1 of 2
James, quite right.
It's important to look at the deal objectively. While everyone can see things differently I'm struggling to observe why some feel this is such a bad deal for KAV and such a great one for POW.
Breaking it down, my view is that I've shared before is ...(sorry for the post length but I feel it was needed)..
As you say the 60million shares POW got are only 14% of KAVs shares in circulation, for KAV to gain POWs 50% of what is a very highly prospective bunch of assets and as you say many consider the highest potential/lowest risk.
Even if all warrants are exercised that's a total 135m shares.
So, worse case, under 31% dilution for full control. (But this also gives KAV £3.375m cash as part of the deal that they otherwise would have needed to raise - see below).
Another way of looking at this is focusing on the strike price of the deal terms.
The strike price used to determine those 60 million shares was 3p.
The day before the deal was announced KAV shares closed at 2p, and had been below 3p for a couple of months prior to the deal announcement. It was a very good strike price deal for KAV. With a 12 month lock in.
Beyond the 60 million it was all warrants..
Total warrants 75 million @
- 30 million at 4.25p (raises £1.275 million for KAV at a premium of 112% of the SP at time of deal)
- 30 million at 5.5p (raises £1.65 million for KAV at 175% premium to kav SP at time of deal)
- 15 million at min 3p or at a 15% discount to vwap. (raises min £450k for KAV at min of 50% premium to kav SP at time of deal).
So KAV have negotiated potential future funding of over £3.375 million at up to 175% premium to the prevailing share price at the point of the deal. That's a great deal for KAV share holders. It basically gives KAV access to exploration capex that they otherwise would have likely needed to raise in the market at up to 20% discount or with 1:1 warrrants, but at prices up to 175% premium to the share price when deal announced.
If the KAV share price doesn't improve and the POW warrants stay out the money the total dilution is less than 14% KAV for POWs 50% of the asset and full control.
If the KAV share price does improve to a point where POW exercise the warrants as they are in the money, then KAV raise over £3.375m as part of the deal, the rise in price will be applicable to all shareholders positions and they avoid having to raise this money through a placing. Win win IMO.
Part 2 of 2..
If you look at the alternative to making a deal it would have been KAV paying for the asset in cash instead of the 60million shares at 3p, so £1.8 million. They would have needed to raise the capital in the market. Either at a discount or at market price with 1:1 warrants attached as they normally do.
So at best £1.8 million at market price (2p) would have been 90million shares plus 1:1 warrants would have been 180m shares. Without even giving any consideration the need to raise the potential £3.375m exploration cash KAV can get from POW from the deal terms.
So in short if getting 100% and full control of the asset(s) for 60m KAV shares, or max of 135m shares plus £3.375m cash to KAV at up to 175% premium to the pre deal share price is considered bad I need to have someone explain why. To me it feels as though some have lost faith and objectivity here.
My view is it was a well structured and favourable deal for KAV shareholders.
Assume that's a rhetorical question.
As it's impossible to answer and if anyone does answer is just opinion. It's all opinion at the end of the day.
The important point (to my mind anyway) is if RMM will hit 60p, rather than when. Im here for strong returns as my personal research and view has given me an opinion it's undervalued.
I think as metals rebound, and sentiment continues to return RMM and metal commodity stocks will be strong performers.
When that will be has too many variables to guess with accuracy, or confidence. Just my view.
Nothing stopping it, just sentiment preventing it.
I've been here a fair while now. A little before the rise you mention and through the troughs.
That's because I was always invested here with a target price /mcap and we've not got there yet.
The company position has improved tbh. Sadly the global markets haven't and RMM sentiment has dropped.
All in good time IMO
Everyone welcome to make their own assessment.
IMO they have been drilling and been progressing assets; exploration/interpretation/acquisition etc and currently feeding this into subsequent drill plans.
Clearly KAV won't be able to progress these assets alone mid to long term, and I don't think they plan to. That said I believe they've established a decent runway of potential funding via warrants and cash to hit a 'game changing' intercept that will make shareholders do well. Then they can look for formalise an arrangement to fully prove the a resource.
The markets generally aren't great ATM as we're all aware.
I'm holding through this period tbh. That's my personal view. I believe this stock will make me very strong returns (as things stand).
If anyone is thinking or expecting the KSZ drill results to give economic mineralisation from the assayed cores then I'm not sure they've followed the situation.
So with that in mind it's not about results being buried but it's more about the fact that they are largely irrelevant, that is outside of the broader understanding the drill results and DHEM have given which will be part of the report.
I do however understand the frustrations about not drilling yet. They are thorough which is great but we would all enjoy hearing news on the drill turning....
BT has said that as it was proof of concept drilling and they know they drilled between 2 (now three) high siemens / conductors then the results for the drill isn't so important (or words to that effect). That they will be released in conjunction with the full report which they have been saying will be released. I believe in interviews he has said that report is waiting to embed an independent survey they had done. (I think that's right from bad memory recall).
Not really sorry on at all.
They've multiple areas being progressed concurrently..
They haven't just been s sampling over the last 15 months..
You can position it how you like, doesn't make it accurate.
Of course we want them to drill. They will do so in a few months or so.
I'm believe we will commence drilling later this year personally.
I also thought the pow deal was alright given the premium to share price and the independent valuation that followed. The majority of the dilution is only relevant if POW exercise the warrants (at much higher prices than the current market).
The markets are broadly frustrating at the moment. Kav and many stocks are the victim of the macro environment.
I agree with the comments that drilling will need to crack on if BT and the team are to actually make this the 'year of discovery'.
Should be an interesting H2
Anyway, Bozi. Like I say I do apologise.
I accept some of my comments and tone weren't fair. I respect your right to your opinions, and everyone else on these boards.
Have a good weekend all.
Bored now Bozi. Dilution is a given and if you're not aware or accepting of that at this stage then I'm afraid it's the wrong market, sector and company.
I'm here for major returns. Dilution is a necessary evil for that at this stage. As long as it's done strategically and sensibly.
Bottom line is you have clearly seen the EMP as critical and thought it was outstanding and you didn't pick up on the fact it's been achieved. Twist and interpret my words however you like, it doesn't make it true.
Anyway. Atb to you. Pointless debate really. Given your posts I'm not entirely sure why you're actually invested here but that's your business.
Bozi sorry but I never actually said you used the word 'hidden'...
However your phrasing that it was 'tied' into an operational update isn't quite right. The RNS was the about the EMP being awarded...but it was with an operational update included in it.
You seemed to imply it wasn't obvious that it was awarded despite the fact it was.
Anyway to help you understand what's been happening at the KCB etc I suggest you have a look at some of the recent videos with BT and Brett Grist. This one will inform you of the work being progressed etc in that regard ...
I personally think you're being unfair in expectations but to each their own. While we can be critical of the priorities, and we may prefer them to take different decisions, we don't have the full info like they do. Anyway here is a useful link around KCB from July...
The RNS was titled EMP awarded and Operational Update it wasbt hidden within an op update.
To be clear I didn't say they were drilling KCB. I just said they were already drilling and pointed out it's a small company. My point being they've been negotiating the KCB while developing the plans and doing sampling to identify drill/collar targets and locations for the KCB. I'd record you watch recent interviews for latest.
Regarding being abrupt I just felt you came off a little critical and righteous on something that had already happened.
Anyway it matters not. You write what you like how you like. No worries to me.
You said 'I've been banging this drum for over 12 months now but we must secure the KCB EMP and drill our most advanced targets there.'
Why are you banging this drum....we got the EMP almost a year ago in Oct last year for all KCB PLs. We're drilling now. We are an 8mill mcap company ATM and it seems KAV have a shed load going on to be fair.
Plus they've been negotiating to buy the whole lot recently.
This report was simply a business case study to feed into next steps decisions, and also useful to have for any engaged parties now and into the future.
Your posts are fairly abrupt / rude and also a little over confident given errors. Just my opinion and clearly not expecting you to agree.
Yes I totally agree MH.
It's a useful assessment to determine if it should be drilled. That said the assumptions and inputs into the assessment are not massively meaningful i.e while it uses a structured method, assumptive models are clearly just that.
I had the same thought about viability and economics of they found the mineralisation above the IOCG also.
KAV are looking to see if they can hit two birds with one drill in their plans so will see. If they can't find this I'd rather the IOCG was drilled later stages and focus on the other areas / mineralisation. Then go for the IOCG perhaps after shallower drilling and exploration of that area.
Kav have so much to go at it's great and the upside potential here is staggering IMO.
As long as they stay grounded and methodical .