RE: Capital requirements hardly huge27 Sep 2022 12:10
To me the case to hold a position in rambler, is different to the case to invest or add more in rambler today. So discussion on these are slightly different points.
The case to hold an existing position is now more about if you think the material going concern risk will be mitigated, resolved and sufficient for the needs of the company during any recovery. It's a business case and ongoing concern decision.
While the above is still a fundamental decision someone would need to determine before investing or adding, the case to buy or add today is different. I say this as once someone finds an investment that looks good, the next stage is to time entry.
So personally I wouldn't add or start an investment in rambler today, even if I felt their is an investment case. The fact an equity element will be part of financing is likely to mean, but doesn't definitely mean, lower opportunities in the short term.
No one knows how much is needed is true but it will have to be significant. Ideally it would have been sufficient for capex to implement more efficiencies at the mine but this, sadly, doesn't to appear to be the plan.
It will however involve equity and the nature of the equity is critical IMO. Most probable is a discount to prevailing price, to hopefully avoid a sweetner of warrants being attached. Especially given RMM aren't in a position of strength.
Convertible debt to equity is possible and that would be dreadful for anyone already invested, or investing today.
In short, assuming RMM navigate the situation the upside is unknown until the equity arrangements are clearer. You simply can determine the possible price per share without knowing the likely shares in issue.
The equity arrangement is likely to reduce the price so waiting would maximise an entry, or at worst could undermine the investment case entirely. Depending on the terms.
By waiting, even if rambler manage this very well and waiting means you buy slightly higher, the information will enable a substantially better ability to determine the potential return on any investment and be lower risk of losing all the capital.
Atb
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