Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Ojay
I have a feeling that Petrovis will apply for all available excess shares. The maximum additional investment would be about £1.5 million. 3.5p should prove a cheap entry price taking the long view. Moreover, PM needs these funds for its 2022 operating plans. If Petrovis make a meaningful subscription under the open offer it would send a very positive signal to the market. On the other hand, if they pass and the open offer is a complete failure, we might expect continuing weakness in the share price.
Many people on this board have pointed out that shareholders are most unlikely to subscribe under the open offer, given that the market price is somewhat below the offer price. However, it is worth noting that the open offer of 1 for 16 applies to the entire share capital in issue at the date of the circular; thus, Petrovis and Mike Buck have entitlements to take up shares under the open offer in addition to their subscription shares. Moreover, they could apply for excess shares. What Petrovis and or Mike Buck decide to do will be most revealing and may well determine the direction of the share price.
The credibility of Mike Buck and the PM board is eroding, and they need to do something urgently to restore some semblance of credibility.
In my opinion the PM board should formally request an investigation by the LSE into the fundraising and particularly into the trading immediately following the EL announcement and disclose that request to the market by an RNS.
Given the unexplained substantial fall in the share price over 12 and 13 July, while the fundraising was being negotiated and finalised, the placing should have been pulled. The decision not to should be explained.
How can Shore Capital justify its advice to the only independent director that “the placing (at 3.5p) is fair and reasonable as far as shareholders are concerned”, given that the share price had traded over 8p following the El announcement and closed on that day at 7.45p. The relevant discount was more than 50%, in contrast to the stated and thoroughly duplicitous and disingenuous figure of 36 per cent.
When the new Mongolian refinery starts up, they will need to have a reasonable supply of crude oil already in storage. I would estimate 6 months of requirements at design capacity (minimum 3 months’ supply). As part of the refinery project, they should consider building a pipeline from blocks XIX and XX together with adequate crude oil tankage at the refinery site. If construction of the pipeline proceeds without delay, the government could purchase Heron crude and put it into storage.
Thanks Spainish
It is late where I am so I will respond to you tomorrow. There may indeed be insider trading, but I am certain that nobody in the company nor Petrovis are involved. I am equally certain that the new investors are not quality blue chip. catch up tomorrow
Cheers
The truth is that if it wasn’t for Mike Buck we would have nothing. His commitment has been exemplary in the circumstances. He has a shareholding of about 10 million shares arising from performance shares, shares in lieu of salary and participation in equity fundraising. He deserves to do very well as do all those who have supported the company through thick and thin. The undermining of Mike Buck which we hear all too frequently from the likes of Manro is pathetic and misplaced.
nLondon
Manro was not right in this instance as neither Mike Buck nor Petrovis have done anything wrong or even naughty. Unfortunately, however the broker and one or more of its clients are utterly disreputable
Something very very wrong here, take a look at the last for trades "unknown" aggregating over 2 million. For the sake of the Company, and shareholders, Shore Capital and Arden must be fired with no further delay. I have enough circumstantial evidence to request a formal enquiry by LSE. If as I suspect t they do nothing the complaint will move up a notch.
Mike Buck had indicated that he was determined to avoid a dilutive fundraising if possible; and only recently, he secured the loan from Petrovis. As there will be no drilling operations this year, the Petrovis loan would have been sufficient for PM’s needs well into next year, which provided a window to pursue JV, farm-in or other funding options. In the event the Board has pursued an entirely different strategy with a significant fundraising at a very substantial discount immediately after the EL approval. So, what has changed? Explanations please.
The closing share price of Petro Matad’s shares on the day of the exploitation licence RNS (Wednesday 7 July) was 7.60p, with an intraday share price over 8p. On the following trading days, the closing share price was 7.05p (8 July) and 7.20p (9 July). The very significant slide in the share price started on Monday 12 July, down 0.85p (12%) to 6.35p, followed by a further fall of 0.90p (14%) to 5.45p on 13 July, and closed at 4.90p on 14 July. The fundraising at 3.50p was announced after hours on that day. Clearly, the fundraising was being worked upon soon after the exploitation licence was granted and certainly during the two days when the share price slid from 7.20p to the placing price – a discount of over 50%.
Notwithstanding the EL approval and the fundraising, the current market capitalisation is now less than the market capitalisation immediately prior to the EL approval. Accordingly, on what basis can Shore Capital possibly justify that the placing at 3.50p is fair and reasonable as far as shareholders are concerned?
Accordingly, Mr Bushell, being the sole independent Director considers, having consulted with the Company's Nominated Adviser, SCC, that the terms of the participation by each of Petrovis and Mr Buck in the Fundraising are fair and reasonable insofar as Shareholders are concerned. !
Consider the following: the company had announced that there will be no operations in 2021 and that the Petrovis loan would be sufficient for its expenses well into next year. In the meantime, Petro Matad would seek a JV or a farm-in partner. This raises the question as to why this fundraising went ahead so soon after the Heron exploitation licence was awarded.
I believe the reason must be the assurances or undertakings that were given to the Mongolian government to secure the licence. Very understandably the Government would be reluctant to approve an unfunded operating plan. If this were the case, who gave the undertaking or assurance that satisfied the Government; and, most importantly, should such an undertaking or assurance have been disclosed to the market. Almost certainly such an arrangement would have been disclosable. The implications of allowing the market to continue to trade in ignorance of disclosable facts is really very serious and raises the question as to who participated in the conspiracy to defraud investors. By arranging a placing at a discount of over 50% of the share price in the immediate days after the EL announcement, the brokers and advisers clearly had the company over a barrel. But it gets worse because both Mike Beck and Petrovis participated in the placing; moreover, it is highly probable that insiders were selling shares ahead of the announcement of the placing, making substantial illegal profits at the expense of market participants.
In my opinion, the placing should be annulled if that is legally possible, Mike Buck should resign immediately, the company should replace Shore Capital and Arden Partners and seek a suitable Nomad/Broker with the mandate to find a buyer for the Company, a process that can be overseen by Tim Bushell (non-executive director) who, interestingly, did not participate in the placing.