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My other question would probably be that if a new valuation report is required, how much additional value that TSG may be deemed as having since the last report is because of funding it has received from TGR and its shareholders over the course of its development for developing its facilities and marketing activities etc. Surely that must count for something even before the TSG merger is complete?
Continued
- but if it's just the valuation report's expiry date that has lapsed then surely a new one can be easily submitted and the 'binding' nature of the deal to acquire TSG can be kept intact?
As we haven't had an update on the statue of the downstream projects' status for a while, other than Patalganga's supposed commissioning of its expanded module bringing capacity to 4,800tpa supposedly this Quarter from previous RNS's, it's hard to tell what the state of play may be.
I hope the TGR team and founders recognise the great value offered by vertical integration and seek to resolve this impasse to allow that vision to continue.
From the last RNS:
In terms of FEMA requirements, the share swap ratio under the SPA was ascertained under a Valuation Report issued by a Securities and Exchange Board of India ("SEBI") approved Category 1 Merchant Banker. Post execution of the SPA, upon engagement with the regulators for the mandatory approval required under FEMA, certain pre-requisites were advised by the regulator being:
o Establishing a bona fide purpose for the acquisition; which could be established with the business integration and demonstration of capital for required investments
o Establishing 'no round tripping'; which could be demonstrated by list of subscribers for capital raised from London markets
o Establish TG as a well-regulated "foreign" entity; this also could be established with the listing on the main market of the London Stock Exchange (the "IPO").
These pre-requisites could be established upon IPO and related equity fundraising being completed. However, IPO fundraise resulted in dilution of the concert party identified with the Takeover Panel resulting in it holding between 30% and 50% of the issued ordinary shares in the Company, thus necessitating a whitewash under Rule 9 of The Takeover Code for the issue of the consideration shares under the SPA if this were not to trigger a mandatory offer for the Company under the Takeover Code.
After approaching the Indian regulator following the whitewash approval on 28 October 2021, the Company was advised that:
o the valuation report of 2018 is time expired and for determining the swap ratio a current valuation in accordance with FEMA requirements is necessary (which must be not more than 90 days old at the time of completion of the Proposed Acquisition);
o Based on an updated valuation, the Proposed Acquisition could be considered for approval by the Indian regulators once certain reported matters in relation of the Company as an ODI were ratified.
- From above, I find it incredible the company and/or their advisers would not have been aware the valuation report of 2018 had expired - that smells of bad advice and TGR should sue for negligent advice if that's the case and seek compensation.
- I take encouragement that it looked as thought the FEMA requirements had been met, including post the IPO fundraise whitewash, suggesting another submission to the regulator with an updated valuation report would be successful now.
The mention of TSG needing further capital to develop the downstream assets - perhaps why TGR is adamant there being no need to raise funds for TGR itself as there remains a question of what the structure with TSG will look like. As Skeletor says there remains great upside for TGR as just a primary miner given margins & scale of operations. It would be a shame to lose out on the value added downstream that many will have based their investment thesis on, taking into account of the risk TSG deal would not complete - but if it's just the report's expiry date lapsing then h
Been away today and just looked in on the RNS - hmmm. Leaves a lot open, and a fair amount to be unimpressed by in terms of how long it's taken to get to this point, and I expect there will be further updates soon once TGR sets itself on the path forward. I hope that all is done to continue the plan to achieve vertical integration considering the value addition and competitive advantage that entails to boost TGR's already very competitive costs etc. Perhaps a UK based, TGR (not TSG!) owned subsidiary is needed for downstream capacities to set up in the UK as has been mentioned multiple times. If I was TGR I would seek to complete the BAT deal, let the assets sit for a while as the development plan is fine-tuned for them while TGR reaches profitability, and re-visit UK government support on setting up a downstream plant in the UK and obtain funding from the likes of the UK Export Finance organisation towards building said facilities to serves the multiple industries possible.
Given the fairly muted reaction, and the fact that those who remain invested know that TGR reaching profitability is on the near horizon, perhaps we are venturing towards the bottom finally before the trend reverses upwards once more (we can hope). Looking forward to further clarity from Shishir/TGR - it is needed and questions re funding given to TSG by raised proceeds etc by TGR's IPO and 90p raise and their purpose/use need answering to regain certainty on the direction of the company. 84,000tpa by 2024 still the goal in Madagascar which is significant and values us much higher.
GLA
Indeed. Looking back we may get an unaudited set of interim accounts as we got last August, with the full set for the year to March 2022 to be published in September. So perhaps a month or so to go before we get a clearer picture of the financial status then to be followed by the half year accounts for 2022-23 to be published in December, but I expect we’ll have heard much more in between August/September and then.
Am inclined to agree with you Skeletor, but as a growth company yet to deliver on profitable operations (although I believe profitability to be essentially just round the corner) we are not considered anywhere near a safe investment yet and such companies suffer in downturns as is happening. Still the level of decline is now quite shocking.
Fully agree confidence is at an all time low clearly which the company could/should address if it wanted to restore it, and which Shishir tried to in his last interview. As posted by someone else, a formal RNS would probably be needed to allay the fears you mention in certain terms. There is also the question of the selling which has been seemingly been consistent since June last year and which we've had no update on either TR1 or otherwise to suggest the source, be it insider or otherwise, yet investors have supposedly received reassurances of insiders remaining aligned with shareholders...time will tell as always, and I reckon lots if not most PIs have capitulated or are in the process of doing so.
GLA
Agree Chameleon, and I think while the sp has shifted downward it’s not just a reflection of the slightly delayed, albeit with a firm law-enshrined deadline, timeline but also it’s a reflection of the most acute point of this binary process and many will have decided to reduce exposure as they can’t deal with this point or just don’t feel comfortable with the delay.
Like your title suggests this does feel like the final lap before promotion to the next league or relegation. Most of the work on the project needed at this stage and it makes an overwhelming amount of sense for Portugal (and Europe) to approve this project. The sp now may be one of the biggest opportunities in a lifetime for the brave/reckless or of course the complete opposite and Europe will have made another concession resulting in its greater dependence on external, sometimes unfriendly actors.
GLA
Indeed perhaps BB, although ironically TGR is not on AIM, it is main market LSE listed.
DYOR great to see hydropower mentioned in last RNS and again on Twitter, imagine RNS will confirm first power generation from that, and hope we get another over the next few weeks confirming first results of production utilising the first CFS column while production ramp up + sales continue.
GLA
Good news - possibly an RNS to recognise the first electricity generated by this first new hydropower plant?
Vital from an ESG perspective to show TGR is serious about its environmental commitments but also should be an effective way of keeping OPEX costs under control/low. Hoping we hear more on how much savings the new facility results in for the company.
I saw this video on Twitter and i'm pretty sure it referenced our partners ABB as being involved with this project to electrify part of the mining Trolley circuit. Very interesting viewing from an innovation pov
https://streamio.com/api/v1/videos/5d91d3c96f8d8dfdc4000002/public_show?link=true&player_id=59eed3d56f8d8d20b5000001
https://twitter.com/Tirupatiuk/status/1542183670995378176?s=20&t=GU86XIT5CFtMa8uRBu9Q3g
As a 'major industrial producer' in Madagascar, perhaps there is the possibility of partial state funding towards the infrastructure upgrades to ensure continued growth of the domestic economy and number of jobs available in the region of Madagascar TGR operates? Meetings such as that referenced in the linked above makes me think all cards are on the table.
Important to note that the thread does not rule out the possibility of a placing in the future at some point.
I would suggest the following, however:
1. Funded from IPO + 90p fundraise + potential positive cash flows starting from this current quarter with majority of capex costs mostly already made as in final stretch of putting the plant together.
2. Hydropower basically done, per last RNS due to being commissioning in July, so can't be much more to spend on this, and which will serve to reduce opex costs. Note also the CFS should bring more opex savings, freeing up more money for below items.
3. indeed, and actually more like £0.85m with FX rates.
4. Exploration expanses budgeted for in IPO raise and paid in instalments most likely as work is progressed/completed.
5. I don't think these rights are that expensive in the grand scheme with land lease payments up to 31/03/2020 being only £37,767 per the admission doc/prospectus.
6. the roads are likely the main question as you have emphasised - but if cash flow is positive from this quarter/the next then this need not be too much of a worry - of course depends on how much exactly this costs - perhaps the studies referenced in the RNS will revealed when they are complete and will provide greater clarity?
My thoughts are that with cash positive/ profitable operations hopefully being reached this year, then as a company with little to no debt (roughly £1m in CLNs) and with a growing production and sales profile debt funding may be looked upon much more preferably for future needs. 30,000tpa capacity is a globally signifcant/comfortable scale.
As a current producer just starting its ramp up phase TGR is in a much better position than those without any revenues, let alone a short term path to profitability. Looking forward to those next results as well RIS as that will reveal the true state of play.
GLA
Always good to see research and clear thinking laid out.
Here is an example: https://twitter.com/BigBiteNow/status/1542074689337671680?s=20&t=GU86XIT5CFtMa8uRBu9Q3g
GLA
You'll know in advance of the re-listing when we get the RNS which contains the admission document/prospectus info and provides the date on which AET will exit suspension I'm pretty sure, no need to worry about how your investment platform shows your holding as looking.
Over in North America, Sayona Mining and Piedmont Lithium have announced they will restart production at the NAL project which will produce 163,266tpa of 6% Li2O concentrate over a 27 year mine life. Each company has other interests as well as this operation but respectively each has a mcap of around £800m and £600m.
https://stockhead.com.au/resources/monsters-of-rock-sayona-and-piedmont-approve-110-million-plan-to-restart-canadian-lithium-mine-amid-price-boom/
Good news for Atlantic with Piedmont's involvement in NAL restarting Li concentrate production Q1 2023.
https://twitter.com/Alastai85608932/status/1541709138329206785?s=20&t=Qdcx0liaCVLMERFm7qzTxA