The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
'Australia has assured India of steady supplies of coking coal, two Indian government sources said on Friday, as domestic mills grapple with shortages of the key steelmaking raw material and a surge in prices.'
https://www.business-standard.com/industry/news/australia-assures-india-of-steady-coking-coal-supplies-amid-shortage-123111700507_1.html
"Global coking coal market is around 1.1 bnt and seaborne trade is around 305 mnt but the steel industry is reliant on a very narrow supply base which is the main cause of disruptions and volatility."
Source: https://www.coalmint.com/insights/growing-shortage-of-coking-coal-expected-from-early-2030s-experts-at-isa-summit-491997
"Unlike thermal coal, one of the most polluting fossil fuels which is being phased out over time, coking coal used to make steel will be needed long term to cater to demand from green energy infrastructure."
Pocket money to a lot of companies too... Below is this years coking coal acquisition/demand news which illustrates the diverse range of acquisitive companies on the hunt for large coking coal resources/supply...
Whitehaven
https://www.smh.com.au/business/companies/bhp-sells-queensland-coking-coal-mines-to-whitehaven-20231018-p5ed7z.html
ArcelorMittal
https://www.herald.co.zw/sa-steel-giant-expands-imports-from-hwange/
JSW Group
https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/jsw-group-exploring-possibilities-to-acquire-coking-coal-mines-in-offshore-markets-sources/articleshow/100567554.cms
Thungela
https://www.miningweekly.com/article/thungela-completes-buyout-of-majority-stake-in-aus-coal-mine-2023-08-29
Bathurst
https://www.nsenergybusiness.com/news/bathurst-resources-to-acquire-tenas-coking-coal-project-in-canada/
Glencore
https://www.reuters.com/markets/deals/glencore-makes-offer-tecks-steelmaking-coal-business-2023-06-12/
Nippon Steel
https://www.mining.com/web/nippon-steel-could-buy-more-stakes-in-coking-coal-and-iron-ore-mines/
Coronado
https://www.afr.com/companies/mining/coronado-hunting-to-spend-coal-cash-on-m-and-a-20230525-p5db8g
Terracom
https://www.theaustralian.com.au/business/dataroom/terracom-weighs-bowen-purchase/news-story/1f0165471524b9c7ff1b7bb19886e05e
Food for thought... Hopefully, let the bidding war begin!
Macdaddy12, it appears you do not like your hearsay and foregone conclusionary comments being challenged with level-headed facts and debate of the current situation at hand. Do you also get upset when you’re told you can’t get you own way, or you’re not allowed to the pub because you haven’t done your chores.
I reiterate I am suspicious of your repeated ‘heads we lose, tails we lose’ commentary regarding us retail shareholders in this situation. I note you joined this site on the day the company received a letter of intention to make a takeover, 2nd Nov. Are you part of, or associated with the consortium? Repeatedly suggesting a takeover or delisting is a forgone conclusion is misleading and gives the consortium momentum.
I will also refrain from further debate with you. Let’s wait and see what the AGM brings, as I am doubtful of any further official direction before then. In the meantime, here are some useful resources (FACTS) for you to enjoy regarding the possible outcomes…
https://content.allens.com.au/the-allens-handbook-on-takeovers-in-australia/takeover-bids/
https://www.dentons.com/en/pdf-pages/-/media/817e13fe2a364f4fbe7b869517237f8a.ashx
https://takeovers.gov.au/resources/key-concepts/summary-takeover-provisions
GLA & DYOR
Macdaddy12, Once again, unsubstantiated nonsense...
The two largest shareholders have been clearly been working on this months and have managed to pull together 64.5% from multiple large shareholders. However, there is still a relatively large retail investor base which needs to be convinced this approach deal is good... I for one do not! I wouldn't be surprised if the punters on this BB collectively control enough to scupper this approach...
Macdaddy12,
Once again, incorrect and misleading comments. Are you part of, or involved with, the consortium seeking to takeover?!
Read the RNS... The company has not given ANY indication of its plans to delist. In fact, the board advised shareholders to take no action, as the proposal is incomplete, has not provided a definitive price and is subject to a number of conditions.
I'll answer your erroneous and misleading comments below. Also, I note you joined this bulletin board on the day of the takeover notice, 2nd November 2023. Bearing in mind the consortium will no doubt be trying to hoover up stock from any 'loose hands' I find it suspicious that your posts all incorrectly point to a 'lose-lose' situation for us retail shareholders. The board/Tennyson have clearly responded to September's IOI takeover letter with an in depth analysis of the true value of the company, currently NPV 21p, rising to 112p and 256p using current and last years high coal price respectively.
1. The consortium has to inform the ASX at stage one and it is in their interest to request exclusivity. However that by no means implies they will be allowed it! Bearing the rock-bottom market price and potential value of the assets, rival bids cannot be ruled out.
2. You talk of steps to a transaction, then jump to the end result of the process... the consortium requires at least 90% shareholder approval to mop up the balance and delist. Hostile off-market takeovers are unlikely to succeed without board approval. Read the info.
Firstly, I would wait for an actual offer! The board have made it clear the consortium sent a letter noting their interest at potentially making an offer between A$0.20-0.23 back in September. Then recently followed up with another letter but have not yet submitted a complete off-market approach. Read the RNS.
I am not sure what you mean by 'if the offer goes through'. If you read the info I posted on ASX takeover's it explains the predator firm needs at least 90% approval to mop up the remainder. Also, it highlights that It is rare for a hostile, off-market takeover to succeed, without eventually winning the approval of the board... Therefore I expect their offer to be increased substantially. Read the takeover info link.
Moreover, according to Tennyson research analysis, The sum of the parts net-present value is currently 21p using low, long-term coal prices; discounted asset prices and cash flows. Therefore, I doubt the independent committee (which has been set up to review this incomplete offer, in the best interests of all shareholders) will recommend it... Also, bear in mind Tennyson highlighted their NPV valuation model price increased to 112p when using CURRENT coal prices; rising to 256p using last years high price... Read the Tennyson report on MCM website.
To conclude, I expect a much higher offer, or hopefully, multiple bidders join the party and there is a bidding war.
Source:
RNS Link: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.mcmining.co.za/all-categories?task=download.send&id=1791:receipt-of-notice-of-intention-to-make-a-takeover-take-no-action&catid=105
Takeover Link: https://www.minterellison.com/articles/how-an-off-market-takeover-bid-works
Tennyson Report Link: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.mcmining.co.za/all-categories?task=download.send&id=1773:tennyson-equity-research-reportl-mc-mining&catid=107
If you require any more questions answered and reasoning provided I suggest you politely ask your broker.
DYOR & GLA
No, this is not definite. Take a look at this weblink which explains an ASX off market takeover offer... How a takeover bid works - off-market. This article explains how an off-market takeover bid can be used to acquire control of a listed Australian company.
https://www.minterellison.com/articles/how-an-off-market-takeover-bid-works
What is an off-market takeover bid
Takeover bids are the most common way in which control of Australian listed companies and managed investment schemes is acquired.
There are two types of takeover bids: off-market and on-market, with off-market takeover bids being far more common than on-market takeover bids.
An off-market takeover bid is a procedure under Chapter 6 of the Corporations Act under which a bidder makes individual offers directly to all target securityholders to acquire their securities.
Target securityholders are free to decide whether or not to accept the bidder's offer – if they accept then the bidder acquires their target securities.
If the target board recommends that target securityholders accept the bidder's offer from the outset, the off-market takeover bid is considered 'friendly'. As an off-market takeover bid is driven by the bidder and does not require target consent or co-operation, it can also be used for a 'hostile' acquisition of a target.
Interestingly, hostile off-market takeover bids are more common than friendly off-market takeover bids, and in most cases an off-market takeover bid that starts as a hostile bid is only successful if it is ultimately recommended by the target board.
Overview of an off-market takeover bid
An off-market takeover bid consists of sending offers contained in a bidder's statement to target securityholders, a response by the target in its own target's statement, and target securityholders lodging acceptance forms and receiving cash or scrip (or a combination thereof) as consideration from the bidder in exchange for their target securities.
Key steps in an off-market takeover bid:
Initial approach
The first key step in a friendly off-market takeover bid will typically involve the bidder approaching the target with an indicative offer to acquire 100% of target pursuant to an off-market takeover bid.
Due Diligence
If the target is amendable to the bidder's offer, the target will typically grant the bidder an exclusive or non-exclusive period of due diligence so that the bidder can confirm its interest in the target and the offer price.
If the offer price includes bidder scrip, the target may undertake some due diligence on the bidder so that it may confirm the value of the bidder scrip.
In a hostile off-market takeover bid, the bidder will not have access to target's confidential information, but will base its offer price and terms on the bidder's understanding of target gained form publically available information such as target's continuous disclosure announcements and periodic finan
My understanding is the main listing is on ASX, therefore those market rules apply... The consortium needs 90% shareholder approval, thats not easy, especially when you consider how fragmented the shareholder base is beyond the 64.5% in the consortium. They need 25.5% more... Why would any of the remaining 35.5% like this offer, bearing in mind the recent in-depth analysis and value highlighted by Tennyson?? Unless I am missing something?
GLA & DYOR
Source: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.mcmining.co.za/all-categories?task=download.send&id=1773:tennyson-equity-research-reportl-mc-mining&catid=107
If the 'sum of the parts' is valued at 21p using discounted cash flows; discounted asset values; and low long term coal prices, then I do not expect the board to recommend the offer. Moreover, using the current coal price the value increases to 112p, then to 256p using last years high price! See the Tennyson research report link to the company website above.
I expect the offer to be rejected with a view for much higher. Now that the firm is in the spotlight, perhaps other interested buyers may emerge... Perhaps a commodities trading giant, or Thungela, or Arcelor Mittal... The list goes on...
I feel the takeover offer is derisory and is opportunistic, exploiting the bottom of the market valuation. Now that peak rates are in sight I expect institutional investors, banks & corporate financiers and acquisitive companies to become much more active.
GLA & DYOR...
Https://www.miningreview.com/coal/mc-mining-turnaround-plan-at-the-uitkomst-colliery-pays-off/
Looking at the Tennyson report:
Page 20. My understanding is, if AP14 is above $120 pt then the firm receives R200 pt produced at Vele. AP14 has been above this level consistently and is currently above this level. Therefore, assuming Vele is at full production 60,000t per month, thats R12m per month, R144m per year, ~$7.5m net-income per year going forward, just from Vele.
This is addition to Uitkmost taking advantage of international coal prices... Read the report, the analyts values Uitkmost @ NPV $25.8m.
The business is profitable...