Member Info for goshawk250

I have not posted in a while, but have held since the grim days of 2017! I’m therefore philosophical about the current issues and think Lee is right to mention the loyalty many older MTL holders have to MTL and Darren. Some have mentioned that Darren merely sorted out the technical side at Runruno implying that he is not a shrewd corporate player. I would make two observations here. The technical expertise is precisely what had eluded the prior management at MTL with Runruno plagued by poor recoveries, inability to run the biox circuit and a barely producing asset at high AISC. It is right to say that he has been helped by the gold price but he greatly reduced the AISC making MTL profitable. At the same time, he navigated very complex negotiations between the previous two major shareholders and banks. He managed to oust one of the major shareholders (Graham Edwards) through a buyback who had been a persistent block to moving forward with MTL. MTL became so profitable that it managed to pay off the enormous debt and buy an existing proven asset (Condor), which by all accounts was struggling to get into production.

Yes Dupax is disappointing, but it was an unproven asset and MTL have done well to identify La India which will keep the lights on. I’m confident other assets will come in the Philippines or possibly even elsewhere. Yes there are risks to La India, that’s why we are here and what makes it a speculative asset. But I would reflect I think as a Condor shareholder that conditions have significantly derisked for you in the time MTL took over.

This is my perspective on the current situation and I think why many MTL holders still hold - Darren is part of the investment case. Yes he needs to show derisking of La India over the coming months I agree, but his track record shows he is more than capable - he has already transformed an asset in a far worse state than La India, understands the challenges with deep technical expertise and builds strong rapport with the right institutional players. I’m still here and will continue to be for the La India journey.

Metals Exploration plc (AIM: MTL) ("Metals Exploration" or the "Company"), a gold producer in the Philippines, is pleased to announce that, further to its announcement of 2 September 2024, the relationship agreement between the Company and Runruno Holdings Limited ("RHL") dated 24 October 2020 has terminated in accordance with its provisions.

Pleased (delighted?) to announce!

I had to sell a small number (40kish) yesterday - went through successfully.

The results are great.

I have a feeling that the timing may have been out of their control as other LSE RNSs have also just been released at 10.36 too - possibly affected by Microsoft/Cyberstrike issue?

Good point - if they distributed all the free cash once the debt is paid early next year, by my calculations we would be looking at approx 4p per share each year!

Also, production figures - DB guidance was 78-81k ounces for 2023. So far we are up to approx. 68k, thus it is highly likely MTL will greatly exceed operational guidance even with slightly lower head grade.

Leo - apologies, my question was aimed at JAdams.

I believe the relationship agreement will be in place while the major shareholders hold at least 10% of the shares. It would remain in place (or be replaced by a new agreement) if either of the shareholders dropped below this percentage. I don’t think it could be unilaterally terminated but on the other hand I’m not sure what remedies would be in place if the terms were breached. (One of course could argue that the terms have possibly already been breached as a relationship agreement should prevent the major shareholders from exerting undue influence on operational matters).

The current management team (led by Darren Bowden) have proven themselves to be a very adept at getting MTL out of these tight spots, which gives me some confidence.

However I can understand your concerns and it is a frustration that a lot of the dealings are rather opaque.

Well anything is possible, but remember there is the 2021 Relationship Agreement.

While the contents are not public, we do know that it was drawn along ‘standard corporate governance guidelines’ which the new Nomad (appointed to allow MTL to leave suspension) would have had to ratify. A standard condition in such an agreement would be not to seek to cancel listing for example. This provides some security to the smaller shareholders.

I think you’ve made your point now about the risks to the downside of MTL. What is your purpose here? Do you make the points out of genuine concern for fellow/prospective shareholders, or are you perhaps hoping for a lower entry point?

That’s a shame Leo. As ever with MTL, one step forward, two steps back.

Not chapter and verse, but the board composition still provides independence as there are 3 directors not affiliated with MTL Lux or RHL. My concern is around the unspecified governance arrangements that RHL opposed.

I am somewhat reassured that the majority shareholder appears to back the board, and RHL has always been the more difficult partner (eg current mezzanine debt negotiations). Thus, it seems less likely to me that they are in cahoots, but this is possible.

Given the current senior debt interest rate negotiations, I feel the issue is most likely related to this. But of course an alternative agenda cannot be excluded.

I have been on the MTL rollercoaster ride for several years now (and through much more serious threats to its existence!) so will stick with it. I’m sure we’ll find out what’s going on soon enough.

We need the proposed debt restructuring to be passed at the AGM...

The key sections from the RNS:
"Subject to the passing of the resolutions required to satisfy the conditions precedent to the Proposed Restructuring, which are intended to be put to shareholders at the Company's forthcoming AGM, the Company expects that its ordinary shares will restored to trading on AIM at that time. A circular convening the Company's AGM will be posted to shareholders in due course."

"The Company currently expects to publish 2019 Annual Report and Accounts on 11 September 2020 and the notice of the forthcoming AGM, on 18 September 2020."

The shares will be restored to trading if the proposed debt restructuring is passed at the AGM. We will find out the date of the AGM next Friday (18th September) and therefore the date trading will be restored (assuming the deal is passed). The reason MTL is suspended is because debts couldn't be serviced not because it has failed to submit its accounts on time. Covid changes mean it can submit last year's accounts any time up until 30 September (3 months from 30 June). The biannual accounts were previously due by 30 September, but this deadline has been extended by a month (31 October).

But this Covid update from LSE Inside AIM March 2020 suggests otherwise:

Pursuant to AIM Rule 41, where an AIM company has been suspended for more than six months, the company’s securities will be cancelled. The LSE recognises that, given the logistical challenges during this period, further time might be required to resolve the reason for suspension and indicates that it will be using discretion to extend the period to 12 months for any AIM company that has been suspended between 30 September 2019 and 1 July 2020.

The last update 1 July said they were experiencing challenges relating to Covid in resolving the accounts and debt refinancing. This would appear to fall within the circumstances described above ie. reasons for suspension not resolved because of Covid delays.

Appreciate it is frustrating not getting any update from the company this close to what appeared to be a major milestone/deadline, but the point I'm making is that we don't know whether the 9 September is even a deadline! Couldn't bear another 6 months of waiting...

6 months I think.

I believe the one month rule applies if suspension is due to a company being without a nominated advisor.

Hi Les
Sorry not clear - sent yesterday, I'm stockbuilder on advfn.

Hello Les and Roy

Been busy today so only just seen this.
Thanks for setting this, good way of sticking together and coordinating - I'm in, so that's at least 3 in the team!

@ALiarAtTheTop:
Yes, that was also my understanding, but as we saw with Ruffer last year, their holding went from 9% to less than 5% (according to the TR1 25/01/2019) and we only found out about it at the 5% threshold. We know, however, from their 2018 end of year accounts deposited at companies house (21/06/2019) that they held around 6% at 31 December 2018. So, clearly they weren't notifying at 1% thresholds.

I know the rules are a little different for some categories of shareholders, including holding companies, investment funds and non-UK domiciled companies, so not sure how this would relate to the Candy holding company (MTL Luxembourg SARL) in terms of notification rules. I've tried to make sense of the notification rules but am struggling!

One thought I did have is that if the company got wind of a sell-off they could have suspended trading preemptively to avoid a crash in the share price. Having read through the FCA manual quickly on RNS notifications, another thought I had is that the company has been unable to stem the leak of news and rumour around the debt negotiations (as we saw with the standstill agreement) and has decided it is easier to conduct the negotiations without various involved parties leaking out the information to advance their own agenda. Much of this is just trying to make sense of the situation; like others have said the forum is a great place to crystallise thoughts and analysis and get opinion from others in same boat here!

As usual for MTL in its moments of "financial turmoil", they are still hiring staff in the Philippines:
https://www.jobstreet.com.ph/en/job-search/jobs-at-fcf-minerals-corporation-runruno-quezon-n-v/

A couple of points to add to our continuing analysis:

1. The shareholder's agreement some have been referring to regarding Graham Edwards/Runruno Holdings dates from 2011. This is from the time that the Candys tried a hostile takeover. This gives a number of protections to RHL including having a director on the board (Guy Walker I think) and to minority holders in general by making special resolutions compulsory in a number of situations where ordinary resolutions would be more usual. However, these protections are removed under a number of circumstances (detailed in section 14.2) including if the Candy percentage drops below 39% or if the company appoints an administrator/liquidator. This makes me wonder if Candy has tried to selloff a number of shares, with the aim of recouping them later via a D4E (the selloff would drive the share price lower and Candy's debt holding would more than make up for this later), if Candy's shareholding dropped below the Solomon percentage then the shareholder's agreement would cease to have effect. I'm now wondering whether the "default" (precipitated by ending the standstill) is being used by Candy to hold the threat of bringing administrators in which again would end the shareholder's agreement. Suspension of trading prevents Candy from triggering a selloff, while the threat of default may be designed to bring Edwards back to the table to negotiate. The more I read in the various historical documents associated with the company, the more I believe we are simply witnessing a clash between Candy and Edwards for control and for their share of the assets of the company, with us all stuck in the middle trying to work out what's going on. I believe the latest events are part of this saga and focussing their minds to negotiate the debt so the company can move on ... This is my latest hypothesis, time will tell if there's any truth to it!

2. Regarding the mining licence. The Philippine national government is unlikely to be a barrier to any negotiations about the mining licence, as they generally seem to be supportive of the foreign investment and contribution to employment/tax take - mostly these relationships seem to be collaborative, having spent a few hours reading around news articles and government info about FCF (MTL subsidiary) and other miners. The barriers to any transfer of mining licence appear to be local government and the President's office (read about OceanaGold's recent problems as an example). Locals regularly raise environmental concerns and I would imagine it is in local government officials interests to appear tough on foreign companies. This is where dodgy international dealings may have most resonance, particularly if FCFs local employees are shareholders (I think there is an employee share scheme).

Not really coherent thoughts, more a collection of ideas after several hours spent (wasted?) reading and researching. Enjoying the debate and opinions and hopefully some facts will emerge soon.

Thanks all for the contributions, and Grocer for an articulate example with potential consequences of poor behaviour (FCA etc.) to send to the board.

I have also emailed them today, info@metalsexploration.com, but also copied to Mike Langoulant (CFO) and Ian Farrelly (Company Secretary) to detail my concerns. I have previously heard back from Mike Langoulant / Ian Farrelly fairly quickly in reply to questions raised.

I agree we need a concerted effort on our part to raise the concerns of smaller shareholders and hopefully to push them to release further information.

Roy, hope your investigations give you the all clear.

This is a real rollercoaster ride!

Really difficult to know what this means.

Although any opinion is speculation at this point, I have a problem understanding who stands to benefit from the situation at the moment. Seeing a lot of references to Candy wanting to walk away with the company. Also speculation that Edwards refused the D4E terms, which would seem to fit that idea.

Do you think that stopping the standstill agreement has been done by Candy to force Graham Edwards into agreeing to whatever refinancing terms they were discussing? A D4E would of course benefit Candy much more than Edwards, handing Candy almost complete control of the company if any significant portion of debt was converted to equity at these levels.

Or, has Graham Edwards put out the threat of default in order to galvanise discussions. Be difficult to see how this would give him any leverage and it doesn't fit with the rumour mill online however misguided that might be!

My first assumption was that Candy and Edwards were in concert here to force administration, which would be the worst scenario as very difficult to stop them.

However, our two last hopes could be that 1) Edwards and Candy are working against each other and have the financial clout to prevent each other "stealing" the company. The company can be quite leaky (last week is a prime example) so maybe the rumours about Edwards refusing the deal have substance.2) that a new company would have to be incorporated to take over MTL and this wouldn't be able to hold the mining licence / would incur government intervention. Be interesting to know if /how many shares are owned by the workforce - the Government may not take favourably to their investment being shafted.

Just my contribution to the debate, a very sad day, but reading opinions on here is great for making sense of things. I hope MTL has not been infected with the "Candyvirus".

Good luck to everyone!

In terms of the shareholder protections arising out of the Solomon offer (2011), the relevant section from the agreement:

"All shareholder resolutions of the Company will be proposed as special resolutions for so long as the
aggregate holding of the Concert Party is 70 per cent. or more of the issued share capital of the
Company."

My understanding is that the concert Party is made up of Baker Steel too, because Solomon Capital (ie. MTL Luxembourg) transferred a share option deed to be managed by their fund.

So, although Baker Steel (6.59%) would likely act with the majority shareholders (65.81%) (total = 72.4%), in theory they're short of the shares needed to pass a special resolution (75%) with a block vote. But... what about the rest of the holders?

Surely though if MTL Luxembourg did get over 50%, they would still be compelled to make an offer under the takeover code.

Bloodninja - I hope you're right!

Not posted for a while, but keenly watching and still holding my approx 1m.
Goshawk.