RE: Get a chunk of cash sooner from Greenland to exploit Wales20 May 2021 09:36
This is all good
Alba will retain substantial upside in the Greenland assets post disposal because, in consideration for the sale of the assets to Greenland Listco, Alba will receive a significant shareholding in Greenland Listco. Further, as Greenland Listco's management team will be focusing all its efforts on growing the value of its Greenland asset portfolio, we would hope to see Alba's stake in Greenland Listco also grow ever more valuable.
At the same time as retaining that upside through its stake in Greenland Listco, Alba would no longer have to meet any of the funding obligations for the Greenland Projects. These are likely to be significant in the medium to long-term, as Greenland Listco seeks the development capital to progress at least one, if not more, of its projects into the development stage and ultimately into production.
Not having to fund the Greenland Projects will inevitably mean less dilution for Alba shareholders, as it would significantly reduce our need to seek further capital from the public markets.
With the Greenland Projects divested, Alba will be able to focus on its UK and Irish portfolio of precious and base metal projects which, in our view, are what have fired the Company's growth over the past 12 months.
Greenland Listco will, in turn, be able to focus solely on the development of its Greenlandic assets, including raising money from investors and institutions who are specifically interested in those assets and/or in Greenland and therefore much more likely to be long-term investors. Greenland is expected to play an increasingly important strategic and geopolitical role on the world stage and in the global mining sector in the coming years. With its pure Greenland focus, Greenland Listco will be able to benefit from this increased exposure and interest in the country from foreign investors and sovereign states.
Looking to the future, Alba may choose to sell down some of its stake in Greenland Listco, once the post-IPO lock-in period has expired, or it may decide to retain its shares in Greenland Listco for the long-term or, at least, until its stake in Greenland Listco has increased significantly in value. The point is that, as a result of the disposal, Alba's stake in the Greenland Projects would become a liquid, tradeable asset, which in itself could add significant value to the Alba Group's balance sheet. This is not the case at present, with those assets being held within the Alba Group and being valued purely on a historical cost basis.
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