Very good post IMO. I like how Alberto cam across in the Minesite interview. The large ii's being funders may well be intentionaly taking advantage of the knowledge that by stringing things along they'll grab a bigger slice of the pie, but equally it may just be negotiations between the parties taking the time they need to to run their natural course/ require multiple sign offs etc. FWIW I don't suspect management of doing anything other than wanting to close off the deal as soon as they can.
Not sure this has been posted here but good overview in this recent Minesite presentation. http://www.minesite.com/2015/03/24/emed-mining-plc-alberto-lavandeira-adan-ceo/
Just sharing Mr Carroll's response to my recent queries on the proposed funding RNS for Barrecuepardo. My Q's followed by his answers verbatim. Q1. Does the terminology 'a majority position' used in the RNS equate to 'a majority shareholding'? A. Yes, this equates to a majority shareholding in the operating Spanish operating subsidiary, Saloro SL, which holds the Barruecopardo Mining Concession. Q2. It would seem judging by the negative market reaction to the news so far that it may be understood to be the case that under the proposal Oaktree would become a 51% or more holder of ORM's equity, as well as major lender (implying a 51% or more equity dilution to existing shareholders). Is that correct? A. Under the proposed financing arrangement, Oaktree would provide both required project level equity and also the required project debt, with the equity dilution to Ormonde shareholders at project level. I think this is what you are asking. Q3. Is the 'early evaluation of stage-2 expansion of the project' essentially referring to evaluation of the economics of underground resource or extended open pit mining? A. This principally refers to drilling and technical studies relating to the potential underground mining continuation from open pit operations although the drilling would also investigate areas where open pit mine life may be extended (principally in the northern portion of the deposit). Hope this is useful. GLA
Next steps outlined by the CEO of ORM in the Minesite interview: 'The plan now is to close off the financing and get into construction as soon as possible. Kerr says that it’ll take 14 months to build and commission the project, so assuming that the debt and equity deal is sown up in early April, as currently envisaged, that could allow for production to commence late next year or sometime in early 2017'. Reconfirms that the details of the equity/ debt split on the proposed Oaktree deal won't be shared with the market until April. GLA
Yup, sorry.... Just found this on Proactive Investors website, relevant comment from John Meyer at SP Angel: "Without knowing the split between equity and debt it is difficult to judge whether the deal on the table from Oaktree Capital of debt at the PLC level and project equity is better than debt and equity at the PLC level," said John Meyer.
In the news: http://www.bbc.com/news/business-31483874
Interested in level headed views on the 'majority position' terminology used in the ORM RNS. It may have been misinterpreted by many? I remain puzzled myself. I have emailed the company for an answer on it, as there may be a chance it is something different to 'a majority shareholder' i.e. taking 51% or over (implying that level of dilution) of equity in the company e.g. 1. It might possibly refer to the sum total of Oaktree taking the 'majority position' of seats on the ORM Board (and all the best chocolate biscuits at board meetings, a large equity stake and the wearing of the lending trousers). 2. Similarly, it is terminology Oaktree specifically wanted, so they come across as Johnny big boots, with the possible benefit of collecting cheap shares from panic sellers? Therefore justifying further bigbucks bonuses from their clients. 3. Simply a poorly worded RNS (seen the effect of that one before!). ORM don't actually pen that many and you would think such an important one wouldn't fall foul of this but never say never?. 4. Anything else you can think of. Probably some of that is conspiracy twonk (apart from the big bonuses and chocolate biscuits for the Oaktree guys) but many things are possible. 'majority position' in any case sounds very American to me. On a re-read it refers to a 'majority position' on the Project (not in the company), so something along the lines of the above could be conceivable i.e. the majority position being primarily a 'lending position'. It may also be lending + >51% equity as I think most assume. Proof will out in the funding deal of course. Tiberius Asset Management are a serious commodities outfit so good to have on board and would be investing for the long term. They took their stake relatively recently (surely in the period when Oaktree's due dilligence was being undertaken). I would think that they must have been cognicent of the funding proposal/ source and therefore happy with them. Whilst they will not sweat about this sp drop one iota (it is small beer to them and would be thinking long-term), they must now be down about 45% on their investment. N.B. Just on currency moves in the swiss franc I think they could have bought 20%ish more shares for the same cash just one week later than their purchase due to that unexpected decision by the Swiss national bank to de-peg from the Euro. In anycase, PI's can currently buy below where they bought presently.
Ormonde Mining (LON:ORM) – Speculative Buy Yesterday, Ormonde Mining provided a financial and operational update on its Barruecopardo Tungsten Project in Salamanca, Spain. The company secured the funding requirements for the development of the project through a financing package from Oaktree Capital Management. The total funding amount comprises of debt and project equity, giving the majority stake to Oaktree with Ormonde managing the Project for an ongoing management fee. The company and Oaktree would finalize the project financing arrangements during the exclusivity period extending to 10th April 2015. The company has also agreed for an additional loan facility of US$1.5m from Oaktree on normal commercial terms. On the other hand, Ormonde completed the negotiations for power connection and water supply at the project site. Construction design for power line, water line and by-pass road have also been finalised. Sub contractors have been shortlisted and the project statutory manager and environmental officers have been appointed. Our view: The availability of a financing package for the company’s flagship Barruecopardo Tungsten Project is likely to ensure rapid progress towards development stage in 2015 and production commencement in 2016. The low-cost mining project, once online, is expected to be a major supplier of tungsten in Europe. Oaktree is a major alternative investment manager with nearly US$90.8bn of assets under management by the end of 2014. Its interest in the project reflects the authenticity of the underlying potential. Apart, Ormonde is also making progress on La Zarza Copper-Gold Project with significant copper, gold and zinc resources and several gold explorations in several highly prospective areas of western Spain. Given the above, we maintain a Speculative Buy on the stock.
The proposed deal must offer ORM the c. E70m it was seeking via an (as yet) unspecified debt/ equity split. ORM surely know the split and the management fee element, although they were not given in yesterday's RNS. The significant shift in Euro weakness vs Dollar strength (since the DFS) probably provides upside in terms of 'evaluation of the Stage-2' mentioned in the RNS (which I assume to mean evaluation of the underground mining option at the project). As I understand it that was not previously part of what the E70m was being sought for, although I may be wrong on that. Re. the 'majority holder' terminology used, must surely mean a minimum 51% of the shareholder equity mustn't it? So a potential for a minimum of 51% shareholder dilution in the deal. Otherwise, why not use different terminology and say Oaktree will become a 'significant shareholder' or even 'the largest institutional investor'? Given the 'majority holder' terminology I was at first surprised to see no mention of the need for the proposal being required to be put to vote/ subject to the UK takeover code but remembered ORM is an Irish registered company so not subject to the UK takeover code. Holders would have to accept this as a risk of investing in Irish registered companies. Large trades yesterday indicate some ii horsetrading IMO. Maybe some more Holdings RNS's on the way through to April and some confidence may be restored by ii's demonstrating they are upping their stakes at these levels, particularly if Tiberius do so. Outside the proposed deal announced yesterday - I suppose it is also possible that another offer may be forthcoming from Almonty, as they have just pulled out of their proposed tie up with WOF due to not agree terms. Speculation-a-go-go. http://almonty.com/_resources/news/nr_2015_02_17.pdf ORM's house broker SP Angel remain positive: *'In our view Barruecopardo is a valuable asset – it is a good quality tungsten project which is now permitted. Finding a project of this quality is difficult and shareholders who have been patient with this stock should hold on to see the final terms on this package. Tungsten prices are below the base case on the DFS of US$350/mtu which is 16% higher than the current spot price of US$292.5. In our view, a US$350/mtu price for tungsten is supported by supply/demand dynamics of tungsten and importantly the project still stacks up even at a tungsten price of US$250/mtu. In addition the Euro is now much weaker when the DFS was set at US$1.30 against current spot of US$1.14 which will make the project cheaper to operate'.
Impossible to know - won't find out until the deal is done on 10 April is how the RNS reads to me, unless I have missed something?
Looks like a change of plan from the E50m bond funding and E20m JV here that was being sought. Had assumed Nordbank would be seeking Scandinavian bankers to pick up the bond funding. Nordbank big in Sweden and Norway (Norwegian banks been hit big via oil price drop may have been a factor in the change of funding source?) I am less surprised to see a US company taking an interest in funding the project due to the US dollar strength and Euro weakness. US$'s go a long way! Aside from their distressed debt business since 2014 they have been investing in value plays in underperforming sectors. From Oaktree's website: 'Central to the strategy’s process is the identification of sound companies with substantial asset values or business franchises that are trading at a sizable discount to long-term intrinsic value due to short-term adversity or uncertainty. “Identifying and investing in a concentrated portfolio of out-of-favor stocks is Value Equities’ key to generating alpha,” says portfolio manager Patrick McCaney. “This is in contrast to managing a highly diversified equity fund where returns are generally far more beta-driven,” he adds. The strategy’s broad charter allows the team to look at equities across industries, market capitalizations and geographies within developed markets'. They have done their DD and I'm pretty sure as sure that it'll work out a good investment for them. For ORM, presumeably for the BoD as they'll continue to get paid. For other shareholders? More detail on the debt/ equity split/ management fees etc (not likely before 10 April 2015 as per RNS) required. Sounds like Oaktree will be pulling the strings though. Were Tiberius Asset Management on board with this change of plan given their recent on market buying? Also possible reason for JPMC reducing? One thing is for sure Oaktree's US$'s will go far in this current exchange rate environment. Hope it works out well for all shareholders here. GLA
Tungsten pricing in China has stabilised and firmed slightly in the last 90 days. In fact most traded measures have firmed or at least seen the pace of declilne reduce over the same period. http://www.asianmetal.com/news/getProductsNewsEn.am?productThreeID=53
o/t tungsten deal news A week or so after Woulfe (S. Korean Sangdong historic tungsten resource) update their feasibility study, news is out that Almonty Industries (the only other tungsten producer in Spain besides WRES) and Woulfe are proposing a merger of the two companies. Almonty previously took a look at ORM but were given the cold shoulder. Let's see how they fair with Woulfe - looks to be a friendlier approach. Might rule out their future interest in ORM? Good to see Tiberius picking up some of JPMC shares here. Finance news once the ii's get their respective houses in order? http://tungsteninvestingnews.com/5486-almonty-industries-enters-loi-to-acquire-woulfe-mining.html
Good luck mate and all here.
That's looking a bit better. Interesting move up, maybe JPM are done on their selling. GLA
Looks good but that spread is the largest I have seen here 36.36%? That's ridiculous
Yes, still don't have the full picture but JPM seem to be clearing out with what looks like 15,251,536 left to go. iis tend to deal in round numbered trades - look for a trade that ends in 251,536, that'll be the last one you see from JPM (if indeed they are clearing out). Good luck mate
2 more huge 10m trades appeared afterhours - delayed notified from the 15 Dec. Weird price, was above the bid for that day for sure but given the subsequent drop since can only have been sell trades although they are shown as buys. Things becoming a bit clearer and I've changed my theory here - JPM have reduced again to 3.23% holding as of today and tbh looks like they may be exiting and their selling causing much of this recent SP weakness. What is weird though is that from their last holdings notification and this one JPM appear to have sold 12,142,745 shares, so maybe only 1 of the latest 10m sells is them. On the +ve, they only have c15m bullets left if they are exiting and will have to notify again if they sell another significant amount as are just above the 3% now. Financing news may provide the missing pieces to the puzzle.
I think Spindok may be referring to the large 2.5m sell reported afterhours yesterday @ 2.5p and other round numbered selling that has been going on including a possible overhang from those large 11m ii sells recently. It is all about the funding here atm The BoD have outlined there is some probability of a large equity component of the funding package and maybe 'the iis know the score' so have been selling those big chunks to participate at a reduced price, hence lowering their average? Or they could just be tax loss selling or whatever. Would be good if ORM could dispose of its other Spanish asset to limit dilution or agree a JV to Barrecuepardo to the same effect (cE20m was being sought for this), cE50m sought from bond funding. At some point they'll need to raise more cash though, as they have been only spending on the engineering work etc with no income. Any delays to funding will bring that into focus. Hopefully the BoD have things in hand. SP now gone below the 2009 low, in fact an all-time low, so a better place to enter for the patient investor than at any point before. If/ when funding deal is done this could do very well. GLA