Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Thanks for sharing the background - interesting to read
Where do you see this heading next if you had to guess? Will we all be taken to the cleaners or you think given there’s many Russian shareholders they’ll take us out with an offer (albeit perhaps lowball)
If that’s the case not sure that would bode well for us
If we have to dilute even by say 50% and that solves all the offtake, GPB debt issues... would be a no brainer for me vs the market cap where we are now
Jayzaround - agree with you and the other points below. Just to play devil's advocate for a moment, I thought I'd set out some open questions that remain for me. Would be good to get others views on these points
1. Why did Strukov try to sell his stake a few weeks ago to Region for a low price if he believed this situation would be resolved somehow?
2. Why did GPB not assign both the RCF and term loan to UMMC to solve the sanctions issue and allow POG to start selling its gold again? Is GPB trying to withhold any sales revenue from us to force our hand? If so what would GPB have to gain from this
3. Why would UMMC buy the debt if they could have spent that money to take over the company? As extra leverage, or are they going down the hostile route to get the assets cheap?
Hopefully the coming week we'll get a further update - it's been a while now since the last meaningful update (not counting the recent vague ones)
Do you think there’s any chance of POG changing it’s listing to another exchange / redomiciling? Probably too complex / time consuming, but it would immediately solve the GBP offtake / debt issue
Interesting press release back in April by UGold (translated with google translate) when the sale to Region fell through
http://www.ugold.ru/ru/press/release/detail.php?ID=278
"UGC announces the decision not to close the transaction on the sale of the owned stake in Petropavlovsk PLC., previously concluded with the Region Group of Companies
The decision is due to changed external circumstances that are beyond the influence of the parties to the transaction.
Taking into account the latest statements of the Board of Directors of the company, UGK considers it important to draw the attention of management and independent directors, who make up the majority of the Board of Directors, to the need to take urgent measures to optimize the debt portfolio and search for optimal solutions related to the listing of shares, allowing to ensure the highest possible level of protection of the interests of shareholders and maintaining the value of Petropavlovsk PLC."
How does UMMC come in to play re Evraz? Sorry if this is an obvious question, just hadn't realised they were involved in Evraz (have only seen them re POG)
Just thought I'd set out another alternative outcome - UMMC takes out the company for say 8-10p. In this context I think the MOEX price might be important as well, as I would think they wouldn't want to screw over the Russian shareholders. UMMC buys the company for a historically very low price - and as you say with a Russian owner all problems go away as they can sell to GPB without problems (instant value re-rate for them). In this scenario the purchase of the debt is leverage for them in their negotiations with POG. Shareholders happy, lenders happy, UMMC happy
There are many potential outcomes here though (as you set out in your message) - we need to wait for an update from the company to see which way it will go
Slightly old article, but thought it had some interesting context on UMMC and the loan transfer (below in English with google translate)
https://www.vedomosti.ru/business/articles/2022/04/20/919042-ugmk-vikupila-dolg
"The bank has the right to demand early fulfillment of a loan obligation if the borrower violates covenants (established obligations), says Sergey Uchitel, partner at the Pen & Paper Bar Association. For example, an obligation to maintain certain financial performance can be established as a covenant, he explains. The borrower may try to challenge the early repayment requirement in court, the lawyer adds.
As a result of the assignment of rights on the loan, Petropavlovsk will now make settlements on it not with Gazprombank, but with UMMC, says Dmitry Puchkarev, an expert on the stock market at BCS Mir Investments. This was confirmed to Vedomosti by a representative of Petropavlovsk.
According to experts, UMMC may subsequently receive a stake in Petropavlovsk or its assets. Puchkarev suggested that due to the collapse of the deal with Vysochaishy, ??UMMC bought out the debt of Petropavlovsk precisely in order to get the production assets of the gold miner. This can be done in case of default on debt obligations, the expert explains. UMMC has long been eyeing large gold assets, and the deal to acquire Vysochaishy fell through, so it is logical to assume that Petropavlovsk will be absorbed by UMMC, agrees Sergey Grishunin, managing director of the NRA rating service. “Probably, the debt will be transformed into equity, and UMMC will get a stake in Petropavlovsk,” he says.
For UMMC , the acquisition of an asset in gold mining is an expansion of business, diversification and an opportunity to gain competencies in the production of gold from refractory ores, explains Grishunin. Access to Petropavlovsk also gives UMMC the opportunity to operate the Pokrovsky autoclave hydrometallurgical plant. This will allow the company to earn on the processing of third-party ores.
UMMC is interested in buying a gold mining asset, Puchkarev agrees. According to him, 2021 was successful for UMMC due to the growth in copper prices, now the cost of the metal also remains high and the company has extra funds for M&A transactions."
in the garden - he’s been quiet today
I did a final cheeky top up for the week
If they sort it all out (big if) and this goes to 15p+ I’m going to Petropavlovsk on holiday
Lol!
But I’m staying on the dance floor. Bring it on - come what may
Friday afternoon RNS or no news this week, what do you guys think?
Until we get an update from the company we really don't know what they may or may not be working on - it's all speculation. All we know is that they've been exploring options with Alix Partners for a few weeks now, they're presumably talking to GPB about a waiver, and they've applied for an export license. We just have to wait and see how all those workstreams pan out eventually.
Seems like a quiet day... almost no volume