Member Info for Metalhead25

Zappy, if helpful, a quick overview of how a solvency issue would likely arise based on a typical secured lending agreement governed by English law (caveat: no idea if the Newgen agreement is typical or governed by English law):

- Agreement provides for schedule of interest and capital payments
- Agreement contains various warranties and/or repeating representations providing that various scenarios are treated as an “Event of Default” whereupon the lender can call in the whole debt and becomes entitled to exercise security. Events of Default are usually not limited to actual defaults but include all sort of indicia of being in financial trouble.
- If the lender becomes entitled to exercise its security, it will normally do so by appointing a receiver of the company’s major assets and/or by appointing an administrator or administrative receiver of the company itself.
- The aim of a receiver is to realise assets to pay the lender. If selling an asset, eg the mine, the receiver has to make efforts to obtain the best price reasonable practicable, but that duty certainly would not require eg waiting for the copper price to rise - it would be a case of what bids can be obtained reasonably quickly now.
- If cash is realised from a sell, it goes first to the receiver’s fees and expenses (inc legal expenses and costs of the sale process) then to the lender (inc capital and interest and lender’s costs) then if there is a surplus it is retained by the company

I’m not going anywhere with this, just trying to add a bit of info!

Moon “This is point that rmm be best situation ever after they do what need to be done”. It really is important to distinguish between the company and its current shareholders. Example. New equity of $50m at 1p per share. Newgen paid off, ore sorter purchased, plenty of working capital to ride out copper price. Boom - the company is heading for the stars. But, the pre-raise shareholders are all but wiped out.

Not intended to be a realistic example and I’m not saying anything like this will happen. It’s just to illustrate my point about the need to think clearly about the different stakeholders. GLA all.

I think it depends how ambitious they want to be in the KCB. I think we could certainly put two holes into B1 and have a small to medium campaign at each of two KCB targets

Today’s copper price obviously includes a large element of the market’s assessment of where the spot price is going in the future - particularly as the “copper price” we all look at it is futures for delivery Dec 22. People can disagree with the market, of course

Company’s website has financial statements as at 31 Dec 2021

Fair enough, I do get where you’re coming from to some extent

Strummer, I sold yesterday but it was a tactical risk-limiting move done without minutes of seeing the RNS. It’s not necessarily a final decision, and subsequently I have spent lots of time carefully considering the matter. I don’t see why I shouldn’t discuss views with others on this forum while I’m thinking

Love the idea that “drills confirming nothing suitably commercial” is a problem that would be fixed by changing CEO. Transparent agenda much?

First one should have said “lower”. Bloody consolation margaritas

I can help with this, 7:

- want price to go higher, say things are terrible (no reasoning / made up reasoning)
- want price to go higher, say things are great (no reasoning / made up reasoning)

Thanks F79 - interesting. I really wish it was clearer. Very hard to make decisions

I’ve now read the RNS over and over again and am still really struggling to work out what it really means. So, a commentary below… any assistance working it out appreciated!

“The Company has recently completed an update of its long-term financial model taking account of the current macro-economic situation, which has indicated a requirement for additional capital [THIS WOULD SUGGEST NO SHORT TERM ISSUE, BUT SEE BELOW]…

It should be noted that the current stress on the business is from balance sheet weakness rather than operational viability. The focus of new capital would be to strengthen the balance sheet [THIS MUST MEAN THEY WANT TO PAY OFF LOANS OR DEFER LOANS OR JUST HAVE ACCESS TO MORE WORKING CAPITAL, BUT NO IDEA WHICH] at a time when operational performance has improved following continued development investment…

The principle issues that the Company needs to address on its balance sheet in the short term [NOW THERE ARE SHORT TERM ISSUES - COMPARE PARA 1 ABOVE] are acceleration of the repayment of legacy commitments made during the intense Covid period [WHAT ARE THESE? THE OBVIOUS THING COMING UP IS PRINCIPAL REPAYMENTS TO NEWGEN BUT THIS WOULD BE A CURIOUSLY OBLIQUE DESCRIPTION OF THOSE. IF THIS IS A REFERENCE TO NEWGEN, DOES “ACCELERATION” INDICATE THAT NEWGEN ARE CALLING IN THEIR WHOLE DEBT EARLY? IF NOT, WHAT IS THAT WORD REFERRING TO?]; reduction of current operational accounts payable balances back to current terms [I’VE READ THIS PASSAGE 20 TIMES AND STILL CAN’T WORK OUT WHAT IT MEANS]; rescheduling the repayment of longer term debt to better match Rambler's operational cash flow generation [IS THIS A REFERENCE TO NEWGEN AND DOES IT IMPLY NO ACCELERATION OF THE NEWGEN DEBT? (COMPARE ABOVE)]; and further capital expenditures to further reduce operating costs. In addition, the Company is conducting a continuous review of its operational and capital commitments to identify elements that can be deferred without impacting near term operations, to ensure financial viability in the face of current copper prices [HOLDING OUT FOR HIGHER PRICES?].

The capital to be sought is intended to consolidate the Company's operational gains and commence the process of strengthening the balance sheet in a more permanent way [THE FIRST FINANCING ANNOUNCED WILL JUST BE THE START?]. As indicated in the Company's 2021 year-end accounts, Rambler started the year with limited working capital [REALLY?] and as production has increased in an inflationary environment, the Company's working capital needs have grown. This was accommodated to some degree [EVEN AT 4.50 CU THEIR WORKING CAP NEEDS WERE ONLY ACCOMMODATED TO SOME DEGREE??] with a previously favourable copper price but the current period is such that the Company recognises the need to prepare for a more sustained inflationary environment and one where copper prices may be more inherently volatile.

Agreed mate, all the best to you and all shareholders

Fuku, “For me the market and I need to see financials and to understand in more detail the proposed finance plan/requirement/costs”. Completely agree, but will the company deign to provide that information in advance of implementing their chosen solution? I doubt it. More likely the next RNS is the one announcing the outcome

I don’t think day to day operating cash flow is negative - the RNS suggests that isn’t the problem. But presumably it is not strongly positive either. And just breaking even is not enough for a company with substantial debt and significant capex requirements. I read the RNS as suggesting we are not solvent based on our current cash flow and current debt and capex requirements. That is the problem that needs fixing. Problem is, there is no longer an operational turnaround story to sell, as that has been achieved. If the company is now purely dependent on a rising Cu price to be viable, why will anyone lend or take up a placing, except on extreme terms?

I think there is a particular concern arising from the phrase “acceleration of the repayment of legacy commitments made during the intense Covid period”. Acceleration is usually (not necessarily) a technical term referring to a lender bringing a repayment date forward, usually due to some sort of breach of covenant. This is what makes me think there is an emergency here. Would also explain why this comes out of the blue. Could be wrong

I have sold at a big loss. Sadly the RNS reads to me that the company is either going bust or diluting its shareholders out of existence. I think if this was an ordinary need for money we would have just had a placing, which could have been done at 20p or something. Why haven’t they done that? Presumably because they need too much money / couldn’t get one away, or, worse still, they couldn’t justify inviting people to buy shares without first disclosing a solvency concern

5 transactions this morning, all buys, all marked as sells. This website needs to be better

I am very happy to see such a huge investment by the CEO, plus a smaller one by Bill. Over time it has been a fairly often expressed complained that Bill wasn’t putting his money where his mouth was. Now we know for sure that our CEO believes very strongly in our future

Anyone catch the SharesMag webinar?