Member Info for Mumbles2021

NIW, the RNS did say that, but I'm sure the bank will allow limited release of funds for care and maintenance pending discussions. It's in their interest to keep the project on track, even if progress is in stasis for a while.

They wouldn't automatically get the previous debt arrangement. A new one would need to be negotiated and the old settled in full (or whatever they agreed on). Or they woud have to make an all cash offer, including the outstanding liabilities, which would include the already drawn down portion of the debt faculty and and any costs assosciates with it.

Bibente, why are you name calling, this is a discussion forum.. Firstly I agree it is a standard set up. I also agree that if a HOLDCO goes into administration, the OPCOs can continue to operate for as long as the agreements continue to function. So i actually agree with your points, but it doesnt make the points i make any less valid. None of these companies are set up as a separate legal entities purely as a protection in the case of insolvency, although that is one of the considerations, but also for practical considerations that are outlined in my previous.

Bibente, the reason why there is a legally separate entity to the holding company is because it has to comply with a totally different legal jurisdiction with different fiscal regulations that need to be ringfekced within the jurisdiction within which it operates. Of the owner goes into liquidation the asset is sold

Beneto, it might be a legally separate entity. But it has an owner, in this case it is Horozonte, which is an asset that needs to be liquidated

MV01, usually a share issue would be based on the total number of shares. ie HZM case with approx 250 mill, a further 750 mill would be issued (at 30p, this would raise $225 M) and would amount to a 75% dilution. Not ideal. It would also need an EGM to authorise the additional shares. it has been suggested that some equity in the operating company could be sold, as HZM own 100% of the equity, up to 49% could be sold to raise additional capital without losing operation control. this would reduce attributable cashflow to this project, but would leave the other assets intact. or even a rights issue and a partial asset sale to reduce the solution. The point being that administration is a last resort for all parties. if the lenders beleive that there is a realistic chance of the a solution being found, they will release a limited out of funds to continue on a care and maintenance basis, as it is in their best interests to do so.

Unsurprisingly, there is considerable speculation regarding the ultimate fate of Horizonte, i.e. whether it will have to go into administration or whether Horizonte will find a solution to complete the project.

Administration: The receiver needs to obtain the best possible price, considering the creditors in following seniority, Government, Lenders, staff, and then equity holders. Further speculation has been that if the company goes into administration, the lenders will deal with Glencore or a consortium of the cornerstone shareholders to pick up the project for a low value.

RNS advise that USD 131.2M of the senior debt facility is available to draw on, assuming that specific criteria are met. This infers that 215 million of the 346 M facility has been drawn down. HZM also advise that $429M has been spent so far. The spend is, therefore, split roughly 50/50 debt and equity holders. The three cornerstone shareholders hold approximately 50% of the stock, inferring they stand to lose over $100 M on the administration route.

The banks will look to make themselves whole on any sale of the assets. Consequently, they will be looking for $215M as a minimum and will resist any haircut. Therefore, any new buyer must come up with $215M, + 136M + 200 M or $551 M to finish the project. The big 3, would have to add their equity losses to this, consequently a further 100M would be added to their contribution. To mitigate this, they would look to the lenders to take a haircut, The lenders will be resist this. Assuming it is refinanced on the same basis as now, they would still need to come up with another $220 to finish the project. This would give them 100% of the P&L.

However, if they were to have a 3:1 rights issue at 30p, it would be oversubscribed. They would only have to put $100M and maintain their current equity share.

My point is that unless the banks are prepared to settle at a significant discount to their current loan value, there is little value to forcing the administration route. Glencore already has the offtake, so that doesn’t enter into the equation. my own view is that this stock is worth holding, at 10P its definitely a buy

ART123, that was my reading of the RNS as well , they have put the project into an enhanced care and maintenance to reduce cash burn and bought themselves more than a few months pending the resolution of their financing issues. even if they went into administration, the receivers should be able to get multiples of the current market cap for the work already completed, plus the asset. The cornerstone investors will insist on that. There may not be a recovery imminent. but definitely a hold for me, (at the price i bought)

Hi Lewis, other than giving comfort to investors a good track record is not a prerequisite, I'm not saying a bad one is acceptable. But absolutely correct that good management is essential. I also agree that HZM could have contributed, but think it's more likely due to the lack of liquidity on Pensana stock. I posted the following on another forum.

Somebody needed to exit, ie needed the cash. There was a 100k purchase at 31.6p at 0930, then consistent selling down to 28p between 1115 and 1415. In total it took 90,000 shares over 10 trades until the price hit 28p. Average price achieved 29.5p. Not saying this is the case, just that it doesn’t need to be any conspiracy. Only took £26,000 to lower the market cap by £10 million pounds. The stock is so tightly held, if you want out, you are going to have to pay, converse is true, 100k buyer paid 31.6p the same day.

Or they get together and make an offer of 270 million for the whole company. Ie a £1 a share. Actual cost to them of $135 million. Plus the cost to finish the project say $200 million and take full value of the company going forward. Lot higher effective SP and the participants are free to exit whenever they like at a commercially realistic price rather than subject to the whims of the stock market

SP, I'm not sure what point you are maing, but im also not sure I'm going to disagree with you either. fully agree with your first para. Which is presumably how SSW came up with there own valuations.

Been thinking about this today, as straight capital raise, a 3:1 rights issue would be required at 25p to raise $200 million USD. this would dilute the 3 major shareholders down to 12.5% if they dont take up their option at a combined cost of $ 100 million to retain their share of the $1.3 bn NPV ($565 m).

if they were to combine together for a take over at $1 a share, it would cost $135 million to purchase the shares they dont own, plus $200 million to finish the project, giving them 100% of the NPV for an additional cost of $ 235 million compared to a $ 100 million cost of maintaining their equity stake %.

They could of course offer less than a $1, say ($0.50), giving a combined cost $ 266 million to finish the project, rather than $335 million for a $1.00/share but they would have to get that past an EGM. Just a possiblilty to mull on.

Lesssee, i sincerely hope he has some say in the engineering and the due diligence. at least in the parameters and scope that they are responsible for executing and/or reviewing. thats his and/or his teams job.

Good advice Lewis, and the price absolutely reflects the perceived risk. The market can be cruel, but its generally honest......

Lewis, I dont get it. the company has no money of its own, if any PI thinks this can be done with no dilution then they need to start reading Trading 101. the trick is to keep it to a minimum and for any diltion to be ringfenced to the project and not the whole company. it was valued by the Angolans at 65p. the price discovery method used was the strategic investors valuation performed at the beginning of the year. (waiting for the "well we all know how that work out" comment to follow. its fairly common knowledge, although not admitted by either PRE or the potential buyer that the company was Sibanye Stillwater. the issues they were having in South Africa and Australia became well documented at the time.

Theo please dont. All you are doing is baiting and waiting for a reaction. They have had a complete redesign of the plant, (but not the process), focussing on smaller size (less cost), but fully scaleable to ramp up in year 3. also the plant is producing MREC rather than double sulphate. I also noted that the reason given for the increase in capex for Saltend due to scope changes, i dont know, but wouldnt be surprised if some of the capex has been shifted to Saltend to make Longonjo more fianceable as a standalone project. so the engineering did take some time, before the due diligence started which a-rare toy was end of August. More importantly, clarifications have been given on how the finance will be structured and how this will be achieved. Namely by some of Pensanas equity being sold, at a value equivalent to 65p at PRE level. This is a value that i worked out and disseminated to most boards in September. This at least gives confirmation of the the effective dilution. (About 10% overall, if converted to shares at that value and not the 31p we are seeing now), which is a great result. I would also like to know if you Israeli or chinese :-)…….. SP/DP please jump on, i know you wont be able to resist

Bankrupty, i can vouch for that just did 135K and the bid was hit immediately, and im definitely a buy!

Your obviousy bored Theo.

Or work on an assumed 70/30 debt to equity ratio

Plenty of scope for this to fly, SP virtually doubles even at a 95% discount to potential