Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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
Hi looked a bit concerning to start with, but looks more like they want to operate their rare earth industry without Chinese dominance
Good morning Theo, my thoughts are that the events have unfolded since the recent appointment of Fernando Marino as operations director. He comes with very good credentials. Smelling something not quite right and not unsurprisingly not revealing the extent of the issues until he was sure of the facts. Considering he was appointed End of August, getting to the bottom of the issues, getting them verified and then producing a cost estimate of the impact of the project within 6 weeks. The board maybe deliberating for another week before releasing the RNS. This is not an unreasonable time frame. To me, there are questions as to how they got there in the first place, but the actions taken to appoint Fernando points to an appreciation that they need more oversight than was previously being provided, and a timely issuance of an RNS when a event with very significant materiality was realised.
For your info SP, he is still banging on about the 25% royalty on sales which is a complete mis-interpretation of the license. The royalties are 2%, the 25% is the CIT rate that will be applied to profits, as they are to any other Angolan enterprise. These will be split 20% to the central government and 5% to the Huambo province government. I raised this with Pensana over 2 years ago and it was clarified then. Needless to say i carried out my own verification. The terms of the license are the Standard terms applicable to extractive industries in Angola, with some investment incentives that are also available by Angolan statute if conditions are met. The official communication is in Portuguese, where that published is an English translation. In the event of any dispute the original Portuguese notice takes precedent. If you would like to register with another excellent site, an overview of the mining laws can be found here https://www.lexology.com/library/detail.aspx?g=589459c9-3d0c-4fb8-9a40-73dee3b78ed8
However the relevant info states
Royalties
As a general rule, royalties are levied on the value of minerals extracted at the mine head or, when processing takes place, on the value of concentrates, at the applicable rate:
1. strategic minerals: 5 per cent;
2. precious stones and precious metallic minerals: 5 per cent;
3. semi-precious stones: 4 per cent;
4. non-precious metallic minerals: 3 per cent;
5. semi-industrial and artisanal diamonds: 3 per cent; and
6. construction materials of mining origin and other minerals: 2 per cent.
Rare earth concentrate comes under section 6, as “Other minerals”
I have acces SP, but then again i paid my subscription… t
As i said (although i said TImes) you have quoted Mining weekly. But PRE has not issued any RNS with any amount. Suspect you spent 20 minutes googling to find that link
Valuation, there was no intention from SP to inform this board of anything it was, as usual, a misleading statement designed to malign and mislead readers. There was announcement re support from the ATF as stated, however, there was never any announcement of the quantum (other than a rumour in the times). The RNS this week clarified the quantum and some of the terms and was therefore material and justified.
It was 1.72 in July, under the same funding conditions, obviously taken a tumble since then to 125 in September
Trickydicky, i think you put it far better than i did. If i was underwater like a lot of holders are here, i suspect i would be feeling the same. Believe me, I know how it feels when a company puts a totally non-sensical financial update out that doesnt reflect the true position, and the market punishes the SP accordingly and immediately
Bebeto, hence the price
Trickydicky2, based on the current 20p, and the previous fully funded £1.75, that would give the same chance of winning the same return by putting 4 numbers on a roulette wheel. But that would be pure chance. HZM investors have far more information as to whether to risk their cash. My point was not that there is no risk, but that the risk discount is way over done.
Headder, you hit the nail on the head. The perceived risk being attributed to HZM due to the recent RNS far exceeds that attributed to Canada Nickel. Hopefully some future news will de-risk and the SP will increase accordingly. With due deference to the LTH’s, the current risk/reward profile for HZM is off the scale. But for me the discount currently being inflicted on HZM does not reflect anything like the true position. As with any share, i wouldn't bet my life savings, equally HZM is probably offering one the most attractive risk/reward ratios in the market today. This is a good project.