Calling Observer842-Thank you10 Mar 2019 15:19
Observer842,
May I kindly run a few points through with you:
1)The IRR of BCN [KDNC owns <5% + JV] is at <30%. I looked at Lithium Americas [JV with Ganfeng] and it has a high IRR at some 40%?
It was in the night so this is from recall. Yes, I realise BCN is clay. From recall, analysts look for 30% IRR as the minimum in an ideal situtation not necessary lithium co*s? So, can this be improved?
2)If anyone attends the KDNC AGM, could they ask informally whether in general, is it not the norm for BCN to offer shares to KDNC in return for the JV? This is in order that before funding is done, institutional investors + funds know that BCN owns the licence of Sonora in its ENTIRETY legally? If not, then this is an anomaly? So, KDNC or Kiran is not discussing anything other than norm.
3)Alan Green cites that KDNC owns some 19% of EMH and by extension = 19% of NPV at $540m. He also said it could increase. In terms of M & A metrics which is a reasonable benchmark to ascertain fair value, one broker cites 70-75% NPV [copper and gold case]. I am aware that lithium may have another metric.
4)For those who attend the London KDNC AGM*s etc, I wonder if his Lordship [history now so can ask] at BCN would have been better off for his co to be London listed and therefore able to obtain funding for the project? After all, funding could not be done in Canada at the time even for drilling and this is the reason why our Founder was at hand to provide funding once he had looked at Sonora? I am talking about about the REM [London listed] takeover offer of 88.5p.
5)I looked at the BCN presentation and saw that his Lordship*s family has sold down their share of BCN to become minority holders?
I am puzzled about this. If his Lordship had asked our Founder if he had the backers informally and he said yes, then any official takeover offer at 88.5p would require an issue of documentation under the Takeover rules?
6)Mr Green in his podcast of 4 Mar 2019 said Kiran, CEO of KDNC expects a "supply squeeze". This is known in the industry itself. However, Mr Green pointed out about "quality" projects. By quality, it was not explained so what exactly would quality mean? As far as I am aware, Australian lithium especially without mica etc ie at Bald Hill, near KDNC*s Picasso may be considered quality per their CEO?
7)EMH & BCN have roughly the same mkt cap at around £25m mark. Hannan & Partners, on KDNC*s website has cited a target price of some 0.9p. If one looks at Nemaska*s mkt cap at £200m, then one can easily see that for BCN, everything almost is priced in per mkt norm. If it goes lower, the normal reason is that there is selling from an institution for example because of a change of strategy etc.
At the end of 2019 max, things should become clearer as the lithium mkt itself is now steadying. This is in relation to BCN and its funding. If funding is not forthcoming, then it is norm that a change of strategy may be forthcoming as in all co*s.
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