Member Info for observer842

"Amapá Operational Update, Placing to Raise £650,000" (08 June 2020)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=311428201923189034
===[
· Trucking contractor has commenced mobilisation of equipment
· Other key contractors appointed including local shipping manager and shipping broker
· Shipping is still on target for late Q2 2020 / early Q3 2020
· Movement of the stockpile to public port is expected in July 2020
]===

If we get shipping (or banking!) news in the next few days or week I'll blame that "July 2020". It's confused me and no doubt the market into thinking we aren't shipping anything until July at the earliest, despite the previous bullet point. In one of the interviews @Kiran mentioned linear logistics rather than just in time. I wasn't 100% certain I knew what we meant at the time in the context of the Amapa operation but I'm wondering now if he meant we plan on moving all of the ore from the private port to the public port (where would they store it though!?), and then starting to ship it, or perhaps start to ship it after a large portion has been moved. Perhaps that is what the July 2020 date is? The date all the ore at the private port has been moved to the public port? Would make sense! Finally. @Kiran!? LoL.

Having wrote that, I've changed my mind to the following which is more likely: perhaps they plan on moving $10m of ore to the public port by July 2020? Seems much more manageable! We'd then ship it over the following few months. This would be linear rather than just in time. JIT in this context would probably involve storing very little at the public port, instead trucking it directly from our port to the ship at the public port or a (relatively < 45kt) small holding area.

Another point that just came to mind is that @Dallas noted that @Kiran said shipping Q2 *and* Q3.

Ob.

Are you suggesting we might getting "shipping" news tomorrow, Friday or Monday, and then banking news on Friday or Monday? It's certainly a possibility. Unlikely IMHO - it feels like we aren't at that point just yet. But oh do I hope I'm wrong and all those looking for a trade around the placing are caught short. :-)

Did you notice that in one of the interviews @Kiran clarified what we determined a while back that: "Before its sale in 2012 Anglo American valued its 70% stake at US $462m in its 2012 Annual Report (100% US $600m)" this was an impaired valuation? :-)))

Yes. But the point I'm getting at is that although 60 days is about 8.5 weeks and would end June 12th. 60 working days is at least 12 weeks meaning the end of June/Q2/H1. i.e. perhaps the plan is to demonstrate we can ship the ore (scheduled this month) upon which we strike a deal with the creditors (the banks) as from the Q&A interview care of @Dallas: "The banks may want some payment as well of that so we may utilise that to settle with the banks, subject to them having a much lower cents in the dollar in terms of settlement".

Though I'm personally of the opinion that if an RNS says 60 days without clarification it means 60 calendar days. @Kiran!?

@tomcat. After listening to the interviews I'm now less confident we'll hear before news of iron ore being shipped as @Kiran indicated that comes before secured creditors news. Perhaps the 60 days refers to 60 court in session days?

Anyone can have a go at extracting the numbers @Barksy! It's the two rows in the first table labelled DIP A & B and DIP C. And the numbers you extract should correlate to an appropriate combination of $2.5m, $3.5m, $30m and $85m, and from that out pops the exchange rate :-)

Once you've got that you can determine the price in $US they used for the 62% product and the 65% product and other things of interest, e.g. the shipping costs per tonne they used.

Squint! Zoom in! Squint! Zoom out! Squint! Cross-correlate. LoL. @Dallas? @Bannor?

Have you figured out the estimated revenue and EBITDA of Amapa as stated in the JRP in $US @tomcat? I gave up and retracted everything previously due to too many unknowns. But these are now known and I must say, whichever way you look at it, what was reported last summer is an underestimate/incorrect:

"Approval of Judicial Restructuring Plan Paves the way for the Restart of the Amapá Iron Ore Project." (30 August 2019)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2887382
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At full production and using US$61 per tonne of 62% Fe Amapá is forecast to have:
o an average net revenue after shipping of US$266 million per annum,
o and an average EBITDA of US$136 million per annum.
]===

Due to recent revelations (ahem!) I'll feel more comfortable if someone else takes the lead and I'll guide/confirm they are going in the right direction.

If anyone is up for the challenge, the first thing you need to do is to determine the USD to BRL used in the Judicial Recovery Plan (JRP) here:

https://pje.trt8.jus.br/primeirograu/Processo/ConsultaDocumento/listView.seam
20012416350764800000023996777

For future reference I've already pulled out some of the information from the tables at the end when I last looked at this when I didn't know what exchange rate they'd used:

===[
Year : Revenue net of shipping : EBITDA
2019: 0 0
2020: R$148 R$115
2021: R$148 R$115
2022: R$386 R$200
2023: R$760 R$502
2024: R$1388 R$938
2025: R$1292 R$832
2026: R$1292 R$816
2027: R$1292 R$800
2028: R$1292 R$783
2029: R$1292 R$765
2030: R$1292 R$749
2031: R$1292 R$727
2032: R$1292 R$707
2033: R$1292 R$688
2034: R$1292 R$665
2035: R$230 R$91
]===

We know the DIP Finance A + B + C in USD and these are stated in the tables in BRL so it shouldn't be too hard to determine the exchange rate to 1 decimal place.

Ob.

@Ivy "I increased my holding here earlier today.". Hopefully you managed below the placing price? It's rare on AIM that this isn't possible. I hate that this happens, but c'est la vie - not really sure what we could do to change it to be honest - it's all linked together with the status quo. The blog I linked to earlier suggested:

"Forward Selling: A Crime Against Shareholders?" (January 21, 2017)
https://www.sharesoc.org/blog/regulations-and-law/forward-selling-a-crime-against-shareholders/
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For these reasons, I believe the practice of forward selling should be banned and companies seeking to raise equity finance should instead be encouraged to do so from existing shareholders, and new investors, on equal terms, with preference being given to the former where demand exceeds supply.
]===

That would be great, but the process would have to be made cheaper to the company, and of course the shareholders would have to have faith in it too. But with the middlemen losing their cut any company doing this would face being ostracised - but perhaps it wouldn't matter?

I forgot to state my "Strong Buy" opinion in one of my posts @Frankie. Oh the horror! Judging by the current low share price the market appears not to believe a settlement with the banks is imminent. Clearer?

Apologies @Ivy - I extrapolated: "it could be many months before the issue is settled" from your sentiment on the many months of delays to date.

What do you reckon @Dallas? Dropped to collect? Never place stop losses on AIM is my motto! :-)

Be calm @Frankie! I just forgot to state it...

The court judged that ore can be shipped before the issue is resolved - which was the sensible thing for it to rule IMHO. But as @Ivy says, be in no doubt that it could be many months before the issue is settled and we take our 20%. But as @Dallas says it could be imminent... The ideal scenario for us is that an agreement isn't reached, the courts rule that what we put on the table was reasonable and demote the secured creditors to unsecured credit status, with their debt taking a haircut in the process. I'd be surprised if the banks are willing to take that risk and therefore I'm more aligned with @Dallas than @Ivy. But if they do take the risk and refuse to budge we could be talking months, 2021 even that we take up our 20%. Judging by the current share price it looks like the majority of the market believes this will happen...

@Woodster5. I'd say if we knew the answer to that we wouldn't be sitting at these levels. Pretty much everything I write at the moment is predicated on Amapa coming good (in particular resolving the secured creditors) and KDNC taking 20% of the company. This is not a dead cert by any means, though it's sounding very promising! :-)

Couple of relevant articles:

"Forward Selling: A Crime Against Shareholders?" (January 21, 2017)
https://www.sharesoc.org/blog/regulations-and-law/forward-selling-a-crime-against-shareholders/
===[
What are the motivations behind this practice?
The motivations for the forward sellers are pretty obvious: they can make an almost* guaranteed profit by selling shares at market prices, when they know that they are going to acquire the shares at below market prices. By selling the shares before they receive them, they are taking no risk that the price might decline after the issue process has completed. The practice also benefits brokers and advisers, who generate fees or commissions from the share issuance.

From directors’ point of view, permitting forward sales may make it easier for them to issue shares, thus raising finance which supports the business (and supports the payment of their salaries). This is a particular issue for businesses that are not generating profits, including early stage businesses and pre-production natural resource companies – many of which regularly need to raise fresh capital.
]===

"Avoid Aim's traps" (December 13 2019)
https://www.investorschronicle.co.uk/shares/2019/12/13/avoid-aim-s-traps/
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Many people suspect that a broker will go short on a company, and then offer that same company cash through a placing. The broker then closes its short in the placing, and they are incentivised to offer as low a price as possible to maximise their own profit.
]===

Very probably @Dallas! Also @Ivy, I don't think it is how you remember it any more. This from the RNS:

===[
WH Ireland has entered into a Placing Agreement with the Company under which WH Ireland has undertaken to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price, being 9 pence per Placing Share, on the terms and subject to the conditions set out in these Terms and Conditions. To the extent WH Ireland does not procure subscribers for Placing Shares as required, including those Placees procured by the Company, WH Ireland will not itself subscribe for such shares.
]===

@degsie. AIM is weird (unpredictable). *anything* could happen. Although after the last placing at 6p we only fell to, what, 5.7p was it? so I too would be surprised if we fell much below 8.5p going on that... And this time news is closer! ;-)

Thanks for asking the question @Ivy. I now have the exchange rate they used in the JRP and know the assumed sale prices of the ore. :-)

@Ivy. "Does anyone know approx how much debt is owed to them?". The last page of the JRP has the details. Also I think I was wrong about the meeting next Wednesday - looks like it's unconnected to the banks which means we could hear something this week. And whilst I'm here, a reminder about these great interviews! ;-)

"Union Jack Oil, Cadence Minerals, BWA Group and Paul Hill" (8 Jun)
https://audioboom.com/posts/7601913-union-jack-oil-cadence-minerals-bwa-group-and-paul-hill
===[
Kiran Morzaria, CEO of Cadence Minerals #KDNC provides an Amapá Operational Update and explains what the £650,000 they've raised will be used for.
(Interview starts at 10 minutes 8 seconds)
]===

"RiverFort Global Capital Webinar Featuring Cadence Minerals plc" (20 May 2020)
https://www.youtube.com/watch?v=MgvMSxoJ8R4

"Cadence Minerals #KDNC - CEO Interview plus Q&A" (8 Jun 2020)
https://www.youtube.com/watch?v=mGhDQjFgP7k
===[
Alan Green talks to Cadence Minerals #KDNC CEO Kiran Morzaria. Kiran talks about the company's investments into the Czech Cinovec Lithium project via European Metals #EMH, Macarthur Minerals iron ore projects in Australia, plus Lithium JV's with Bacanora in Mexico and Hastings Tech Metals at Yangibana, Australia. Kiran then elaborates on the company's flagship Amapa Iron ore project in Brazil, discusses the latest developments re shipping the ore stockpile, the fundraise for the scoping study plus the value inflection points going forward. Alan and Kiran then go through a shareholder Q&A, before Kiran finally provides key takeaway points for. investors, highlighting the valuations on each of the projects.
]===

Indeed @Mullins, SP could go through the roof if we pull this off. And with likely news flow over the next few weeks and months and (hopefully!) very little chance of a placing without a significant rise, I to the disdain of @Frankie no doubt, am hoping the share price continues to fall as I continue to buy. That's right AIM, you do your thing and I'll do mine. Below the last placing price is a very strong buy from me, especially after yesterday's revelations, LoL! ;-)