Member Info for observer842

On the back of this:

"Gas heating ban for new homes from 2025" (13 March 2019)
https://www.bbc.co.uk/news/science-environment-47559920
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Gas heating for new houses will be banned by 2025, the Chancellor has said, although gas hobs will still be allowed.
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I thought I'd re-post this from when it was first mooted:

Observer842@22 Feb '19
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Personally I think governments needs to be more aggressive, forcing all new homes to be equipped with near 100% solar tile coverage from 2025 and consider subsidising local (house or estate) energy storage to minimise transmission and distribution costs and losses. In terms of INSP our market is commercial not residential. But even if it were residential it will be a looooong time until the UK's, never mind the world's, housing stock is fully weened off gas. We still have plenty of time to make a buck while making a difference. ;-)

Having said that, get a move on John Gunn, the world is moving away from gas - our potential market won't be around forever!

Ob.
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Interim's due by the end of the month - here's hoping for an update on certification! ;-)

Ob.

I believe KDNC held 6,574,000 shares in BCN around the end of February, and according to HL ~16.8m shares swapped hands on Monday (8,444,303) and Tuesday (8,349,400) of this week.

And Blackrock. And the estate of COE... This share could be in line for a big bounce when all the sellers that need to/want to have finished. I guess the "game" for some will be trying to determine that when! ;-)

As a likely minimum I should say! And from memory, @Kiran was indicating too.

@Ivybush. I know it has been discussed to death already, but I have no recollection of @Kiran mentioning a placing in the 20's. At least one person I find credible is adamant they heard him mention in the 20's before he, presumably, realised his mistake and went on to say the quote I have, which was a heavily caveated "equates to a placing in the 30p mark" - which is practically spot on with what I have (finally!) arrived at... ;-)

@BigBiteNow
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It even has 100% ownership of the main 2 mining licenses that make up the first 20 years of its mine life.
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Cadence Minerals (KDNC) currently owns 30% of 1 of those licences.

Maybe we need to urgently capitalise a loss to offset against all that profit we are about to make! Lol ;-)

@tomcat
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ob... my interpretation is that $100m of the equity funding will be raised from existing shareholders... those that remain i assume will have already agreed how much additional $’s they wish to invest... kdnc & blackrock visibly exiting for reasons yet unknown... hanwa and sgrf having already committed to $90m... which leaves $10m needed from the other existing investors... the $100m recent f2f is the remaining amount outstanding... that they need to... and attempted to raise from new investors...
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That appeared to be the plan back in the summer. Assuming it is still the plan, that means $200m of equity still needs to be issued in order to unlock the remainder of the stage 1 debt funding. The BoD currently have authority to issue 500m new shares without offering to existing holders. The proposed $10m raised from existing holders wouldn't have to use the 500m share authority, but for all intense and purposes I don't think it's worth splitting those hairs - the minimum raise price with existing authority comes to about the same as I showed the other day:

$200m / 525m = $0.38 = 29p

That's the minimum on the assumption that all those taking part in the $200m equity raise do so at the same price - this wouldn't necessarily be the case, but it seems a fair first guess. Assuming the BoD aren't intending to ask for authority to issue more shares (it's a maximum of 525m new shares or no deal), this worse case scenario would result in a market cap of:

(525m + 135m) * $0.38 = $250m

I find it hard to believe that the remaining equity part of the funding can't be raised at this minimum issue price given that it will result in a fully funded project with an NPV multiples of this (effective) $250m valuation.

@tomcat - do let me know if I'm missing something: you seem more clued up than me re BCN! ;-)

Ob.

But what, or should I say, who is missing? ;-)

We probably need to discount that by the overall recovery factor of 76%:

127,000,000kg * $25 * 3% * 6% * 76% = $4.34m = £3.3m

But this is all back of the envelope calculations anyway... £10m for the lot and its yours. ;-)

According to the HAS presentation:

Resources = 254kt TREO
Reserves = 127kt TREO

Those reserves make up the 11 year mining plan of which ~6% is attributable to us. Discounting the current sale price of $25/kg TREO stated in the presentation of these in ground reserves to 3% (as is done for, e.g. copper for this stage of project) then for M&A purposes our Reserve holding may be deemed to have a fair value of:

127,000,000kg * $25 * 3% * 6% = $5.7m = £4.3m

And the resources round about the same again, but with a bit more discounting.

Ob.

Cheers @Barksy! I'm sure you'll realise it's not what was said, but what wasn't that makes that presentation interesting... oh, and page 21 of course ;-)

The date was an example @tomcat ;-) They could (should!) say in an RNS first thing tomorrow morning that "we note the market reaction to unfounded rumours of a fund raise below 10p and would like to reassure shareholders that recent authorisation to issue 500m shares is expected to give sufficient leeway to raise $100/200m on previously announced timescales."

It would quell (fake) rumours similar today's that a sub 10p placing was on its way. It might be by the way, If shareholders new the minimum issue price was 30p for the $100m/200m (or no deal) then I don't know about you, I'd pile all in here up to 30p... No brainer - assuming you believe the project will eventually get funded.

If we were talking about the usual AIM raise of a few million I'd agree. But we are not, we are talking about raising $200m. Are existing holder really going to vote through issuing more shares? If the BoD can't raise at 30p, then they might think asking for authorisation to issue 1B shares is a good idea. But it isn't. AIM being AIM would likely trash the sp below the new "backstop" of 15p down into the 5-10p range.

The BoD need to make a stance by making a statement of intent about what a minimum issue price will be. Time bind it if they like: we will not place below 30p before end of December 2020 ;-)

Ob.

@tomcat I'm still wondering what the consequences of a $200m equity raise with only 500m shares authorised to do so are. Does it mean a raise at a minimum of:

$200m * 0.76 / 500 = 30.4p?

or failing that a return to existing shareholders to authorise the issue of yet more shares? Or perhaps a raise at half that for only $100m, and then a return to shareholders to authorise more shares? Too many angles to consider!

It might be useful if the BoD outlined the lines in the sand they are not willing to cross. e.g. a placing below 30p: it's above 30p or we wait it out until the market sees sense. ;-)

Ob.

I suppose it's possible a new cornerstone investor will come on board for say $100m at a decent share price (because it would be no deal otherwise), followed by another attempt at a book build for the remaining $100m+ on the back of this?

@addictnt - "a minimum equity raise of US$200 million". I missed that until now...

Great link @Dallas!

@tomcat I haven't the will to dissect the accounts or terms of the funding arranged to date, but I'll say the next tranche is $50m not £50m and depends on various factors..

"Interim Results" (13 February 2019)
https://polaris.brighterir.com/public/bacanora_lithium/news/rns/story/w6l18kw
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The facility may be drawn in three tranches of US$25 million, US$50 million and US$75 million, subject to certain Conditions Precedent, including, but not limited to: various matters in respect of the execution, registration and perfection of certain security and the granting of listing consent by The International Stock Exchange, a minimum equity raise of US$200 million, energy and engineering contracts executed.
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Unpack that! ;-)

Ob.