Member Info for okenia

The final part of this - and a valid question - is what RRR brings to the table. With Penny/Diacore I think we can safely assume the expertise in diamond mining is covered and they've not let RRR take part due to Scott's deep knowledge of kimberlites. Likewise, I doubt either Penny or Diacore are short of a bob or two to fund this.

So why allow RRR in at this lucrative early stage? What could RRR possibly bring to the table that Penny and Diacore can't? Where, for example, might you possible see Amulet in a few years time?

Penny starting to drop yet? Come on, it's not difficult.

To make it easier for you to understand, think of a exploration JV structure like what MOD did with MTR. Each side put a small amount of money in to get equity in the JV vehicle. Going forward, each side then splits the exploration spend bill according to their percent ownership on a fund-or-dilute basis. That expenditure adds value to the JV vehicle and the equity portion.

If you think about it, the Amulet deal (although stated as a 'loan') is identical in the end result. All parties have an equity position (we know that). Both RRR and Penny/Diacore have put funds in to pay for exploration work ( we know that too). And it's done in a way that is tax efficient and doesn't trigger unnecessary waste of cash.

If you think about the 'unsecured interest free' part - well there's no need for additional security, that comes via the equity component, and charging yourself interest is pointless (and tax inefficient). Again with the MOD:MTR parallel their exploration spend has the same characteristics of not generating either interest or additional (duplicative) security over the assets, plus has no fixed date for repayment until such time as BHP buy out MOD (who listed on AIM yesterday - a little cross ramp for you there).

This RRR equity/loan combo thus appears identical to a exploration JV, and when there are only three shareholders in a private company and all want to contribute funds to drive the business forward these shareholder loans are far more tax efficient than (say) a pure equity based structure that would trigger income tax liabilities with dividends etc.

You'd have thought that the ex MD of de Beers and current Chair of Norilsk Nickel would have come up with the most tax-efficient SPV structure to fund an acquisition, given he's spent most of his life making acquisitions in the NR space. Amulet looks to be exactly that and thus although (being private) we don't have deep insight into the finances and structure of it, I'd say with Penny and Diacore driving it forward you'd definitely "back management".

So I think Amulet looks extremely credible as an acquisition SPV.

But you think this is 'shocking' and is 'pi***ing away RRR funds'. Go figure. Better still, go ring Gareth Penny up (when he's not busy running Norilsk Nickel - you might be put on hold for a while) and tell him. But from what we know (and there remain bits we don't), the Amulet deal looks sensible and exciting.

zumore

The trouble with having a trolling tendency verging on the weirdly obsessive is that you make assumptions. You have no idea whether this is a shocking deal. Your automatic reaction is to take anything the company does and just add 'shocking' 'woeful' or some other moniker to it.

So let me help.

Amulet is a private SPV so we don't have a lot of insight into it as a result. However, it's pretty well covered in the press and is a joint venture between a couple of big industry players. Penny is ex-MD of de beers (so we assume knows something about diamonds), is currently Chair of Norilsk Nickel (a seriously big natural resource company) and the other SPV partner is Diacore (again a big player in diamonds that is looking to expand its production into Botswana - https://www.diacore.com).

So first tick - the SPV team look top-notch and very credible.

The SPV was put together to acquire a non-core asset (BK11) from Firestone (FDI:AIM). Firestone are having a bit of a torrid time, with their mcap now a lot less than the £200m it was in 2017. They're divesting non-core assets to survive, and when you're buying an asset having a distressed seller is always a good thing. The jurisdiction is good (Botswana).

So given the management expertise of Penny / Diacore I think we can safely assume they are able to judge a good asset from a bad one and will only proceed if it makes commercial sense.

Second tick then.

Amulet have an option (due to expire end of Dec) to acquire BK11 for $5.1m. Prior to that they are funding some bulk sampling, slightly delayed due to late arrival of kit. Bulk sampling a kimberlite is basically small scale production as well. That means some funds will have passed thru Amulet to fund this. That's important.

As commented below, the tax efficient way to do this - when you know you have to spend capital now and will get it back later - is to fund your company via shareholder debt. That can be repaid without a tax liability, whereas an equity investment triggers a whole pile of tax issues. Let us assume that the other SPV players have funded Amulet (as they must have done) via a similar debt/equity combination. We don't formally know the mechanism but I think that's a fair assumption. Because they're doing it for themselves, you don't charge yourself interest (and thus have to send tax to the govt), that's robbing Peter to pay Paul and does nothing expect send tax to the tax man. It's commercially most efficient if the SPV partners given interest-free loans.

Amulet has no assets other than an option to acquire, so there's nothing to have security over. The SPV partners already own Amulet so lending a company they fully own cash doesn't need security, they already have the maximum via their equity ownership.

That second picture is a sweaty Andrew, asleep in the back of a minibus in the Congo. If you think that's "cushy" you must lead a very rough life! John Boardman is making humour with the 'first class, congo style' comment.

I'd quite happily pay money NOT to be in the back of a minibus in the Congo, thanks very much.

And in these very thin trading days, it's easy to pick up cheap stock and see a sudden switch to upwards momentum. But you need to not follow what your fear v. elation emotions are telling you or else you get it the wrong way round.

Across the small cap space you're currently seeing a lack of buying, and general fear. People are generally sitting on their hands in their current positions, and not getting profits to re-balance to new investments. But while holders are sitting there and doing not much, some people are being shaken out by fear. Hence why you're seeing these large MM-driven drops on insignificant volumes in many stocks ... it's a side effect of the mood of the market. Given how thin trading is, it will equally take very little inflow of money for those situations to turn around and bounce upwards and hard.

In the case of DISH there's so little trading at the moment that it's hard to argue there's true 'price discovery', especially in a general risk-off mood at the moment.

Hi

I'm one of the investors who funded DISH at the seed, pre-IPO stage, and I personally know a number of the other seed investors. I thought I'd clarify the issue of CLNs that has been raised.

1. First, the CLNs no longer exist. They were converted to ordinary shares on the day of listing. I'm now a straightforward shareholder, like everyone else.

2. Using a convertible note is a very common way of allowing people to provide seed funding to a company that intends to list. What they provide is debt funding (and the loan note accrues interest at a certain interest rate), and then at the time of listing they convert to shares at a pre-agreed discount to the IPO price. That discount is to reward the CLN holder for having risked their capital at such an early stage, plus also for locking their capital away for several years. A CLN is used to allow the valuation of the stock to be determined at the end, by the market IPO price, rather than at the start of the funding process. It's an accounting mechanism, nothing more.

3. Two key points from that, then. (a) The CLN holder enters into this process expecting to become a shareholder at the end. They invest early-on and get a larger reward to reflect the much higher risk they are taking. But they expect to transition to becoming a shareholder like everyone else. (b) The other point is that we CLN holders aren't some shady death-spiral finance outfit that will just dump the stock on listing, by-and-large we're private investors who have chosen provide seed funding. If you read the prospectus you can see who we are, and you may well have met several of us at investor events over the years.

Thus the idea that has been raised that the plan was for all the CLN holders to be repaid in cash at IPO is completely wrong - quite the opposite in fact. We entered into this seed funding expecting and wanting to become shareholders in the listed DISH vehicle. The ex-CLN loan note holder are now just private investors, holding stock, same as everyone else.

(As an aside, no broker raising IPO funds would bother to do so if the story they were selling to their clients is that much of the IPO funds raised would be used to repay debt, as opposed growing the business. If I were funding at IPO I'd want every pence used by the Company to grow the business.)

I hope that helps provide a bit of colour. If anyone wants to chat with me offline then DM me on Twitter.

Good luck with your investments - the nano cap space is a bloodbath wherever you look.

And booboo booboo, if as we now agree nickel oxide isn't carcinogenic and isn't subject to an export ban (as otherwise, Vale's Goro lateritic nickel mine would have a problem, as that's what they currently produce!), you may wish to revise a long list of your previous posts.

"Mambare has 162.5 million tonnes @ 0.94% of carcinogenic Nickel Oxide"

"the Direct Nickel process doesnt produce Nickel like we were lead /mislead to believe but Nickel Oxide instead which is indeed categorised as a carcinogenic and under international law has a shipment ban. The former head of Metallurgy at Ravensthorpe told me this personally ."

"The Ni Oxide would need to be treated therefore at a separate plant and guess what there isn't one in PNG"

Next time you have a chat with a Professor, get them to explain the difference between a hydroxide and a oxide.

So when you've been saying there's a problem for Mambare because nickel oxide is carcinogenic, you actually meant MHP (mixed hydroxide product)?

Plus you're telling us Mambare wouldn't be producing the carcinogenic MHP anyway.

There seems to be an argument going on that laterite mines are impossible because they produce a compound that is carcinogenic and can't be transported / exported.

To which I asked, how do laterite mines like Goro and Murrin Murrin circumvent that? Since they clearly do.

Colin - "I thought that the DNi process was the only practcai way of extracting nickel from the laterite form, hence our initial interest. "

How many of the existing laterite mines globally used the DNi process?

I fully accept a sulphide ore is easier (and so people have focussed on the low hanging fruit), but those are largely done and dusted. As we move forward, yes we'll have to move increasingly to the tougher laterite deposits. That's already happened (Goto, Murrin Murrin etc)..

I'm slightly puzzled as to why a lateritic deposit like Mambare can't be turned into a mine when there are other lateritic deposits have been turned into mines. (None of those use the DNi process either). There appears to be some conflating taking place between DNi being nice if RGM can have it, with DNi being essential.

Also, how does Vale manage to export nickel oxide from it's Goro laterite mine on the nearby Pacific island of New Caledonia (which according to these links, it does)?

https://www.geologyforinvestors.com/nickel-laterites/
https://minerals.usgs.gov/minerals/pubs/country/2014/myb3-2014-nc.pdf
http://www.vale.nc/?p=1613&lang=en?&lang=en

Non-medicinal apparently. Not quite sure where that boundary is drawn (Holland and Barrett versus a prescription ?)

"The Company can confirm that this opportunity, which is one of several that the Company is evaluating, involves the extraction and wholesaling of high purity Cannabidiol (CBD) oils from industrial hemp for clients in non-medicinal health and well-ness businesses."

Zumore - has a month absence really passed so soon? Gosh how times flies when you're enjoying yourself. Anyway ... even by your mischievous standards the following comment is disingenuous. "Should a company be disclosing rns information to an interviewer before that rns has been released to PI's? My opinion no they shouldn't. " Er, the entire IR comms / media / PR industry is built on exactly that principle. Companies work with PR (obviously, under appropriate confidentiality ) before a news announcement, so that a timely set of press releases, interviews and so on appear alongside the formal RNS. In fact, in many cases the PR will have taken an active role in drafting and advising on the text of the RNS, from a messaging perspective. You know that, I know that. I appreciate you're a bit rusty in the old sheet-stirring stakes after your absence, but you do need to raise your game or else we'll think you've handed your login details to MrMagic ....

Lock-ins are easy to enforce, you do it via physical certs or stock in an escrow account. For example, US and Canadian share certs can carry a "do not trade before" legend on them that prevents their trading (common because placings in Canada typically have a 4 mo lock-in).

It's harder if the holder already has the stock (and you're asking to impose a lock-in) but for new stock (eg vendor stock) it's a piece of cake.

The delayed consolidation is nothing more than a technical side effect of being suspended. Don't read anything more into it.

Going with booboo's $3mpa lease cost for sake of argument, that's still leaves $31m pa in stated revenue.

It's like having £34,000 in turnover and needing to rent something for three grand a year. The sound of desperate straws being clutched here is deafening.

But yes, if you want to go on about it, be my guest!

Given that gross weekly revenue for 2017 averaged at $650,000 per week, a $55kpw lease cost would hardly register , would it?

Big operations have telephone figure numbers all round. You have to appreciate the scale of running a big mine with big revenue ($34m per annum) is a tad more than a corner shop.

"So you would imagine those lease costs would be incredibly expensive (does anyone know highwaller lease costs?) ")

You state it'll be incredibly expensive and then in the same breath admit you have f-all idea what it costs. Lol, you really couldn't make this up.

MrMagic - given the amount of money you've lost trying to trade AB companies, you'll forgive me if I don't lend your views much weight (other than perhaps as a counter-indicator).