Member Info for Rover62

I’ve been doing something really dangerous, thinking!

The talk around a placement doesn’t actually get to the point. The obvious, is to raise pots of cash, but underlining that, it’s actually getting investors to part with their money, with the usual incentives that they will make even more money. Well most here, would admit to that. So the format is to give them something at a discount that will appreciate in value. That’s absolutely true for any new investor. So how do you persuade any new investor they will make money without losing your own shirt? You of course talk about the company’s intrinsic value against its fundamentals. Given that in all probability there will be no public placing then the company will be talking about the investment coming from the existing cornerstones and a new investor. By the time the company is in discussions than that negotiation will be about percentage company ownership for a given investment. All parties will be trying to get or keep hold of as bigger percentage as they can. Unfortunately not all shareholders have a seat at the table and are relying on the BoD to represent their interests. For the deluded with the calculators they have shown it’s not purely about dilution and share price but more about percentages. So it’s a question of how much is owned for the £x millions invested, 10, 11 or 12%. I don’t think they would care if they had 10 million shares, 100 million or one billion shares.

Https://blackrockmining.com.au/loan-approval-from-industrial-development-corporation/

I haven’t got a clue! I’m interested here for goodness sake!

It’s extremely hard to be bullish at this juncture, however, it’s inconceivable the BoD are solely out to screw us all over. If they were they could’ve easily forced this into bankruptcy before Christmas. What possible motive would they have to prolong the agony? (Rhetorical, usual suspects no answers needed, we know what you’ll say). As I see it, they are negotiating hard to get the right deal for the company. Most likely not the deal we would want. It’s not as obvious as going to the bank and asking for some loose change. They are asking for a vast amount of more money from sceptical lenders in a difficult market. This is where Karim and the rest of the negotiating team will earn every penny. They will have to persuade them that the project is worth it. Other than the CAPEX the fundamentals haven’t changed. The base case hasn’t changed. Unfortunately the NPV will be reduced by an amount. The real rub is the amount of dilution. From my delusional playing of the calculator heavy dilution doesn’t suit any of the existing shareholders.

One thing I am sure about is that someone like Karim will not have taken this role if he thought he could not solve the problems. I think he does have integrity and will have personal pride.

If I remember rightly Woolworths was brought down by a creditor calling in a debt of £75k.

This RNS is just relaying to the market that they are doing what the BoD need to do to protect the company.

Mv01,

It’s strange today as my other mine stocks are extremely quiet

Https://www.gtreview.com/news/americas/glencore-backed-horizonte-minerals-faces-uk-suit-over-brazil-nickel-mine/

Being delusional I went and got my calculator out, but that wasn’t being deluded enough so I’ve resorted to a good old spreadsheet. I wish I could replicate it here. I was somewhat surprised by the findings. I assumed a raise of £200 million evenly split between cornerstones and investor. I looked at the future value at A1 nameplate for each investor and the resulting percentage owned and sp. For the calc I assumed an NPV of £700 million. Below current % followed by raise Sp strike points, 3.625p, 20p and £1.

LM 23.09%, 24.91%, 24.59%, 23.90%

G 17.74%, 24.66%, 23.46%, 20.83%

O 10.49%, 24.32%, 21.92%, 16.67%

New 0%, 23.83%, 19.69%, 10.64%

Rest 48.68%, 2.27%, 10.34%, 27.95%

Issued shares

269,778,906

5,515,241,379

1,269,778,906

469,778,906

Sp £2.78, 12p, 55p, £1.49

From my analysis for LM it doesn’t make much difference in this what the strike sp is. The winner is the new investor, the loser the rest. The balance is as mv01 says is 20-30p.

Https://www.lme.com/Metals/Non-ferrous/LME-Nickel#Summary

Unfortunately I think this was a pump and dump.

Minus111,

Just a correction,

You can only take a capital gains loss after you have disposed of the asset. Then you have four years to do it. If they were going to do that they would have already done it like Helikon.

Mv01,

I’m glad we agree, I’ve been trying to say the exact thing for few months now.

I’ll try and put this simply.

The cornerstones will take the lions share of any new equity and it is they who will have the say on what the share issue will be. They will want a fair return on their investment. That not only for the new investment requirement but their existing investment. By raising at a low share price they set a low price for the share due to dilution and they lose their money on the existing investment.

Example

Existing investment 50 million shares @ £1 equals £50 million

Add the new investment of £50 million

@ £1, it’s 50 million new shares so in total 100 million shares @ £1 equals £100 million

@ 10p, it’s 500 million new shares so in total 550 million shares @ 10p equals £55 million

So in this example raising at 10p rather than £1 looses them £45 million overnight and the probability the share price will never recover.

When the financials are agreed it’ll be a done deal, whatever the arrangements there will be nothing for the private investor or the markets. Any new investor will have to pay their fair share to join the club. The lowest entry point for the cornerstones was 80p. Just saying. What do 5he rest of you think?

I’m glad that people are now aware that the current share price is just a product of a few sellers. The market has currently priced this to fail. The cornerstones and any new major investor will not be looking solely at the share price but the value within the company. Karim is a highly respected financier who’ll know a little about putting together complex packages. I wouldn’t be surprised if a rabbit is pulled out of the hat. What that package will look like is a guess for us. There will be some equity needed, but maybe not as much as some fear. My view is the smaller the equity slice the higher the strike point can go.

Or could the LME be being influenced by

An Indonesian nickel producer has for the first time ever applied to have its metal listed as a good delivery brand on the London Metal Exchange (LME).

https://www.reuters.com/markets/commodities/nickel-producers-fear-growing-indonesian-pricing-power-2024-03-05/

An informative read

https://www.lme.com/api/sitecore/MemberNoticesSearchApi/Download?id=1dcae570-87ee-422a-9596-acaa2b041f11

Or if that link doesn’t work

Discovering the low carbon premium for the nickel market

https://www.lme.com/en/

Https://www.marketindex.com.au/news/morgan-stanley-nickel-likely-troughed-lithium-closer-to-a-floor

Maybe they meant 10 working days 😂😂

Given that the company just needs to survive and get A1 built it needs cash to do it.

That cash with come with a heavy price.

Say Glencore came in with a prepaid agreement for 10kt over three years 4:3:3 at $15k/t, could the company live with that even at a higher than predicted operating cost of $10k/t?

It’s loose change for glencore.

I’m heavily invested here so news that would take this back up to the heady days of 6p would be extremely welcome. However, I fear with no news this will drift back lower. As said no one knows. Saying that the BoD may I hope have a strategy