Member Info for Rover62

LME not playing 😩

https://www.nasdaq.com/articles/lme-says-does-not-plan-to-launch-green-nickel-contract

I’m not too worried about green nickel attracting a premium, just having green credentials would be good enough. That way the likes of the EU and US could legitimately legislate denying Indonesian nickel entering 5he market.

Strow,

Agreed,

The fact that they opened the position a week or so before the last RNS. If they are closing it maybe….

Stow,

Agreed.

What’s your view on the short position still being open?

Low liquidity and a few small buys, moves the price up by more than it should.

I wish it was a positive leak, but….

Https://www.nasdaq.com/articles/graphic-shrinking-surplus-suggests-end-to-two-year-nickel-price-slide

777,

I’m really disappointed with you. I don’t know why you thought it necessary to call me ridiculous. I’ve never aimed any personal attacks on you. Actually I’m more than disappointed I’m angry. However, I’m not going to stoop to your level.

I have acknowledged that the company could do as you suggest, so why can’t you acknowledge, however much you think it unlikely, what I say, could happen. All I’ll say is that you need to look in the mirror at yourself because all you have done yourself is to peddle the same negative arguments. Yes, you have the right to express your opinions as much as anyone else does, but please do not insult anyone for expressing them. We may have to start calling you -111.

Let me elaborate. Sorry it’s late so full explanation not provided. You’ll have to guess on the figures.

For argument purposes, as well don’t know the true figures. £300 million needed, £100 million debt, £200 million equity.

£50 million each for the cornerstones and £50 million for a new investor.

Let look at the case for La Mancha and the new investor. Currently have 23% for their £77 million invested. 62,297,182 shares as we have to talk shares. £1.24 per share.

So as we are fixated with the raise rate, what is the difference in percentage and value with differing share prices. 20p and £1. 1 billion or 200 million.

20p,

LM 250 million + 62 million = 24.6%, £62.4 million.

New 250 million = 19.7%, £50 million.

£1

LM 50 million + 62 million = 23.8%, £112 million.

New 50 million = 10.6%, £50 million.

So they get a percentage of a potentially £4 billion company.

Or the cornerstones put in the new investors money at £17 million

20p, 333 million + 62 million = 31.1%, £79 million

£1, 67 million + 62 million = 27.4%, £129 million

So I do think there is some leverage in negotiations

Rob,

I’ve got plenty of reasons to understand. I’m NOT underestimating the gravity of the situation at all. I’m heavily invested here and have been for a long time. So I’m providing an alternative solution. However, I know that when I invested four years ago I could end up with zero.

What you don’t seem to understand is that with the 3 cornerstones we have, they could if they wished invest without finding a new investor. It would be easy for them.

My statement and the law is correct. You cannot issue ordinary share below their nominal value. However, as you say that some underhand shenanigans can be done.

The first cited is CNR, this being discussed previously on this chat, underhand.

The second is changing the nominal value via a general meeting. As you rightfully suggest it could be done.

I would suggest that this is totally unnecessary.

You, I know, will shoot me down for this, but here goes.

Why get fixated by the current share price. It’s only a current reflection of the inherent risk in not being able to fund the company. It being brought down to this price by the a fraction of the 49% and not the 51%. Those same shareholders took the price up to £1.72 last August. There was still risk at that stage, but not realised.

So has the total future value of the company changed significantly? I would suggest not. The increase in CAPEX spread over 40 years production.

Any new investors will be looking at taking a percentage of the company for the money they invest. The current cornerstones will not want to reduce their percentage by much. The battle will be there as I don’t expect a public offering. So how much can you buy for £100 million and what does it give you in the future?

Again I’ll reiterate that unless some underhand shenanigans are performed the raise has to be done at at least 20p a share. It is against the law to do otherwise.

Three random law websites below as reference.

Payment for the New Shares 

Importantly, you cannot issue your shares for any amount less than their nominal value. This is the price per share registered at Companies House. However, subject to your company’s articles, as a director, you can agree for the shareholder to pay the full amount later.

https://legalvision.co.uk/corporations/issue-shares-limited-company/#:~:text=Payment%20for%20the%20New%20Shares,pay%20the%20full%20amount%20later.

A share will have a nominal or par value: 1p, 10p, £1 or any other sum in any currency. And it is an absolute rule that a share cannot be issued fully paid for anything less than its nominal value – that is, it cannot be issued at a discount. A company cannot issue a £1 share fully paid for 99p or less. A company thus has no ability to issue free shares (but it may buy shares in the market and give them as free shares to employees, say, as part of an incentive scheme).

https://www.pinsentmasons.com/out-law/guides/shares-and-share-issues

Shares can't be issued at a discount, i.e. for less than their face value.

https://www.mylawyer.co.uk/issuing-shares-a-A76058D77480/

I’m under no illusion that this RNS is at best a holding one. They have given themselves another month to find a financial solution. We don’t know what going on behind the closed doors. All we know is they haven’t struck a deal yet that they are willing to sign off on. In the current environment the negotiations will be extremely difficult. Yes , miners are thinking twice where they invest in nickel. High cost facilities are shutting in favour of the lower cost. Horizonte is in the lower operating cost bracket which will help. It’s the duty of BoD to do the very best for all shareholders. Unfortunately it’s has been a substantial minority of those shareholders that have made this situation worse. They absolutely had the right to sell, but that is why the market has priced the share at its current value. Is the mine worth more than its current MCAP, $9 million, well yes. Joking, you’d get more for its scrap metal. I believe that the BoD, because of this, will be trying to attract as much debt they can, to reduce the amount of equity needed. Any amount of dilution of equity is not good for any shareholders. Also raising equity via a raise will not be easy. Again I’ll reiterate that unless some underhand shenanigans are performed the raise has to be done at at least 20p a share.

For this share I would agree.

Let’s assume for agreement sake, that Glencore wants to buy 100% of the company. What’s stopping them? Nothing except the price they’d have to pay. Currently La Mancha have invested £77 million for their 62,297,182 shares, or £1.24 per share. 23% of the company. I would hazard a guess that La Mancha would really like to see a large proportion of that back. To budge La Mancha and Orion into selling their shares Glencore would have to make a significant offer, and not at the current share price of 4p. By buying one or the other or both they would have to make the same offer to all shareholders.

As has already been said here on this chat regarding the cornerstones not taking this private, here were a few.

Glencore the most likely to buy this outright, haven’t because at this stage they share risk as seen in the current situation.

La Mancha have stated they do not own mines. Their sweet spot is 19.9% of the shares. This gives them flexibility and the ability to help and have influence.

Orion are just mine financiers. They are here for a 3-5 years for a multiple return.

Where can the funding come from?

Bank loans

CLNs

royalty agreement

Pre pay agreement

State/government breaks

Equity

Another element is they have first to convince themselves it’s still doable. They’ve looked at the CTC and EAC now they’ll be looking at the OPEX, crunching the numbers to make sure that the future profits margins are still in line with their current projections. This is will influence what their stake in the company will look like in the future and what the financial package they would want. We can only speculate about this. Depending on whether you bull or bear decides what you favour. Admittedly I’m bullish so I’d say the best thing is to fund mostly from debt, however, the bears will have us all wiped out with a vast dilution. The other option is administration, but this is costly with no guarantees.

One thing the new management team will need to do is convince the market that they have a true handle on what’s going on. There are several facets to this from explaining how the previous management got it so wrong and to why they didn’t know about it to what they’re proposing to do to get it right. For the past they’ll easily be able to concoct a convincing explanation. The future is slightly more difficult because they have to be watertight. By bringing in GMS they will lend credibility to the CTC. Yes, they have overinflated the figures and by some margin. The reason again, the need of being viewed as credible, given the previous management asking the market for more money only to come back for more. This next raise will have to be the last.

Rob,

I’d like to bring to your attention that the cornerstones are in here at at least 80p plus per share.

For the rest of the 49% of shareholders there will be a fair chunk who didn’t sell on the initial crash and are stuck at a £1 plus. Given that only 20% of the company was sold AND bought on the way down to 20p there’s a good chance that that would be still. A substantial percentage of shareholders will be holding.

I wouldn’t know the exact amount of shareholders that would make up the 3 to 4 p buy category, but would expect that to be extremely small. Less than 5%.

Rob,

You start off with a couple of valid observations but then spoil it by putting on your tin foil hat.