Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
There has been plenty of speculation either way of how this will pan out. Deal or no deal! No one will know until that RNS that tells us the future. However, fingered in the air, gut feeling without any scientific evidence I came up with a figure. It’s pure speculation, nonsense etc., etc., etc. If a deal is struck, whatever the deal in monetary terms I think between the cornerstones and new investors they will end up with a maximum of 90% of the company. This leaves the rest of us with 10%. I’ll give a bit of rationale behind this, liquidity. I believe this would be the minimum the cornerstones would want, ideally I’d think they’d want more like 30% to provide a more stable base. (Not too sure with that theory).
So at 10% what does that look like. Currently approximately 300 million shares counting all the hidden ones are accounted for. 50% currently retail, 150 million.
Therefore future shares in issue would be 1.5 billion. 1.2 billion new shares to be issued.
What is the future value of the company just considering A1 with 1.5 billion shares. NPV of £750 million by 1.5 billion shares is 50p.
This is where this all falls down.
If full equity of £600 million raised via 1.2 billion shares, they’d have to invest at 50p a share, absolutely no return whatsoever.
If equity of £300 million raised via 1.2 billion shares, they’d have to invest at 25p a share. Is a 100% gain enough with an upside of A2 and V?
Spike,
I did ask that people think deeply about this. You may need that coffee you eluded to.
So I’ll give you the answer.
The point I’m making is the company once the deal has been struck it will no longer be distressed and as Chess says there maybe more than one player having a look
Chess, I agree that whilst negotiations are ongoing there will be many interested parties looking, some just looking, some chancers with lowball offers and the serious players. The board at this stage will have dismissed the lookers and chancers, and will be negotiating hard with those remaining.
There will come a point where negotiations are concluded and final offers are made.
A General Meeting of the shareholders will have to be called to consult and vote on the board recommendations. I think the board will come with one, ‘take it or leave it’, this is the best we could get.
Thought for the day!
I’m going to state the obvious now, (which isn’t), but I’m sure a lot of people haven’t thought of the situation in this way, I didn’t.
The current company value is solely due to the perceived risk.
If a deal is done then that risk goes away. (Mostly).
So WHY should the new investor who is part of the deal not pay accordingly in line with the de-risked company future value, maybe with a little discount?
Please think deeply.
Currently I’ve not got a clue whether this will go bust or not, but it’s not looking good.
If a financial package is agreed it’ll be a take it or it deal. There will be no retail placing, no book building, it will be a case of them detailing what the total £s is to be invested by the cornerstones and new investors and how they are dividing the company between themselves. There is no point in thinking in terms of a share price as there is absolutely no way they can raise at these levels.
The scenario is that you’ve been approached as a potential new investor by the company. Before you get to see the prospectus you sign an NDA. You also at that point become privy to insider information. You can no longer trade in shares of the company. If you like what you see what are you willing to invest. It’ll be about the future not current.
This is a question all of us should ask.
So why did Glen, LM and O invest in Horizonte in the first place?
At the top of the list for most, will be to make a bit of money out of the vast potential the company had. A1, A2 and V. Oh, and talk of A3 and maybe V2. Oh and a possibility of being a FTSE100 company. How dreams crash and burn!
So why would Glen, LM and O invest in Horizonte now?
The only reason I can think of, is not to lose money. If they walk away now they have certainly lost. I dare say the potential is still there for them.
However, for us it’ll be crumbs at best.
New today. I thought just interesting to look through.
https://blackrockmining.com.au/investor-presentation-sharecafe-webinar/
-111,
Well we are all gamers here, and that’s the point. Some are slightly more risk averse than others due to being burnt. Even yourself, but you came back and got burnt again. Each of us has to learn. Some are more thick skinned. You have learnt and now have retired from AIM. I too have learnt and when in a position will exit to. Sure others here will follow at some stage, but that’s up to them.
AIM is an investment. Well that’s a laugh. It, like a lot of activities, is a pure gamble. Putting a bet on horse running in the Grand National at 100:1 is throwing money away so why do people actually place that type of bet?
So is Horizonte a gamble, and what are the odds? I couldn’t myself work these out as it’s a combination of a straightforward gamble, accumulator and spread betting.
The market itself hasn’t got a clue, hence the current share price.
For those that like throwing in an odd £1 or £2. Well it’s 5heir money.
Now that the new CAPEX is known and financing cost, the new OPEX cost could do with being published. I’m presuming that those will be known by the company and shared to the privileged. I would also suggest that these have to be solid to be believable. The shutters haven’t been brought down yet so maybe the mine will still provide an adequate level of profitability.
I invested in Horizonte the first four years ago on the open market look long term income though dividends. (Yes. Bad decision! But I’ll have to live with that.)
I did all the due diligence I could and bought. That was looking through reports, presentations and any other information I could get. My decision to invest was verified by the funding being realised.
Although everything has changed, somehow I feel we’re are the beginning again. The same questions, the same forecasts, a different but same bearish market. The decisions taken then were full of risk and uncertainty. Some may say that as time has passed and what’s happened has happened that risk and uncertainty has diminished a fraction or two.
So to conclude is the case for investment by the majors now stronger?
I’m always amazed at people commenting on the share price movement on the TSX.
Yesterday someone mentioned it was 75% up at close trading at an equivalent 3.5p.
Now we have comment on a 25% drop with only one sale of 35k shares.
Are they really a barometer, given the small volume?
Sorry meant to put the link in
https://x.com/goldstoneres/status/1775443108068557050?s=61&t=iGwN06MTvXMFS5Z_VwueBg
Over the past five weeks there has been some activity at the mine site. Check out these two sets of images.
20 feb
https://apps.sentinel-hub.com/eo-browser/?zoom=15&lat=6.32846&lng=-1.62512&themeId=DEFAULT-THEME&visualizationUrl=https%3A%2F%2Fservices.sentinel-hub.com%2Fogc%2Fwms%2Fbd86bcc0-f318-402b-a145-015f85b9427e&datasetId=S2L2A&fromTime=2024-02-20T00%3A00%3A00.000Z&toTime=2024-02-20T23%3A59%3A59.999Z&layerId=1_TRUE_COLOR&demSource3D=%22MAPZEN%22
Yesterday
https://apps.sentinel-hub.com/eo-browser/?zoom=15&lat=6.32846&lng=-1.62512&themeId=DEFAULT-THEME&visualizationUrl=https%3A%2F%2Fservices.sentinel-hub.com%2Fogc%2Fwms%2Fbd86bcc0-f318-402b-a145-015f85b9427e&datasetId=S2L2A&fromTime=2024-03-31T00%3A00%3A00.000Z&toTime=2024-03-31T23%3A59%3A59.999Z&layerId=1_TRUE_COLOR&demSource3D=%22MAPZEN%22
For a laugh! I wasn’t going to get the calculator out again, but feel the need to do an extreme simplification. This is in agreement with mv01’s calculations.
If the new investor ends up with 20%, 50% or 80% of the company.
200 million shares initially in issue.
Resulting share numbers
@20%, 250 million
@50%, 400 million
@80%, 1 billion
This shows that the relative dilution increases substantially as you give more away.
What would this mean for new and existing shareholders if the new investor was investing £100 million and the future company value being £1 billion. Well the new investor would have a 2, 5 or 8 bagger. The existing holder would be at a value 0.8, 0.5 or 0.2.
Or if you actually want to put this imaginary company in terms of share price then.
Pre deal it could be anything, conceivable 1p. Post deal is want the new investor paid, £100 million for 50 million shares £2, or 200 million shares 50p, 800 million shares 12.5p. Future £4, £2.50 or £1.
At this point it’s getting beyond simple so I’ll stop.