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Malik - Yes, the only potential "placing" they have announced is for paying less than half the purchase price of H2 Green Limited in shares to be issued instead of cash, should they choose to exercise the purchase option (something they of course will do to progress this project!).

from the RNS:
"…the maximum consideration that could fall due before H2 Green generates first revenue totals £375,000, of which up to 50% will be settled through the issue of new shares in Getech and the cash component of which lies within Getech's current financial capacity."

The fact that the amounts and figures mentioned in the RNS are so small compared to the potential size of this business, could be the reason the share price has not moved much. And their additional costs need not be very high apart from hiring more engineers to the team that will handle this project. Already in their 2H2020 report they hinted that something material was going to happen:

"These diversification initiatives are focused on opportunities that
have the potential to materially grow Getech. To date, activity has
been delivered through organic product investment, service
enhancement and innovation. The Group is also working to
accelerate this journey through acquisitions that target Energy
Transition related opportunities where Getech sees the potential
to deliver a stepwise series of growth-focused transactions.
Year to date, Getech has screened c.100 acquisition opportunities,
seven of which have been taken to detailed due diligence.
Diligence and negotiations continue on two of these opportunities."

At current share price, 29p, the market cap. of Getech is £10.9m, which is only £1.6m above Net Asset Value at the end of June2020 (2H2020 unaudited). What is going on here? Any other listed company just mentioning H2 involvement is priced 10 to 50 times NAV!

Hi OK123,
you are not alone in wanting to know how CGWIC has handled similar joint projects in the past.

When I read China Great Wall Industry Corporation's own website there is absolutely no mention of engineering, construction or mining projects in Africa or anywhere else. All they write about is space, satellites and "Successfully Launched" this and that space crafts. Even the photo of the Pensana chairman with the CGWIC-representative (www.clbrief.com/china-great-wall-industry-corporation-enters-angola-rare-earths-project/) is full of rockets! Why can't the Chinese be straight and describe their company activities truthfully?

Below is the complete list of what CGWIC want us to believe their activities are:

• Space Transportation
o Launch Services Management
o Launch Vehicle
o Piggyback Opportunities
o Launch Site
o Launch Record
o Customer
• Satellite Communication
o DFH-4 BUS
o In-Orbit Delivery
o Customer
• Earth Observation
o CAST Satellite Platform
o SAST Satellite Platform
o In-orbit Delivery
o The China-Brazil Earth Resources Satellites
o China's Small Satellite Constellation for Disaster and Environment Monitoring and Forecasting
o China's Three-Dimensional Oceanographic System
o Meteorological Satellite
• Satellite Navigation
o System Introduction
o Satellite List
o International Application
• International Cooperation
• Technology Applications
o Satellite Applications
o Space Workshop
o New Energy
o Energy Saving & Environmental Protection
• Component Products
• Comprehensive Services
o Consulting
o Exhibition
o Trade
o Tendering & Bidding

Where is the decades long track record in mining projects?

Yes, therein lies the problem. Changing the strategy to something that now also requires great Chinese diplomatic skills in addition to dealing with substantial extra commercial and political risks and complexities of this sudden green UK turnabout has made this project completely unrecognisable compared with what Atherley presented to e.g. Crux Investor only a few months ago (https://www.youtube.com/watch?v=lZzMhJSYIkk)

I bet the Chinese now feel completely alienated in this project. Only a few months ago Atherley was talking warmly about his longstanding good relationship he had with China and how this project would fit perfectly into their Belt and Road scheme of things. On that basis they were offering collaboration and finance. Now, on the other hand, it's all about rare earths supply to UK (probably, if everything works out) and green credentials and certifications. They must be gutted so why should they provide any finance on that basis?

Agree. Earlier the business plan was quite simple and easy to understand making PRE very investable:

1) To turn the signed Heads of Agreement with China Great Wall Industry Corporation into a fully signed Contract for mine construction agreement.

2) Get the 85% finance from the Chinese banks on the back of a £50m placing to raise the cash for the 15% equity).

3) Construction start in 1H2021, i.e. within 6 months (!!!) had been communicated several times since this summer.

Now on the other hand they have not just complicated the whole progression but also made sure everything necessarily will take much longer to set up. The "sustainable mine to magnet supply chain" with "an integrated rare earth processing facility in the UK" with the choice of at least 3 sites, government grant involvement is something that will take years even for FTSE100 companies to arrange, let alone build! But little Pensana to arrange all this?

What on earth happened to our simple, high visibility project? Have the Chinese as expected demanded exclusivity in return for finance and construction? And that therefore this new, very "sustainable" route to UK became the only option available? I don't know of course but ever since the bombshell RNS on was released on 12 October about their Wood Group Study about creating the world's first sustainable magnet metal supply chain, the appetite for shares seemed to have been lost by the market. I have witnessed some wild goose chases in my life and this magnet sustainability project is up there with some of those.

The market needs some reassurance now, and quickly: Are they still 100% committed to the original strategic route and time schedule with China? And is this UK thing just something added extra that could come in parallel with, or preferably, well after the planned mining and sale to China has commenced and is profitable?

Mike - One answer can be that Lynas don't have sufficient free (and consistent) positive cashflow to allow them to safely pay any dividends. Their business is so capital intensive that even if they occasionally may be profitable (2020: Total comprehensive LOSS for the year attributable to equity holders of the Company: AUD32mill) all their resources need to be ploughed back into the business just to remain efficient. Also, and perhaps more importantly, repayments on their big AUD332m long term debt also suck them dry of all spare cash.

From Lynas' latest annual report:

"Dividends
The payment of any dividends in respect of Lynas’ shares is affected by several factors, including covenants in the JARE loan facility, Lynas’ profitability, retained earnings, ability to frank dividends, capital requirements and free cash flow. Any future dividends will be determined by Lynas’ Board having regard to these factors, among others. There is no guarantee that any dividends will be paid by Lynas. If Lynas is unable to pay dividends the price of its shares may fall. "

The actual business of mining is NEVER as rosy as always painted by the various mining company boards however smooth, shallow and simple the resources may look from the surface.

only worth 0.05p at best? Just the cash in bank alone is over 0.05p per share.

There are many of them with the same name (even same middle name). Our particular Richard Arthur Lockwood sold 2,168,300 shares between 14 September and 5 October I've noticed.

Have I misunderstood the terminology? I thought book value was the same as NAV (net asset value) which according to the annual report to 30Jun2020 is USD14.61m or equivalent to GBP11.4m. Market cap or trading value today is approx. GBP109m which would mean that Pensana is trading at 9.5× book.

Tony, Any views on the timing of the capital raise for the 15%?

I assume the planned 85% of total project cost debt finance will be given only AFTER the equity for the remaining 15% (or USD30m-USD50m according to Atherley https://www.youtube.com/watch?v=lZzMhJSYIkk&ab_channel=CRUXInvestor 39:40) has been successfully raised. And if so, how soon will the bank need it to happen? We obviously don't want it to happen until the share price has fully "matured" to minimise dilution.

RNS:

https://www.investegate.co.uk/pensana-rare-earths--pre-/rns/issue-of-equity-to-angolan-sovereign-wealth-fund/202009251728052064A/

The Angolan Sovereign Wealth Fund has agreed to buy a further 13,500,000 ordinary shares to be issued at 50.21 pence per share, raising gross proceeds of approximately US$8.6 million.

I don't think the discount of around 12% is unreasonable for a company at this stage, all in all a very reassuring placing!

An interesting article in Asia Times Financial today:
China has kept its 70% of the total REE world market so hidden from view that international financial media say they are simply not able to explain why China's REE export in August has fallen by 62%.

https://www.asiatimesfinancial.com/chinas-exports-of-vital-rare-earths-drop-a-dramatic-62-in-august

This article does show how opaque the REE market really is and perhaps also why China appears to be able to be so competitive (=cheap). Since Pensana are planning to ship practically all the rare earth output to China for refining and use in components, this makes me think Pensana will struggle to achieve the "high Environmental, Social, and Corporate Governance standards" they are talking about, or to raise ESG-compliant finance.

The actual rare earth mining itself in Angola may be possible to keep clean but it cannot be within the spirit of ESG compliance rules to just ship all the rare earths into China with its so-called "different" compliance standards to other countries. But in all the promotion talk chairman Paul Atherley have used windpower generation as a central selling point of his ESG chain of events, and that is clearly AFTER the Chinese have done all their magic bits to the rare earths, and the wind generators with their NdPr super magnets are installed and generating pure and clean electricity in the North Sea.

Tornadotony - yes, the question of finance risk is an important one. Chinese finance I think is quite a realistic option. But by selecting that option how restricted will Pensana be in its strategic choices later?

According to the Pensana's chaiman Atherley in talk with Crux Investor, China has belt-and-road invested $20bn in Angola. This mine fits perfectly into Chinas long term plans in Angola. China Great Wall Industry Corp (CGWIC) is as far as I can hear in the videos the only company Atherley has contacted to turn-key build the mine facilities. Via CGWIC Atherley will be put in touch with suitable Chinese banks for the planned 85% of total cost loan finance. This is a finance methodology China has done hundreds, if not thousands of times around the world. And they know which clauses to include in the paperwork.

https://www.youtube.com/watch?v=lZzMhJSYIkk&t=196s

A scenario where the bank, as you suggest, could say "its not a runner" would only happen if Western (non-Chinese) banks were to lend the money. As far as I can hear from several video interviews, Atherley is only speaking with the Chinese about both the mine procurement AND the finance. No plan B seems to be required.

As part of their belt-and-road game plan, China takes a different view to the rest of the world. They want these rare earth elements shipped to China so that they not only can refine the them but also make them into components and use them in the whole value chain from raw materials to finished products (e.g. Chinese made super-magnet CT scanners was mentioned in one video).

Western banks don't have belt-and-road. They need belt-and-braces instead. They need to make profit on the finance alone. Therefore, western banks often need to say "its not a runner". China however thinks in terms of long-term profit created in the whole value chain for all its belt-and-road projects combined for China as a whole. A few losses here and there within the value chain is not an issue since they know that the overall domestic and export price of millions of products containing rare earth elements is colossal. And perhaps more important is China's ever-reinforced dominant world position created by each additional belt-and-road input.

Atherley, with his many years working and getting along with the Chinese, never stood a chance. He has completely fallen for this Chinese procurement and finance method.

I'm no expert here but the last regular trade yesterday at 16:35:27 was marked Uncrossing Trade, i.e. an LSE auction trade with matching bid and ask, and as far as I understand auction prices are always conclusive however small such trade is.

On the subject of transparency, I wish LSE became more modern and democratic and let us all trade openly on the main board directly instead of through these shady market-makers who frankly were superseded by computers decades ago. But of course, the number of trades would tumble if shareholders could trade directly with each other instead of through this unnecessary middleman layer and affect commission revenue. I'm also sure it must be in the interest of the investment platform providers to restrict us private investors to the MM regime since they all (as far as I know) are in full agreement to do so.

Chinasyndrome, is this the piece you mentioned?

https://stockhead.com.au/stockhead-tv/v-cons/v-con-rare-earths-rare-upside/

Relevant and very interesting!

https://uk.finance.yahoo.com/chart/BGBIO.OL?p=BGBIO.OL

https://www.hl.co.uk/shares/shares-search-results/b/bergenbio-asa-nok0.10

Bought some just before the placing on 5 May (using HL). Up 18% so far today! No specific news apart from general news coverage, for instance https://finansavisen.no/nyheter/borsintervju/2020/05/14/7527195/nordea-forvalter-tror-bergenbio-aksjen-kan-doble-seg (subscription needed which I don't have)

google transl:

Nordea manager believes the BerGenBio share can double
"Within a few weeks, we will know if the drug Bemcentinib has the desired effect for covid-19 patients," says Nordea manager Jakob Vossgård.

Will the company announce any special dividends this year? Its getting a bit late I think and I haven't seen any sign yet. Last year the RNS came out on 22 Jan 2019, the year before none, and before that on 30 Nov 2016.

Apologies - in a disturbed, weak moment I got both the date (of the balance sheet) and the figures completely wrong in my posting. I am however still annoyed that they reduce the total dividends for the year by around £9m when their operations apparently are going so well.