Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Ruffles accuracy has been very impressive thus far, so when he says Drilling 2022 Summer/Autumn I believe the deal is getting close.
To potentially drill Summer 2022 means they could be drilling as early as next month.
When the deal was announced I wrote to the company expressing concern over the proposed timeline
"An exclusivity period has been agreed for up to 90 days to allow for due diligence, and up to an additional 90 days for the negotiation and execution of the Joint Venture Documents."
I was told not to read too much into the timeline as this was a boilerplate agreement. My understanding of that is this is a standard document that has been used many times before and the timeline allows for any issues the legals might find to be ironed out without jeopardising the deal.
Lastly, as a result of the executed warrants Arc's current cash position is better than that declared in the Annual Report.
When they issued the CASA Disposal Update RNS on Friday, I thought it might finish with a one liner saying something along the lines of
After receipt of the first installment of $125k, Arc's current cash balance stands at $xx
If the deal was still a long way off I would have thought they would have taken the opportunity to reassure investors of the current positive cash position but they didn't.
If the deal is fairly close perhaps they thought there was really no need to do that.
Tweet from Arc's largest shareholder, Karl-Erik von Bahr
"#ARCM - ridiculous valuation right now. If you believe the deal will happen and understand how and why the deal happened and the aggressive structure, there is a true value proposition here. Well funded post warrants and expect Casa cash soon."
If you are invested here the question you need to ask yourself is
Will Anglo cement this deal?
If you believe they won’t then you may want to sell and move on, everyone has different investment reasons, timescales and opinions.
If however you believe that Anglo will rubber stamp this deal, then Arc is currently an amazing investment at this price.
I obviously agree with the latter statement.
Anglo American previously owned this acreage prior to exiting Zambia. They have come back now to attempt to regain this asset. They entered into an exclusivity agreement where their initial low offer was rejected. The exclusivity period ended but did Anglo walk away, no they did not.
They continued talking and eventually made an unprecedented offer to Arc to take 70% of the asset. This appeared very generous but the crux for Anglo was that it stopped anyone else bidding on this asset because it was presented to the market as an already done deal.
What I am saying is Anglo conceded to give Arc a generous deal because the key to them is to not lose this asset.
Arc’s current share price gives absolutely no value to the AA deal and I appreciate that. However, once rubber stamped Arc has a free carry on the licence for 7 years and they will on signing receive, $3,500,000.
This is the point where everything changes and Arc goes from what is still perceived as a risky investment to a partner with a major on an exciting licence.
NvS has done an amazing job getting to this stage with minimal dilution. We could easily have twice as many shares in issue at this stage but he has constantly tried to avoid dilution.
Finally, the negative posters.
Share investors do try to talk a share down with a view to buying in cheaply and this is an accepted practice.
With regard to Arc if that was the case it has already been achieved, so buy in and move to the next target. However, our negative crowd don’t do that and keep posting negative posts. The conclusion you have to draw from that is that it is more personal, perhaps they have heavy losses here and are still bitter.
Of the first 15 trades today, the total value is £55k.
Very small volumes
From the RNS dated 29th April 2022
" The terms of the transaction are that Arc will be paid US$250,000 within 30 days of today"
I make that this Sunday 29th May, so if all is well the funds should be received today or tomorrow, if they haven't been received already.
I don't know if an RNS will be issued but it would be good to know things are on track.
Last Wednesday, the day before Arc released the news of a transformational unprecedented deal with a major miner, the share price stood at 4.46p.
A week later and the share price has fallen almost 7% from the price it was before the news broke.
You couldn't make it up!
The shares were quoted at 3.75p just before 08:00 down 11.77%.
Did anyone sell or buy at these levels? No they didn't
There was absolutely no reason for this drop. As well as trying to entice sellers, they also affect sentiment by doing this.
By marking the share down sharply they are attempting to set a negative mood for the day and hope more investors sell.
A fantastic deal for Arc and Anglo.
I said before the deal was announced that there was a chance, if the deal went to a vote, Anglo could be outbid and lose the asset.
By agreeing this deal Anglo have guaranteed they get control of the licenses. Yes they have had to agree to allow Arc to retain 30% of the JV but at the end of the day that is a price worth paying if they think there is one or more Tier 1’s on the licences.
The 180 days is just more insurance for Anglo that the deal does not fall through. The DD and the Joint Venture documents will be signed off fairly quickly because they want to get drilling asap. NvS said in the call that most of the DD has been done already. The 180 days is there just in case there is a slight legal sticking point, this gives them time to resolve it without stopping the deal.
The share price reaction was disappointing but the news was released on a bad day for markets. Once the deal is rubber stamped I expect the share price to steadily rise as drilling gets ever nearer.
The hard work is done for Arc now they can sit back and watch Anglo plan and finance this years drilling. Anglo will obviously drill what they consider to be the best targets first, so we should see some interesting results.
We will also have drilling results from Botswana to look forward to, exciting times.
AIMO. GLA
What might stop a full takeover is the risk to Anglo of losing the asset altogether.
Under a JV it can be agreed with the Arc board and presented to the market as a done deal, no other major gets a look in.
With a full takeover the offer would be put to a shareholder vote, which takes time. Whilst the vote is going through another major can counter bid and potentially snatch the company or just start a bidding war.
If Anglo do go for a takeover it would have to be at a price that Arc are happy with but also high enough to deter other bidders.
In my opinion, the dream ticket is a full takeover. If that were the case I think the shares would be suspended pending a shareholder vote on the offer.
I thought a full takeover was off the table when Arc bought the Botswana acreage but now there appears to be a chance Anglo may be interested in buying the licence next door in Botswana, perhaps a takeover still has a chance.
As I understand it with a JV the board can just agree it and the deal is presented to the market already agreed. That said, the board could put the deal to a shareholder vote if they so wished.
I expect in the event of a JV that the shares wouldn’t be suspended, unless there was a massive surge in the share price before the announcement and then they may ask for a temporary suspension.
AIMO
Given the number of people who would know that a deal is imminent, I think it would be extremely difficult to keep a lid on the news. In these situations you normally get a leak of some kind and we would see a sharp spike in the share price before the announcement is made.
IF we are getting news next week, I would expect to see a greater volume of shares traded and probably larger buys than we have seen in the last few days.
Either way I wouldn't want to be out of this share this weekend!
GLA
I for one will be disappointed if we don't see 12p a share after a deal is announced. I think the current share price is artificially low because of the Ukraine situation. NvS always talks about a significant deal and they have already allegedly refused one offer because it was too low.
It all depends which licence or licenses any JV includes, just my view but if they want a JV on all of the licences I think it will cost them. I just can't see the board accepting a deal that doesn't adequately reward its shareholders.
Hopefully we haven't long to wait to find out.
Just my thoughts on the timing.
The timing of this RNS might be significant as well, released at 15:29 an hour before the market closes for a long weekend.
We were told that all the interested parties wanted to see the results of the aerial survey and we don’t know how long these results have been in.
Let’s assume that they have reinforced what the potential suitor thought and a deal is imminent. Could Arc be accused of withholding potentially price sensitive information?
Not if they released it to the market close to the bell before a long weekend, prior to the announcement, the information is then in the public domain.
Exactly and he also said on the 22nd April 2022
"Final legal dotting of "i"s & crossing "t"s agreed yesterday??"
His posts are now validated, if they weren't before, and a deal is close!
GLA
Always a good sign when you can't wait for the markets to open......
"ARC have what appear to be promising licences but so far have found very little to back that up. 4.3m @ 0.59% copper per the Sept RNS was their most promising discovery to date."
That was their most promising discovery to date was it, perhaps you missed these
12/09/2019 RNS
CHDDE025 intersected 1.27% Cu over 32.50m from 23.50m
o Includes 2.05% Cu over 17.50m from 38.50m, or
o 2.79% Cu over 10.50m from 44.50m
• CHDDE023 intersected 0.95% Cu over 17m from 22m
o Includes 1.60% Cu over 5m from 30m
• High-grade core to the mineralised zone now established
5/11/2019 RNS
CHDDE047 intersected 1.44% Cu over 20m from 34.50m and 1.41% Cu over 11m from 52m
o Includes 3.67% Cu over 5m from 34m, and
o 2.46% Cu over 5m from 52m respectively
• CHDDE049 intersected 1.20% Cu over 14m from 38m
o Includes 1.78% Cu over 7m from 44m
• CHDDE051 intersected 0.93% Cu over 14.50m from 17.50m
o Includes 1.36% Cu over 7.50m from 18.50m
• CHDDE027 intersected 0.62% Cu over 15.50m from 44.50m
o Includes 1.51% Cu over 3m from 46.50m
• CHDDE045 intersected 0.61% Cu over 10.74m from 74.50m
Arc Minerals is in a better position now than it has ever been, on the cusp of a deal yet still the share price languishes at a ridiculous 4.1p. (Market Cap £49m)
Anyone expecting a deal to be announced before the Webinar tomorrow will I think be disappointed, we don't know if the Zambian authorities have rubber stamped the agreement yet.
What I expect tomorrow is NvS to be extremely bullish about last Friday's agreement and he will reaffirm that negotiations are at an advanced stage. We should also hopefully get clarification on a few other things as well.
Two points to make
1. When a deal with a major is announced and the share price is north of 6.94p those Directors will have lost money
and
2. The RNS also states
"In order to protect the cash resources of the Company, the compensation schedule will be phased over the next 3 years at the Company's discretion "
The 6.94p can be paid at any time in the next three years, more than likely after a deal is announced when cash flow will not be an issue. They weren't paid it on the day as your post implies.
LTH’s have had a very long wait here to see things unfold, that is all about to change.
Do not underestimate the significance of Friday’s agreement, investors hate uncertainty and the court cases provided that. They also threw in an open ended timescale with nobody really knowing how long the court procedure would last.
With one agreement on Friday most of the uncertainty was swept aside. MM and co must be happy with the agreement or they wouldn’t have all signed it. With the benefit of hindsight I believe the cost to Arc will be seen to be peanuts in comparison to the final sale value of their assets.
Investors watching the Arc story, possibly believing the share price has the potential to multi-bag from here, may have understandably been put off by the court cases. They are no longer an issue here and the only issues MM and co now have are with the Zambian authorities.
We knew that discussions with a major were at an advanced stage, NvS took the opportunity of saying in Friday’s RNS “accelerate our discussions with interested major mining companies.”
The timing of a deal on Friday morning was in limbo, it isn’t now. Once the agreement is rubber stamped by the Zambian Courts, a deal could come at anytime.
One thing delays have done is allow time for checks and to finish the complicated documentation surrounding a potential deal.
I believe we are now moving into a new phase in the Arc story and, for once for Arc shareholders, this will be a positive one. I fully expect to see a greater appetite for Arc shares over the next few days as investors realise the risks have been greatly reduced.
I also believe we will see a deal announced in the next couple of months.
GLA. AIMO.