Member Info for Small_Holding

Thanks SeisNav, your time and effort is appreciated. That image is far easier to understand.

We currently have Explorations licences that have a relatively short term and need to be renewed every few years. Once a Mining Licence is obtained the JV has a long term secure licence, agreement to build the mine and mine the copper.

If I can use an analogy of buying a piece of land, it obviously has a value. Obtain planning permission and that same piece of land is worth considerably more.

With the Exploration licence we have the land but with a Mining Licence we have planning permission to build the mine.

A JV with a Mining Licence is worth far more than a JV with only Exploration licences, this isn't lost on institutional investors. With a 25 year Mining Licence we will have security and continuity and that is why we will get more investor interest once the full licences are obtained.

AIMO

By my calculations the Mining Licence Committee will be meeting this week or early next week. I see no reason why we shouldn't then get a decision on the Large Scale Mining Licences (LML).

IF the licences are granted it is a major step forward for the JV and Arc. With the 25 year licences obtained and with confirmation that they are drilling, I believe that will be the catalyst the institutional investors need to start buying.

If I am right we won't have long to wait now until the share price re-rates.

Https://www.forexlive.com/news/copper-prices-hit-a-record-breaking-5-per-pound-for-the-first-time-20240514/

Thanks SeisNav I didn't appreciate all three licences were at that stage, even better.

Would you post the other two licence reference numbers please as I don't have them

Thanks

The status of one of the JV Mining Licences recently changed to

Large Scale Mining Licence 33404-HQ-LML Handa Resources Ltd -Application Validated and Pending MLC Decision.

This change happened before we had the Investor Call but no mention of the licences was made during the call.

I have contacted the company to try to get clarification regarding the licences but they are unable to comment.

My reading of this is Anglo do not want that information released at this time.

For anyone who doesn't know the Mining Licence Committee (MLC) meet roughly every five weeks.

https://www.mmmd.gov.zm/

The last meeting was held on 11th to 12th April 2024, so the next one will be held towards the end of this month.

If a decision is made by the MLC regarding the above licence, their decision will be published in the results announcement at the close of the meeting.

At that point the information will be in the public domain and we will all be aware of whether a licence has been granted or not, regardless of whether Anglo want to tell us or not.

I see the granting of a Large Scale Mining Licence as a major step forward and it underlines Anglo's commitment to developing these licences into production.

We still need to find the mother-load but it is another landmark reached, if the licence is granted.

For years there has been a lack of investment in developing new copper mines, it takes years and is expensive.

This is now abundantly clear as we see the vultures circling Anglo, the big players want to buy producing copper projects or new ones in development.

The JV acreage is believed to be one of the best unexplored prospective copper areas in the world at present.

At the time of the JV other big players were interested, I seem to remember BHP was mentioned at that time.

Anglo is attractive to prospective buyers because of its producing copper mines but I'm sure their interests in Zambia will not have gone unnoticed.

It is my belief that Anglo will eventually be taken over by one of the majors but there will probably be other bidders who are unsuccessful.

At the time of the JV Anglo agreed to pay up to $88.5m for 70% of the JV. They did that because they believe it is worth many multiples of that value.

Had they been allowed to they would have bought the lot, if Arc and Kopore had sold out.

Pro rata they would have been happy to pay $126.42 for 100%

Anglo $88.5m 70%

Arc $25.28m 20%

Koppore $12.64m 10%

Arc's 20% low valuation of $25.28m or £20.47m

Today we have a market cap of circa £24m and that includes Botswana as well.

If investors believe the JV acreage is such a good prospect, why not try a bid for 20% of the asset and secure a share of future profits or 20% of the future copper produced.

Our holding is made even more attractive because it includes a free carry for the next few years, with guaranteed future payments from Anglo.

If Anglo would have paid £20m for Arc's 20% share in the JV acreage because they believe it is worth many multiples of that value, then perhaps others will have a similar view, especially at its current low valuation.

AIMO

Following the Investor Update presentation I contacted the company because I was concerned that some investors could have been given the impression that the JV might not run its course.

I received the following reply

'The point on the JV going the course was misunderstood... what I was saying was that a punter reached out and said following the BHP bid and concern that they might pull it was grateful that the company was well capitalised - for any eventuality... As I said on the call BHP (and Anglo's) strategy is all about copper so I have no concern...'

From RNS dated March 12th 2024

'The Directors anticipate applying approximately £2,000,000 of the Fundraise to the Potential Licence Acquisition Process and the Potential Buyback.'

The board's strategy is to spend a substantial amount of the fund raise on acquiring another exploration licence.

It is my belief that this strategy is wrong and I will explain why.

The board sold off non core assets to concentrate on the main asset, Zambia.

They then unexpectedly raised cash to purchase another licence in Botswana, We were told that they just couldn't say no to this asset at the price and I accepted that.

Due to the delays in progressing Zambia cash was running low. So much so that the board decide to suspend Botswana assay testing to preserve cash. Again to save cash any drilling through our 2023 winter in Botswana did not take place.

We then get the awful fund raise at 1.8p partly to buy out a Swedish institutional investor but also because cash was very low.

Anyway, having gone through this extremely painful process for retail investors we now at least have some cash.

We all hope that Anglo commit to an extensive, long lasting drilling campaign this year and find substantial copper. However, nobody knows how long this will take.

If they find one big copper deposit then, as I have said before, the only real way to buy into the JV is to buy Arc shares.

This is the dream ticket but everything takes an age. I was told the Zambian assays were sent off late December, three months later still no sign of the results.

It is my view that we should let Anglo do the work in Zambia as per the JV and the board should concentrate on Botswana, doing the exploration they had to suspend due to lack of funds.

Spending a very large chunk of cash on a new exploration licence commits Arc to spending additional cash under the terms of the licence, with little chance of a return for many many years (Zambia has shown how long it can take)

I have to ask where is the cash coming from? The annual money from the JV will pay salaries, overheads and maybe fund exploration in Botswana but not much else.

You may ask, why not write to the company outlining my concerns. Well I have done that but I just got the straight bat, basically saying this is the company strategy.

I haven't posted for a long time because the BB has become a slanging match and little else. However, I do think this is the wrong strategy when the hard work is already done in Zambia, conserve cash and wait for drilling results but at the same time progress Botswana,

I hope the next RNS is going to either give us the 2024 Zambia or Botswana drilling plan or the Zambia assay results.

Unfortunately I think it may actually be we have spent a large proportion of our cash on another exploration licence that you may see a return on sometime in the next decade.

AIMO

Https://www.share-talk.com/sharetalk-new-year-digest-20-stocks-to-watch-in-q1-2024/

Fulmar

I agree that there is no way AAL will sell their share. What I'm saying is they may not get Arc's 20% if a higher bidder appears

Long term investors here believe the copper is there and the JV will find it, when that happens sentiment will change very rapidly.

At that point anyone wanting to invest in the JV only has one realistic option and that is to buy shares in Arc.

Kopara are a privately owned company and are therefore not listed. Buying shares in Anglo would give exposure to the JV but any effect would be watered down because of the sheer size of the business. To gain maximum benefit from the JV either in terms of a share price rise or to attempt to secure a supply of future copper, any potential investors would need to buy Arc shares.

I know many on here think it is a given that eventually Anglo buy Arc and Kopara out but I believe the Arc board will sell to the highest bidder, as simple as that.

If the JV is very successful what better way to secure future copper supply than to attempt a takeover of Arc. With proven copper, when a bid from Anglo comes I am sure they won't be the only company interested. As I have said previously it is good business sense from Anglo's point of view to make a bid sooner rather than later, before the true value of the JV is realised.

I also find it interesting that they started drilling Cheyeza first. It could be just that the infrastructure is good because of previous drilling but it is my view that they believe Cheyeza could be a Tier 1 and now we know David Wood has been on site that reinforces my view.

We are waiting on four bits of news in the short term

1. Botswana assay results

2. Botswana drilling plan

3. Zambia assay results

4. Granting of the mining licences

Just my opinion but I expect them to come in that order, mainly because the first two are directly under Arc's control.

AIMO

This was a private event aimed at institutional clients, it was not originally intended for retail investors.

Due to the amount of interest from retail investors Arc have made the decision to open it up to a few retail investors to attend as well.

Arc are doing exactly what we want them to do, demonstrate to ii's the attractiveness of the risk/reward investment here.

Many thanks, it makes sense to drill deeper around where they have previosly had success

In the last investor presentation slide 16, it shows 2 significant early discoveries.

Is the one shown for Cheyeza where you believe they are currently drilling?

Fantastic news that the deal is finally unconditional.

As I have said before institutional investors do not want to take any risks, they want as many risks as possible covered before they invest, even if that means a higher entry point.

With the deal now set in concrete the risks have significantly reduced.

The news landing late on a Friday afternoon was not the best time to get a market reaction.

If this deal is as good as it looks, next week we should see either an analyst or a rated share tipster give Arc as a buy.

Given the relatively low risk and the potentially huge reward I would expect that to happen.

I am sure I am not on my own in looking forward to the market opening on Monday

Anglo want to own these licenses outright and it makes good business sense to buy the remaing 30% before the true value of the licences are realised.

The more drilling they complete, the more copper they find, the more the value of the licences increases.

From Anglo's point of view better to take control early on than to wait for the full JV to run it's course.

Just my opinion but once the 25 year licences have been obtained, if Anglo find significant copper, I think we may see a bid made for the remaing share.

Obviously at that point we want to see a higher bid come in from a counter bidder and a bidding war starts.

The deal is not yet unconditional in accordance with the commercial terms previously announced and Arc haven't received any money yet. These two things should be completed in the next two weeks. Lets get those confirmed in the next two weeks and then see what the analysts and tipsters make of the deal.

The key thing that surprised everyone is that we are already drilling and down 100m after the first 10 days, so we will see assay results this winter.

Investing is gambling, you can potentially lose everything.

Yesterday investing in Arc carried risks that the deal did not complete, they ran out of money or that AA can't find copper.

Now Arc can take a back seat and let AA get on with the drilling, the risk/reward has altered dramatically.

The risks are now significantly reduced, there is still the risk that AA don't find any copper but the potential reward is as big as it ever was.

The market will wake up to this

Fantastic news, well done everyone who held their nerve!

I wonder where they are drilling?