Member Info for Small_Holding

https://wcsecure.weblink.com.au/pdf/MTC/02554494.pdf

You may have thought that a deal would be announced within the 90 days but most LTH's knew that we needed the licenses renewed first. As I think the first 90 days are up tomorrow, I certainly knew that we were into the second 90 days.

Yesterday morning we knew that we were into the second 90 days, that the Cadastre closing had caused a delay and that the licence renewals were the sticking point preventing the deal being announced.

Arc issue an RNS to announce the maiden drilling programme at Botswana is underway, now does NvS give an update on the AA deal or not mention it because it is still covered by the original deal.
He chooses to give a brief update which confirms what investors already knew, get the licenses renewed and the deal is ready.
It seems, damned if he does and damned if he doesn't.

I still say, get the two licenses renewed by the Cadastre and a deal will follow very soon afterwards.

With the two licenses expiring on the 26th August (a week on Friday), I think it is reasonable to assume that the company should hear this week.

Nothing is happening until the two large Zaco licenses are renewed and they expire 26th August 2002.

In normal circumstances you would expect the licenses to be renewed say a week before that date.
As Seisnav says one of the licences (23005-HQ-LEL) has had its status changed from Active to Pending Renewal, that suggests that the documents have been submitted and are being processed.
The second licence (23004-HQ-LEL) is still shown as Active.

It is my belief that the deal is already done now but the last piece of the jigsaw, before the signing and announcement, are these two renewals.
Get these agreed before August 26th and the deal could be announced almost immediately.
I would also hope that if a deal is just sat waiting to be signed AA are preparing everything for drilling as soon as possible after that date.
AIMO

https://wcsecure.weblink.com.au/pdf/MTC/02547870.pdf

Diamond drilling continues at the Sturec Gold Mine from drill chamber #4, part of the Phase IV diamond drilling campaign
Resource upgrade anticipated following completion of the Phase IV diamond drilling campaign

We do know that two of the Zaco licenses expire on the 26th August 2022.

23004-HQ-LEL
Zaco Investments Ltd
Granted 27/08/2018
Expires 26/08/2022
Area 38191 Hectare

23005-HQ-LEL
Zaco Investments Ltd
Granted 27/08/2018
Expires 26/08/2022
Area 8275 Hectare

Two things need to happen before the JV is completed.

1. These two licenses need renewing, it should be a formality but it has to be done.

2. All the Zambian licenses need transferring into the new ‘vehicle' that has already been mentioned, when the JV is completed.

The Mining Authorities website and the forms needed mention 90 days. I am presuming that Arc will have already submitted, or they are about to submit, the renewal forms.
As no deal has been formally agreed the two licenses will be renewed in the same name of Zaco Investments Ltd.
If the dates don't change then they will run from the 26th Aug 2022 and the deal will be announced after that date, the subsequent transfer forms will be submitted after that date to change to the jointly owned new 'vehicle'

With the licence renewal pending will Anglo agree a deal prior to then?

I don't think so, they are in no rush and the agreement already signed allows them the flexibility to wait, given the generous timeline.

If all the above is accurate then we won't see a deal until after 26th August 2022.

What could change that is if mining licences can be renewed early. That is the forms have already been submitted, they are approved and the new licence runs from say 31st July 2022.

As far as I can see the renewal licence form has to go in under the existing Zaco name if no deal has been done prior to the forms being submitted because Anglo will want to see confirmation of the renewal and Arc obviously won't transfer ownership until the deal is done.

Just my opinion but with Anglo having the time to wait, I think we will see the licenses renewed and then an announcement that the deal has been finalised.
I am hoping the renewal is authorised early and Arc receive confirmation prior to 26th August 2022.
Even if this is the timeline it still means we could be drilling in September.
With more CASA cash and Tingo shares due at the end of the month and Botswana exploration news to come, all still looks good.

AIMO

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.