some questions13 Nov 2010 15:59
hi guys, hope someone will be able to help. just picked out a few bits of yesterdays RNS: "The Directors may offer new ordinary shares in the Company by way of consideration as well as cash, thereby helping to preserve the Company's cash for working capital and as a reserve against unforeseen contingencies including by way of example, and without limit, delays in collecting accounts receivable, unexpected changes in the economic environment and unforeseen operational problems. The Company may in appropriate circumstances, issue debt securities or otherwise borrow money to complete an investment. There are no borrowing limits in the Articles of Association of the Company. The Directors do not intend to acquire any cross-holdings in other corporate entities that have an interest in the Ordinary Shares.
There are no restrictions in the type of investment that the Company might make nor on the type of opportunity that may be considered." - have to take this to mean that dilution is very very likely, as they do not hold that much cash, and the REEs are getting more expensive by the day.
"As an investing company, Zest will be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its investing policy on or before the date falling twelve months from the adoption of the new investing policy,"- Does anyone else think this means a deal is already lined up?
I've never heard of Zest before, but (and just playing devils advocate here), does it not seem a bit strange that they are completely changing their business model? And is it a bit risky getting into a commodity many are suggesting is a bubble?
I have to say I don't think REEs are in a bubble, and the majority of my portfolio is in international junior miners, and I do really like the looks of this company (there are no other REE plays on london stock exchange), but their business model sounds so vague...will they be like Dacha Strategic Metals and buy rare earth elements, or will they finance mining projects? If it is the latter, where will all the cash come from, bearing in mind that Avalon Rare Metals have recently announced that their mine will cost approx $1 billion.
Not deramping here at all as I will be doing further research over the weekend with a view to buy on monday, and would appreciate views on the above?