Member Info for TheMadStork

The resource at Monchetundra has not changed since drilling was completed in 2018.

15 months ago, the mcap was £10m. No bids.

1 month later, after it was confirmed there were in fact interested parties, the mcap was £50m. No bids. Palladium price $2000. Resource at MT unchanged since 2018.

1 month later, 'update' released claiming there's at total of 40m PGM ounces in and around MT, of which 15m oz is actually in the license area. This is sheer speculation based on old data, but it is also *PUBLICALLY AVAILABLE* data at the state registry and would therefore obviously have been known to any potential bidder. Mcap £100m. No bids.

3 months after that, EUA is suspended and the nomad resigns. Pre-suspension mcap was £200m. No bids.

Suspended for 4 months, during which time there are no bids.

Unsuspended, FSP initiated, mcap £350m. No bids.

6 months later: no update on the FSP, absolutely nothing changed at MT since 2018 bar the flanks license, which obviously would have been granted to any previous bidder as they would simply have used EUA's application. Same resource. Mcap £900m. No bids.

Any firm offer for the company *has to be declared*, per Rule 2.2 of the takeover code, no matter the opinion of the board. There have therefore been no firm offers. Nobody has tried to buy the resource at £10, 50, 100, 200, 350million. It is the *exact same resource that has been known to potential bidders since 2018* The palladium price is barely higher than when the market cap was £50m. Why on earth would there now be bids at £900m+?

That's another index tracker. The clue is in the name.

Actually it should be an extremely simple sales process. There is a defined state approved resource for sale at MT, the details of which have been known since 2018. The speculative exploration targets there are based on publically available information at the state registry. It should not have taken long at all for a bidder to value MT, since apparently there was interest from October of last year and absolutely nothing has changed in terms of the resource since then.

WK is even easier to value; we know its NPV is no more than £5m (per audited interims) to £33m (per ACF's ludicrous ramp). The upcoming DFS will not raise the value of WK more than 100%.

It's a very simple sale in theory, the resources have been known to any potential bidder for years and the mcap in September 2019 was £20m. So my question is: why are those same resources now apparently worth £1bn+?

Actually it is extremely rare for a Formal Sale Process to go over 6 months, and I cannot find a single example of no update being given to the market 6 months after the start of the process. And by "update" I mean an RNS specifically informing the market of progress.

Looks like a further death spiral agreement to me.

As Chief M&A Officer or whatever, DS cannot sell his shares in the middle of a formal sale process, even if he wanted to.

If anyone can factually refute anything I've said re the resource at MT, the materiality or otherwise of the DFS, Blackrock's purchases, or the takeover rules, the please do so and I shall be happy to be corrected.

Otherwise I shall leave it there and I guess we shall see what the outcome of the FSP is.

Note that I don't expect people to pay attention or to get anything other than abuse; I don't take it personally as people are obviously emotionally invested (as I am in my stocks!) and so obviously don't like some dastardly shorter telling them that they think EUA is vastly overvalued. At the end of the day, we are all betting on the outcome of the FSP, it's just that I am betting the other way to the bulls here.

...and with the palladium price at about the same level, should have added.

There has been no material change to the resource at MT since the market cap was £20m. Since then, the price has gone up 50 times. I can well believe that there may have been interested parties in late 2019, when the palladium price was going vertical and people were looking round for Pd-heavy deposits for sale. Given that Barrick sold their nearby license over 12mPd-heavy oz for $60m around December of last year, I can imagine that somebody may have been prepared to pay $30m odd (this is obviously a guess but it's in the right ballpark imo) for MT.

What I do not believe is that, given that potential bidders were well aware of the resource at MT in 2019 and that that resource *has not changed*, people would now be prepared to pay *£1bn for the same resource*.

For the literally the 5th time: Blackrock's purchases are the result of them operating several MSCI index tracking ETF funds, and EUA's mcap getting high enough that it has joined those indices. The very nature of index tracking funds is that they are entirely automated, and the operator simply automatically buys enough shares to reflect the weight of companies within an index. Blackrock did not make an active decision to buy (or sell, or short) EUA. This has been explained over and over again.

1)The market cap is c£1bn

2)The current NPV of WK is somewhere between £5m (per the audited interim results) and £33m (per the ramptastic nonsense of the ACF report)

3) The DFS will increase the NPV by at most 100%, mainly by shifting some of the inferred resource at WK into mineable reserves.

This means that the DFS will add *at the very most* £33m of value (and this is wildly ramptastic in my view), i.e. around 3% of the current mcap. It is simply not material.

Harryharls: Spot on.

For the avoidance of doubt, I do not believe that there are or will be any bids, formal or otherwise, at anything like the current price. It is, however, theoretically possible that there could be an informal bidding war going on and that this is allowed under the current implementation of the rules.

The relevant rules under the Takeover Code are Rule 2.2 and Rule 2.4. Note that EUA have been granted a waiver of rule 2.4. Rule 2.2, however, still applies:

2.2 WHEN AN ANNOUNCEMENT IS REQUIRED
An announcement is required:
(a) when a firm intention to make an offer is notified to the board of
the offeree company by or on behalf of an offeror, irrespective of the
attitude of the board to the offer;

2.4 THE ANNOUNCEMENT OF A POSSIBLE OFFER
(a) An announcement by the offeree company which commences an
offer period must identify any potential offeror with which the offeree
company is in talks or from which an approach has been received (and
not unequivocally rejected).
8.1.18
RULE 2 CONTINUED
NOTES ON RULE 2.2 continued
D6
(b) Any subsequent announcement by the offeree company which
refers to the existence of a new potential offeror must identify that
potential offeror, except where the announcement is made after an
offeror has announced a firm intention to make an offer for the offeree
company (see Rule 2.6(e)).

From here: https://www.thetakeoverpanel.org.uk/wp-content/uploads/2008/11/code.pdf?v=7Nov2019

Jr8409: To be absolutely fair, it is possible that there is an informal bidding war because EUA have been granted a dispensation from Rule 2.4 of the Takeover Code, which would otherwise force them to disclose any approaches. All formal bids have to be RNSed regardless, obviously.

Montyboz: The actual mineral content of the ground is not really the issue. The issue is that only 2m oz have been proved to the satisfaction of the Russian state, and of those 2m only c100koz are actual mineable reserves. In order to actually *mine* any more than 100koz, any buyer would have to prove up the remaining resources to the satisfaction of the authorities. This should be doable, if expensive, for the existing 2m state-approved resources. Any more than that would be a huge gamble on the part of any buyer, and such speculative exploration targets would be massively discounted compared to state approved resources.

Robbdabank: Technically there is no deadline for the FSP process. Practically I think they will have to give an update soon or the Takeover Panel will start asking questions.

There are c2moz state-approved resources at Monchetundra, of which the vast majority are C2 or inferred, ie heavily discounted in the ground. Any talk of 15moz is highly speculative and based on decades-old data, and the 40m figure is sheer hot air.

The market cap is where it is because punters are speculating on a deal being done. If there is no deal then the price will collapse - precisely how much by depends on how the RNS is worded and whether or not EUA announce plans to mine at MT themselves.

The DFS is completely immaterial. West Kytim is simply completely irrelevant in the context of a billion pound company. The DFS may add 100k -ish oz PGMs to WK's mineable reserves, increasing the NPV of WK by absolutely no more than a few million dollars at the very most. Whatever else may be happening, I can absolutely guarantee you that the outcome of the FSP will not be affected in the slightest by whatever the DFS says.

The DFS process will allow EUA to move some ounces from inferred/probable resources to minable reserves. Current reserves at WK are c80koz of platinum. I'd expect the DFS to double that, plus possibly add 20-30koz of palladium.

These figures are not material in the context of EUA's one billion pound mcap and so the DFS will have no material effect on the outcome of the FSP. Obviously that doesn't mean it won't affect the SP short term.

Great to see SAVE finally breaking out in what appears to be a sustained way. Price has been pinned by II sellers for what seems like an eternity, but the latest confirmation of cash generation and debt reduction appears to have finally moved things forward. Looking forward to a great 2021 here.