The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Have a look at the Corporate presentation January 2019, slide 12 and you can see what gold the company is sitting on.
http://www.metalsexploration.com/pdf/Presentation/Corporate_Presentation_Jan2019.pdf
The most important asset this company has is Darren Bowden. This extraordinary man came to MTL to achieve something and build a successful business for shareholders and for himself. He did not come to work for a private company but came to a listed one where he has a market profile and the opportunity to share in its wealth creation. No one wants to lose this man. So you can forget a takeover.
maxreturns, it is a no brainer.
The RNS says Candy/Edwards are buying the debt from the two banks. These businessmen are two very successful money making machines. They will not have bought the debt at face value. So they will either keep the debt or sell it on. Either way I expect the company's renegotiated debt package, including their mezzanine finance, to be substantially less than the previous total of $125m. For example, if it ends up as $90m, that effectively transfers past debt into shareholders funds of $35m or £27m or 1.3p per share. So you could see a share price increase up to 2.8p just on the restructured debt alone. Then we have to take into account reduced financial risk, good cash flow, successful gold processing and so on....
In the RNS Darren Bowden said "Negotiations with our New Lenders are well progressed. Hopefully, following the completion of the transfer of the Senior Facility, these negotiations can be concluded swiftly, such that the Company's financial position becomes sustainable". They key words here are "Company's financial position becomes sustainable". This gives further weight to a lower overall amount of debt.
He ends up by saying "allowing management to focus its efforts on improving operational performance at Runruno and to consider growth options for the Company." To me this says that he has projects in mind that will enhance the value of the company.
We have got what we have waited for. Very shortly the company will formally be on a sound financial footing, a new mine plan can be published, drilling results to extend the source ore for processing can be announced and I look forward to 100,000oz, or very close to it, production this year.
Q4 results tomorrow?
Hi Mac19, I thought yours was a very good summary. My basis for 20,000+ oz in Q4 is based on an ultimate gold recovery rate off 90% that I thought DB had said was possible. But I can't find my record of that. Last quarter gold recovery increased from 66.1% to 77.6% . Gravity and Biox recoveries were not mentioned in Q3 but were 35.4% respectively 74% in Q2 - plenty of scope here for improvement. If 90% is indeed targeted then 31.12.2020 might be a realistic date for its achievement, having seen the progress that DB has made in his first year. So I am looking for recoveries of 82% in Q4.
While the mined ore grade has been below the original mine plan from the previous management, DB has put more ore through the plant to compensate for this. I am assuming the same mined grade of 1.39oz and same ore mined of 464,000 as in Q3.
I think you are right about the gold price and costs. I thought there was some downtime in Q3 but I may be wrong on this. Like you I am expecting similar costs in Q4 but at the end of 2020 we should be much lower.
CV7Blue, I have seen these sort of posts we have to contend with before. The most effective way of dealing with posters like that is very, very easy. Simply ignore them. Don’t say a single word in response. They can’t stand it. They want to generate a response and discussion on their terms. By ignoring them we make the person irrelevant.
So all, please ignore such posters. We can then continue meaningful discussions.
Many thanks.
Having said a final outcome is expected during Q4 2019, DB must be quite disappointed at having been let down by one of the parties. The question is whether an refinancing update can await Q4 results or is a separate RNS is needed. It can probably wait.
If Q4 results come first then I would expect that all costs have been thrown in, including the kitchen sink, leaving a totally clean sheet for 2020. For the first time we will then see the true earnings and potential for this company.
Isn't this frustrating! But I haven't found one reason not to continue holding or to buy.
If it was a simple rescheduling of the debt it would not of taken 11 months. Darren Bowden only took 45 days from taking office to providing a rescheduling of the debt coupled with additional equity. The two major shareholders did not want to provide any additional equity. You could say some of the loans they provided went to pay interest to the banks.
This is about more than a simple debt rescheduling.
SuhailM3471, I don't think so. DB was expecting final outcome in Q4. Let's assume that it happened. That the five parties agreed late in 2019 and papers had to be signed. We have had the Xmas and New Year break when most companies did not function normally. So lawyers might have been slowed down to the last minute and docs may have had to be signed in January. Then the company's brokers and nomad have to review and pass everything prior to the RNS. This has been the first fully functioning week since before Xmas in many businesses. If everybody has had their skates on the news could come this week but imo more likely next week. But what do I know I have been wrong in the past.
I feel very confident it's not the fifth party (the company) holding things up.
Suh, I don't buy it. The deep pockets are already shareholders. More likely to be someone like the secretive Baker Steel based in Switzerland or one of the two major shareholders topping up. Either way I do think that when the buying ceases we are more likely to get news of the refinancing or when the news comes this buyer will stop buying. What does this buyer know that we don't or is he simply a late comer?
H5O, agree with what you say about Ruffer. The major holders at 31.12.18 were:
Candy (MTL Lux) 46.9%
Edwards (Runruno) 19%
Baker Steel 6.9%
Ruffer 6.1%
Jim Nominees 3.9%
The first three were unchanged from 31.12.17. Jim increased and I believe has increased further - these are private investors. This leaves a free float of around 17%. Ruffer is selling down as we know. I would expect there to be a shareholders agreement between MTL Lux and Runruno as they financed the company from the outset. So if one of them wished to increase his shareholding it would probably need agreement of the other - that would be fine.
The other shareholders, Baker Steel, JIM and the buyer(s) of Ruffer shares know the value of the company and its potential value.
I believe Darren Bowden did not join the company (i.e. the two major shareholders) just to see it taken private. He has already stated his objectives to expand the scope and activities of the company. The two major shareholders need to get the refinancing over the line and that includes their own mezzanine finance. Haircut or not haircut, the mezzanine 20% interest rate is unsustainable. Darren Bowden has already shown his independence in putting the Banks refinancing to the major shareholders last summer.
So we are back to refinancing news and the company's future. The genie is out of the bottle in that we all know how world class Darren Bowden is and he has recruited world class Technical Director Xiaofeng Zheng, world class plant manager, world class biox specialist and so on. I guess all these would like a stake in the quoted company to share in it's prosperity. Once the refinancing is done I would be able to, very easily, make a case for a share price in excess of 10p.
I don't post very often but follow the discussions with interest. Many thanks and let it continue.
Someone has bought 20 million shares from the seller and I have no doubt that the buyer will have done due diligence on the company and the investment. Sales of that magnitude are not bought by market-makers to hold on their own account.
I would expect that the seller, possibly the rump of the Ruffer holding, will have been made in order to execute their strategy/tidy up their portfolio before the year end. Maybe the MTL's broker was involved and sought to have the shares sold to a buyer who wants to hold the shares and not trade them. All speculation but perfectly feasible.
If the company's broker was involved then that now leaves the road clear for the refinancing to be announced, if in fact it has been agreed.
It would make a nice Christmas present for shareholders but the impact on the share price might be bigger if the announcements were made in January.
When will the debt negotiations be done? Why don't we ask Boris to put 31st December 2019 for it in his new Brexit Bill!!!
31st December is the year end for Metals Exploration and for the bank lenders. Companies like to get things in order for the year end balance sheet. While MTL is not significant for the banks overall, the offices that are dealing with MTL will still want to get things done.
There's a very good chance that refinancing of the debt will be finished before Christmas, or at the very latest before the year end.
If this happens MTL will no longer be a company with a debt problem and the share price will surge. Here's hoping for a Happy Christmas everyone.
This company is priced at the value of a large detached house plus it's cash! What an opportunity.
When will the debt negotiations be done?
31st December is the year end for Metals Exploration and for the bank lenders. Companies like to get things in order for the year end balance sheet. While MTL is not significant for the banks overall, the offices that are dealing with MTL will still want to get things done.
There's a very good chance that refinancing of the debt will be finished before Christmas, or at the very latest before the year end.
If this happens MTL will no longer be a company in default of it's borrowings and the share price will surge. Here's hoping for a Happy Christmas everyone.