Member Info for Zarro

I agree with you. There must be serious doubts. I picked that figure simply because Hanwa invested at those levels last year and will likely have a view/influence on what dilution / price they are willing to see. Also note that the authority to issue shares is up to 500m in total - which only leaves headroom for about 360m more shares. BUT it is a stretch to believe a raise above market price and Citi would have to work very hard to communicate and explain.

Maybe it suggests that there needs to be/will be a link to raising funds from the Zinnwald asset.

last I checked there were 91 days in a quarter.......but I know what you mean.

Does anyone know if BCN has announced its Q32019 reporting date? In my view news will either come then (say towards the end of next week) OR in early June (with the Zinnwald FS) or it will be 30 June.........place your bets

I posted a personal view at 13.15 last friday

Thx Robertjt. Agreed ....but I thought not the repayment of debt capital. I.e. the total project value (which I have arbitrarily discounted to £1bn) needs to flow to the providers of capital (debt and equity - however that is split) and I think I reflect that in the maths.......unless I have got this completely wrapped round my neck and always happy to stand corrected. (Should have called it required capital structure rather than liability values?).

Don't know enough / much about charts but think they are very relevant in between information events as they reflect well tried and proven investor behaviours. Perhaps someone can give me a sense of where the charts show 1st and 2nd support levels stand at the moment.

When I look into the bottom of my cup the tea leaves read broadly as set out below; based purely on the public information available. Of course, one big variable is where any equity raise is priced (I have used US$1.33 simply to clear the Hanwa investment level and provide upside for what is a substantial share raise). Of course, there is also plenty of other execution risk that can derail my view. But it gives me some sort of 'back of a fag packet' basis for a valuation range.

Asset Value

NPV of Sonora $1250m
NPV of 50% of Zinwald say $80m (total guess)
Total $1330m
Discounted by 25% = say $1000m

Liability Values

Plant capital cost $420m
Add say 20% to capital cost $80m
Total Capital Costs - say $500m

So, assuming financing requirement is split:

$150m debt (already secured) and all remaining $350m is equity @ $1.33 per share then:
Would need to issue 263m shares resulting in a total of say 400m shares
The value for equity is $850m – resulting in an underlying value per share of $2.12 (£1.60)

OR

$150m senior debt, $100m junior debt/mezz and $250m equity @ $1.33 per share then
Would need to issue 188m shares resulting in a total of say 325m shares
The value for equity is $750m – resulting in an underlying value per share of $2.30 (£1.73)

OR

$150m senior debt $225m junior debt/mezz and $125m equity @ $1.33 per share then
Would need to issue 94m shares resulting in a total of say 228m shares
The value for equity is $625m – resulting in an underlying value per share of $2.74 (£2.06)

So I get a realistic(?) company valuation in the range of £1.50 to £2.00 with a base camp 1 of £1.00 upon a financing announcement.

Just a personal view and would welcome knowing whether others have a different or more sophisticated analysis.

Meanwhile, pending the long awaited announcement I expect 'the charts' will be much closer to the reality.

Tend to agree with Col D and Mystic 888; What facts is the DC2007 view based upon?

From publicly available information my broad brush read is as follows:

Sustainable EBITDA will be $175m-$200m (ignoring any big plusses - e.g. large finds - and unknown minuses)
Less maintenance capex say $50m
Less Interest - say $50m
Don't know about tax position.

That leaves up to $100m p.a. for debt reduction. On my forecasts net debt to EBITDA would be only c 2x by June 2021. (Also note that debt for covenant measures - which includes BEE debt did reduce last year quite substantially - they just used cashflow to pay down BEE advance early). Can meet reset covenants fairly comfortably after this year. Bond does not need refinancing until 2021/22.

That tells me that at current market cap of say $250m PDL is trading on a 2020/21 (a) EV (i.e. debt + mkt cap) of just 4x EBITDA or say an adjusted PE of 3-5x. All depends on their cost controls and on-going capex reality (and market prices for diamonds and political risk and and and ...) But still does not look over demanding to me.

Also agree with Mystic 888. Isn't strong dollar / weak rand better for PDL actual financial performance?

Happy to have the above views challenged where/if I have misunderstood the facts.

Thx both. Keep learning. I need to get out more often but can't take my eyes off the screen at the moment. On £1k / penny.

Out of interest - what is NT? Seen it mentioned before......

Tomcat - assume your first questions are rhetorical. Bond prices will rise and fall with (a) buying and selling demand (b) BCN Credit risk profile and (c) general interest rate levels. As Addicknt says I would also not be interested in taking this credit risk for the % returns on offer. I don't know where to access CI bond prices so do not know the answer to your second question.

Great spot Tomcat. Do you think this is connected to (a) the Zinnwald 50% buyout (b) Zinnwald IPO arrangements (c) Sonara fund raising (d) all of the above..........

Is BCN Finco a new or an existing sub in the BCN Group?

LoveMusic - I am in a very similar position and was asking myself the same question. The trading update did not give much away but does not, on face value, imply anything materially better or worse than the recent results and outlook expressed in the presentation with the interims.

I am estimating EPS around 4p - maybe a bit more - which puts PE on about 20 - 22.5. The £10m net debt reduction to £17m is good news, putting leverage at only around 1x EBITDA and gives them either some firepower within their £40-£60m Bank facility or more likely scope for substantial dividends (they would be debt free within 2 years). I thought perhaps half of the annual free cashflow could be used for Dividends which would be a dividend yield of 3.75% and wondered whether that was what was underpinning the rise in the share price BUT I see that the Board have said they will maintain EPS div cover at 4X which points to only a 1p annual dividend (split 1/3rd 2/3rds) i.e. no better than 1%.

So all in all I don't really know what is really driving the price up. We have low growth and low dividend yield. At present levels share price looks just about justifiable and sustainable but hard to see what takes it a lot higher from here and keeps it there. This is all IMHO

https://www.miningcapital.com/conferences

According to a poster on another Board, BCN will be presenting at a Mining Conference in London on 2nd May.

Stroga - maybe I just misunderstand your post - but imo the 'spin off' is very much of benefit to current BCN Group shareholders as the 'proceeds/value' (not necessarily in cash) that BCN receives could/would directly mitigate the level of dilution associated with the Sonora funding arrangement.

Numerous ways that the Zinnwald divestment/IPO can be structured ...but, whatever way, I agree - no proceeds will be distributed outside the BCN group imo.

I believe Fukuo and Mozax are right....but is it not more likely that the proceeds of a Zinnwald 'divestment' will be held by the BCN parent to support the terms of a funding arrangement for Sonora.

If so, I still expect these events to be linked ....and on timing it could either be this week i.e. before Easter or - more likely in my view, as part of the Q3 update somewhere around the 3rd week of May.

In my experience complex funding/finance negotiations often work backwards from a deadline - which is what concentrates the minds of those involved. On that basis, and guessing they would also want KDNC out in full first, I would place a Q2 backstop around the time of / in conjunction with their Q3 announcement - which last year was 24th May I think.

That said, given my sad track record at predictions, that view is also likely to be total rubbish.....

Has the RNS confirmed funding focus in BCN Q2 (i.e. by 31 March) or is it now calendar year Q2?