PM Bolt-On: EMED the issue of 2 Billion shares (See what I've done there), should shareholders vote for it? Hmm..

Good Evening,

A last minute update from EMED today appears to mean most holders will be diluted on a fair value case. Had the open offer had an element of 'equality' about it, then all stakeholders would have/should have been pleased. 

Assuming the maths is correct, 2,060,520,685 shares in EMED are hitting the register (please note the term) on the 24 June 2015 (subject to approval) in to the long only camp. EMED infer they can achieve the expansion from 5mtpa to 7.5mpta in Phase 1 ramp up, 2.5mtpa above the previous projections. 

With a soon to be 72.5% of the capital to be in the hands of four shareholders, one would be wise to ascribe a certain element risk to this. Its acknowledged the articles protect shareholders to a degree*, had they all been offered "openly" for the capital raising it would not have been an issue. The terms could have been better, but unsurprisingly it was rather obvious, EMC: EMED strong arm. 

Perhaps the punters should formalise a shareholders group, there's near 14% of them on the register (currently but not for long)! Yes you stale holders, get savvy and start protecting your investment. 

Avoiding going into the analysis over the mine plan, costs should reduce per lb to near 1.87-1.94/lbs (EMC's estimates) all in (not C1 costs but around 11%+leeway). The numbers appear to stack up well for ramp up in production and the long-term prognosis for 'Rio Tinto.' 

With such a capital raising, removal of convertible loan issues and offtake agreements for an expected 100% production, the project is de-risked for any (possible) finance needing to be inked. 

Offtake agreements are now revised upwards from the previous 51% ish, with Orion receiving 31.54%, Trafigura Pte Limited 19.34%, XGC 49.12% Liberty Mines and Metals holding zero%, but potentially seeing value by their investment. 

All the above assuming one has an understanding of the copper outlook, belief in the EMED suggested copper outlook consensus from the March presentation and Chinese market demand. Simply put, if one envisions a perfect market, there's no reason why EMED cannot be a longer-term hold, with hopes of ten pence+ some. 

Alternatively, current shareholders can propose an different options for the financing. Brave call, but all the same perhaps do’able if one was well organised. Assuming one’s average is below 7 pence, you could be handsomely rewarded, "if" the potential majority holders play nicely, with a register looking like.........HKX 767,655,838 (21.9%), Liberty Metals & Mining 489,473,684 (14.0%), Orion 509,598,282 (14.6%) and Urion 770,530,339 (22.0%) is it possible? 

Trafigura's dispute by its subsidiary Impala Warehousing and Logistics with Wanxiang Resources is unlikely to impact on EMED even as a forced seller. Over to Decheng Mining, apologies for the humour here!

Atb Fraser

Disclaimer

Notes: Urion, Urion Holdings (Malta) Limited, a wholly owned indirect subsidiary of Trafigura, XGC, Yanggu Xiangguang Copper Co. Ltd, Orion, Orion Mine Finance (Master) Fund and LIberty, Liberty Metals & Mining Holdings, LLC.

*On 7 May 2015, the Company entered into the Concert Party Determination Letter with Liberty Metals & Mining, Orion, Trafigura and XGC, whereby the Board made a determination for the purposes of a restriction contained in the Company's Articles which prevents any shareholder (whether by himself, or with persons determined by the Board to be acting in concert with him) from acquiring shares which (when taken together with shares held or acquired by persons determined by the Board to be acting in concert with him) carry 20 per cent. or more of the voting rights attributable to the shares of the Company.  In reliance on certain confirmations given by Liberty Metals & Mining, Orion, Trafigura and XGC to the Company in the Concert Party Determination Letter, the Board determined that none of Liberty Metals & Mining, Orion, Trafigura and XGC shall be deemed to be "acting in concert" with one another (or any of their respective affiliates) by virtue of carrying out or undertaking any potential activities in connection with the Proposals.  In addition, the Board has also determined that the subscription of the Subscription Shares and the Capitalisation Issue Shares by the Investors constitutes a permitted acquisition for the purposes of the Company's Articles.

Morning Mumble: (Holiday Mode) EMED Plc & CAML, and a QPP Cheeky One!

Good Morning, 

Its pleasing to see a decent amount of news-flow on a Monday.

EMED have an extension to the loan facility. This extension reads as though a strong armed is being applied to force (or appear to) force EMED into accept 'some' terms that are on the table currently from the 'three' (Trafigura, Orion Mine Finance and Hong Kong Xiangguang International). One assumes they'll be able to organise a meeting by 30 April 2015 to avoid incurring extension fees. 

Some egg on the faces of those with very large positions in QPP (Quindell) today, with the gossip proving right. QPP, for those with any interest now, was something to avoid as the risks being significantly unknown. It was surprising to speak to such a well-versed trader today whose position was impacted by the news in Australia of Slater & Gordon overnight. One for the learning curve?! Today it would have been rude not to have a cheeky short "on the news." 

Central Asia Metals (CAML) full-year results beat even the most bullish expectations, dividend up, revenues up and profit beating the whisper by near 30%. Return on shareholder funds even allowing for FX impairments and rebalancing of Kenges Rakishev 16.02% holding, are positive. 

Improving EPS, bottom line and the Tenge devaluation aiding costs CAML's cause. 60% of the cost base is Kazakhstan Tenge. Expects further bottom line improvements as the full affects of the Tenge devaluation kick in, assuming production levels are maintained. 

With the copper market adopting a more realistic outlook, even with the current prices, its hard not to justify 'turning positive on CAML (again). See  EMC: CAML from January. The EMC is slowly getting over its issue with the director sales by Mr Nick Clarke, Chief Executive Officer, although one will always have an issue with a director without skin in the game? We'll save that for another day, expect a special dividend in due course. 

Arian Silver (AGQ) achieves first concentrate production at San José, with the more recent net smelter royalty purchase AGQ's woes may just about to turn. Today's "not" very interesting news is Bluefield Solar (BSIF) most recent acquisition, those SIPP investors will find it hard not to have some form of lower risk stability, with a yield of just under 6% isn't too be sniffed at (EMC 2014 (BSIF).  AND, GKP (Gulf Keystone) get an extension on their homework!

Anglo American's (AAL's)  inability to sell its assets and now looking to give them away doesn't bode well for Jubilee Platinum's (JLP) Tjate project in the mid-to-long-term. Blackrock realising AAL's woes a little too late, or perhaps "just in time" and selling down.

The news award goes to Randgold Resources (RRS), whom see growth opportunities.

Atb Fraser