Morning, whilst completing my blog and eating croissants,
Leggie has come up with a company that is worth a closer look at. Both Leggie
and myself have a position in this company already and does not constitute a
buy recommendation. As per the normal common-sense rules, not do any posts for
that matter. This has to be put in place to avoid idiots running of and
claiming they were unaware.
My post is to follow in due course...re: Barclays, the turn
around with a big shift in focus, plus AntoFa'ghastly (ANTO) who's results
leave a lot to be desired. Rio's dire coal sale. Also continuing the theme of
the cannibalisation of B&Q, we have Travis Perkins results, Travis Perkins PLC : Interim Results which in essence
is akin the to LIDL/ALDO price perception to Sainsbury's or Tesco, and perhaps
even Asda. Save for the ToolStation Loan notes debt was significantly reduced
and net interest cover increasing significantly to 20 times+, this company is
clearly proactive. I'll cover more in due course.
Leggie's devling has produced his own view [Start]:
The main issue being that the best play re Bolivian
nationalisations I have located happens to be a stock that isn't traded much at
all, so its down to tranches and patience. Still, most other things line up for
me, so let me know if you find anything Ive missed.
The company in question is/was Soam Silver (soam standing
for South American), which was a fully owned sub of TriMetals Mining (TSX.
TMI). Soam discovered a silver/indium deposit in Bolivia (named Malka Khota)
and spent $16m over 4 years on the project, with a PEA in 3/11 showing a NPV of
$704m at 5% discount, with an IRR of 37.7% based in silver at $18/oz and capex
of $411m. The cash costs were v low ($3/oz) and there was a mixture of metals,
with silver over 70%. The 181 page PEA is on the website, and a NPV of $1.5bn
was quoted at silver at $25/oz as a headline, but the figure above is obviously
nearer the case today.
So far so good, they were busy working on their PFS when,
hey ho, guess what, a media announcement is made on 10/7/12 that the project
was to be nationalised, following swiftly on 1/8/12 by a supreme decree which
confirmed the above. Five attempts to negotiate were ignored by the government
between 8/12 and 2/13, and despite a meeting in 4/13 (v brief apparently) Soam
Silver announced on 30/4/13 that it was going to take the case to UNCITRAL for
recourse. The position re arb is held here and confirms that the position now
is that a statement of claim will be submitted by 24/9/14 and that the court
has set a date for hearing on merits as being in either 4/16 or 5/16. The court
seems quite intent on getting procedural matters settled between now and then,
but no doubt the Bolivian side will argue over every point in the meantime,
looking at the interplay to date. More info re the arb case is here-
Tri Metals Mining have several assets they are developing
but the good news for me (at least) is that they have split the company and
have a secondary listing (TSX- TMI.B) which is purely interested in the arb
case and which will get 85% of the net proceeds. This is positive for me as it
simplifies the investment case.
They have also got an unnamed international party to third
party fund the arb - Calunius or even Burford Capital, who knows but still a
positive as they will have assessed before putting their money down, and
hopefully the % take is reasonable and equitable. Given the RUR case, Im hoping
its not Burford, but no clues Ive been able to locate in this respect.
The market cap of the secondary listing (TSX- TMI.B) is
circa C$18m, which is around £10m and v close to the OXS mkt cap strangely
enough. Volume is v low here and there is v little interest at present, with 2
years to go, its an ideal time for me before the claim goes in in 2 months
(over $700m v v likely) which may stir some interest. Im long via a small inv
but planning on a couple more invs over the next month.
Any comments are welcome. Good luck to all. Im not expecting
a $700m payout, but given the mkt cap and the asset, I feel the risk/reward
balance is right for me presently. [End]
Cheers for that Leggie, my
comments will be in the reply
Will be back later Atb Fraser
I picked up for around $0.20 I think without checking, not sure of the price now but have been buying as low as .18c more recently [having checked it's as high as .29c. I tend to tranche buy over the longer term. The figures and costs were skewed if I remember correctly, with costs per ounce coming in at near double and IRR of 26.4% which was still healthy at $21/oz. I tend not to comment on all trades I do, I’m not a tipster on the blog more a commentating, my trading pays my bills (full-time) and some training…yes educating people of the risks of “my type.” The discount applied at 5% was somewhat high and a concern of mine after the Rurelec result was….they may risk over-claiming. All in the project on an arbitration basis was my view worth around $250M, allowing for various items, early stage exploration etc…off the top of my head, after costs this was a top end 10 fold recovery. Atb Fraser
ReplyDeleteInteresting thanks Leggie (and Fraser obviously)
ReplyDeleteD