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
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.
