Lonmin Share Discussion Threads

[careful] 24/11/2015 16:55

PMG and other commodity prices will almost certainly rebound very quickly.

It is all to do with ETF's.
I considered purchasing a short physical platinum ETF as a hedge against this Lonmin pantomime that is running at the moment.

There are more punters gambling on the metal prices than real customers buying the stuff.
ETF's make this possible.
But then we sell out our ETF positions and the price rebounds suddenly.

It is inevitable and little to do with supply/demand.

[elvisrocks] 24/11/2015 16:54

PMSL Graham, and you really think that was the discussion between the Chairman and big institutional shareholder when they went eyeball to eyeball just as they were about to sign the cheque?

Think you need to head back to Italy for a little dolce vita!

[graham2405] 24/11/2015 16:50

"Can't wait for this answer Graham, so what figure between 0 and $1.6bn are you going for in terms of uplift when the nil paids become fully paids?"

How much is a money pit (sorry, uneconomic mine) really worth, now that's a good question.

A much better question is, can you right off the loss as a charitable donation.

Well shareholders are supporting all those 'local communities'.

So what is a mine worth, when it could not make a profit when Platinum was $1400 per oz.

....and Platinum is now $840 per oz.

It's not really worth anything is it.

....and before you say the asset in the ground is worth, blah, blah and the infrastructure is worth blah, blah, blah.

Can Lonmin stay around long enough to benefit from the asset?

....or will some other company in a few years time benefit from it.

They have just 'kicked the can down the road', that is all.

[elvisrocks] 24/11/2015 16:38

Can't wait for this answer Graham, so what figure between 0 and $1.6bn are you going for in terms of uplift when the nil paids become fully paids?

[graham2405] 24/11/2015 16:36

"i am confident if the platinum price rose back up to $1000/Oz we could do well here."

All you need in this life is ignorance and confidence, and then success is sure.

Mark Twain

[elvisrocks] 24/11/2015 16:34

Careful re Post 6663, now your talking...

So, after the re-IPO and what's left of this "temporary book-keeping" as I call it to do with its old equity, we will have a company with a $2bn kitchen-sinked balance sheet, no debt, carefully constructed business plan, stress tested by 10 banks and others, institutions behind it, PIC wanting upto 30% etc.

Yes, agree could do with Pt price moving a bit, but still, is this Kojak's ten-bagger or even a five-bagger?

[careful] 24/11/2015 16:26

Lonmin worth about $390m on todays numbers after raising about $350m after charges.

net assets will be about $2bn with negligable debt.
We could do with PMG prices improving over he next few months.

i am confident if the platinum price rose back up to $1000/Oz we could do well here.

[elvisrocks] 24/11/2015 16:24

How was Italy ICarrado / Graham, bit of Mama Mia and a maths lesson or two?

[graham2405] 24/11/2015 16:21

Graham, I'm pretty sure there's no stamp duty or broker commission charged on taking up the rights, unless things have changed since I last did it.

I've just checked and your right, NO CHARGE FOR STAMP DUTY, not sure about commission?



My apologies to 'lazyhisnibs'

[elvisrocks] 24/11/2015 16:16

Can't believe I am having to re-post this, but here goes, there is a typo $ not R from the recent BDay transcript with Magara.
------------------------------
So what is the market doing now? The trading value of the rights as we see them at 4pm today are roughly 60-70% lower than the worst case after the mad sell off equivalent from the 46:1 announcement. Crazy. Traders and those on the steal are making very big bucks. But what has the market done? As careful said it is effectively valuing Lonmin today at less than the $400m RI cash shell. Crazy.
------------------------------
So what is it not doing that it will do after the 10th when the nil paids become fully paids (and when it looks at the results of the RI take announcement at 7am on the 11th). Well, it's going to pick a figure between 0-$1.6bn and slap that on the value of Lonmin. Every $80m is roughly 10p per share in old money. Now go figure!
-------------------------------
"BM: My focus right now is that there’s nominal value in this company. We have impaired and the company’s value today is R1.6bn. the market capitalisation is R100m. the value uplift is massive so I am focused on persuading my shareholders that it is the right thing for them in their interests to vote yes on 19 November".
-------------------------------

[graham2405] 24/11/2015 15:59

For someone exercising the rights whenever they were acquired provided it is before Dec 10:

No spread on the 1p, just straight forward, vanilla flavoured 1p.

Normal broker commission applies unless one or two brokers decide to charge less?

The normal stamp duty applies as it's still a shares transaction from Big Brother's point of view?

-----Yep, all the usual fees apply and no spread to buy a straight 1p.

These questions and the previous ones are about me learning just the basics not just for Lonmin but future RI's. Watching this and the POG one with a helicopter view rather than a detail monster view leads me to the same conclusion as you and Chris as in 'stay away until the dust settles then ask some searching questions about the company's prospects.' I'm tempted to add: 'in respect of small caps' but I ducked out just before the Lloyd's one during the Great Recession and (at the time) that was the right decision too.

Thanks in advance.

------------


Yes, RI's can be a minefield, it really depends what they are going to use the cash for.

i.e. is it to expand or to take over another business, or is it to get them out of the proverbial.

If the latter, watching is often better than diving in.

[chrisbr777] 24/11/2015 15:57

Its a pleasure Lazy. We are ALL learning...:)

[lazyhisnibs] 24/11/2015 15:54

Graham,

Thanks for making the effort to go back and see what else I asked and for the point by point answers. I get it now. Thanks to Chris too as I had the most basic of the basics back to front this morning. (The fractional price of LMIN should have made me twig but it didn't. Lost in all the noise.)

I only have the following really basic questions remaining:

For someone exercising the rights whenever they were acquired provided it is before Dec 10:

No spread on the 1p, just straight forward, vanilla flavoured 1p?

Normal broker commission applies unless one or two brokers decide to charge less for whatever reason?

The normal stamp duty applies as it's still a shares transaction from Big Brother's point of view?

These questions and the previous ones are about me learning just the basics not just for Lonmin but future RI's. Watching this and the POG one with a helicopter view rather than a detail monster view leads me to the same conclusion as you and Chris as in 'stay away until the dust settles then ask some searching questions about the company's prospects.' I'm tempted to add: 'in respect of small caps' but I ducked out just before the Lloyd's one during the Great Recession and (at the time) that was the right decision too.

Thanks in advance.

[elvisrocks] 24/11/2015 15:51

..... Here we go, shorts starting to close on LMIN I think, should start to see LMIN on the up a little and then some big buys coming after hours if the last two days is anything to go by .....

[graham2405] 24/11/2015 15:38

"How was Italy?"

No idea, I've never been.

[graham2405] 24/11/2015 15:38

"How many rights you buy again? Two truck loads?"

None, but now you mention it, Lonmin shares are a bit like Weimar Bank Notes. One barrow load may be enough to buy you a loaf of bread.

[graham2405] 24/11/2015 15:35

"Each right is bought for a fraction of a penny. (Typo56 mentioned 0.07p yesterday which value is dynamic.) (Added now: yep, I know it's about halved since.)"

Yes, you can buy them.

"On the 10th one has the right but not the obligation to exercise the rights purchased in the secondary market in part or in full. Each right taken up involves paying 1p without spread but with broker's commission and stamp duty."

Correct, you can let them lapse, (this is where the underwriters come in)

"If by the 10th the rights have not been exercised in part or in full then then they will lapse with nil value."

Correct.

"What have I got wrong this time please?"

Nothing, but obviously you could sell them rather than let them lapse, assuming there is a willing buyer. Clearly if the fully paid shares trade below 1p, then the rights are worthless.


"Graham, I don't intend to get involved until the dust settles and may never do so again. I do not hold rights or shares at this time. I just want help with the basics of the process and more to the point where have I got the wrong end of the stick but at a very basic level. No formulas or other noise."

A wise move, sit tight and watch it play out.

Any more questions?

[elvisrocks] 24/11/2015 15:31

How was Italy?

[graham2405] 24/11/2015 15:30

"Is not the PIC buying rights the same as a PI buying rights unless they do a private deal and surely most of what they buy at this stage and from now on will not be through private deals? (I'm not saying they do private deals as I know nothing about that side of things but dark pools and all the rest have been mentioned here.)"

PIC are taking up rights on shares they already own. They are also underwriting circa 25%, which basically means that if current shareholders do not take up rights and do not sell them to someone that will, that PIC will buy them. In short ensuring that Lonmin get the cash.

As for private deals, yes Institutions will do deals with each other to offload/purchase large holdings. Clearly dumping a large holding will move the price, and so will buying a large holding. So they prefer to find a match and do a deal off the market. Regardless, if the % goes above certain levels they still have to notify the markets. You may have noticed that Old Mutual offloaded a significant % of Lonmin. This almost certainly occurred 'under the counter'.


"Traders surely are buying rights now. Obviously their prime aim would be to trade them for a profit before the 10th and preferably multiple times but if the rights didn't confer a real right of some kind why would they have any value at all?"

They do have a value if you want shares in Lonmin for 1p+ the cost of the null paid right.

There are also market makers, it is there job to provide a market. That is to facilitate trade by offering to sell and buy. A wide spread is often a price for the 'risk' of providing this service. High risk stocks wide spread, FT100 low spread.

Yes there may be traders, there may also be companies that want a stake in Lonmin.

...any more questions.

[elvisrocks] 24/11/2015 15:29

What fun Graham is back!

U forgot to mention the Johnston Matthey Report and what it quotes on demand / supply and the insulation effect of the XR. They are the experts not you.

Will repost that report for your pleasure later.

How many rights you buy again? Two truck loads?

[lazyhisnibs] 24/11/2015 15:17

Graham,

I didn't. I'm just trying to get my head around the basics.

After a correction from Chris I came up with this. Is it wrong anywhere please?

"Thanks Chris and in respect of the following for someone in the position described in the last couple of posts is the following correct: (meaning someone who didn't have shares on XX but bought rights from someone who did through a trading platform, LMIN presumably.)

Each right is bought for a fraction of a penny. (Typo56 mentioned 0.07p yesterday which value is dynamic.) (Added now: yep, I know it's about halved since.)

On the 10th one has the right but not the obligation to exercise the rights purchased in the secondary market in part or in full. Each right taken up involves paying 1p without spread but with broker's commission and stamp duty.

If by the 10th the rights have not been exercised in part or in full then then they will lapse with nil value.

What have I got wrong this time please?"

Graham, I don't intend to get involved until the dust settles and may never do so again. I do not hold rights or shares at this time. I just want help with the basics of the process and more to the point where have I got the wrong end of the stick but at a very basic level. No formulas or other noise.

[graham2405] 24/11/2015 15:15

lazy his nibs...........the process.

If you held before the ex rights date you will receive 46 unpaid rights, and keep your one fully paid share, for every share you hold.

If you sold them before ex rights date, you will not get any.

So assuming you held.

You now have 46 unpaid rights (*shares you hold). That means that you have the option of either selling those unpaid rights at current 0.042p each.

Or, you can pay the 1p per share and convert them to fully paid shares.

after a set date (read the prospectus) the fully paid rights and the old shares will trade as equals.

Later they are carrying out a 100-1 consolidation.

In short for every 100 shares you own you will get 1 shiny new share. This is largely an academic exercise, because the share will be worth (I use that term loosely) 100 times the value of an original share.

However, it does give those nasty shorter's a nice start from circa 100p to bash it down again.

Any other questions and I will try to answer.

[graham2405] 24/11/2015 15:06

How many of these rights you buy?

Not one.....