Premier African Minerals Share Discussion Threads

[doctor 69] 19/9/2017 12:11

Yes tedob . Good stuff

[sleveen] 19/9/2017 12:05

ted or ed/toby?

I think you've nailed it. A tick up from me.

[doctor 69] 19/9/2017 11:57

2.7 million of buys consecutively , but no move in the price

[tedoby2] 19/9/2017 11:54

I'm probably only one of only a small number of investors that think Prem's latest finance deal isn't so bad. It seems there's quite a few that think just because YA are involved it has to be a spiral agreement. Firstly YA are only involved in the loan agreement which although It's linked in a small way to the equity release is relatively easy to understand. A straightforward % on the amount borrowed over 12 months on a two tier draw-down. And secondly the deal is not a death spiral as it's called. Far from it in my view.

The difficulty comes from trying to understand the equity release part and to come to terms with the fact that the funder also wants what we all want which is for Prems share price to improve. This is quite the opposite of a spiral finance where the lenders and I Include YA in that group along with Darwin and Landstead etc. have an incentive to dilute. That's not possible in this case as the number of shares cannot be increased.

In Prems case the number of shares involved is 680m. Unlike spiral arrangements there are no warrants issued to any of the several funds involved.

I hope that investors that are feeling disgruntled about the finance go on Thursday and get a chance to speak to RiverFort Prems advisor's who orchestrated the several funds involved in the deal. I've no doubt they will explain it all much clearer than I can.

But to try to understand the equity part better I'd like to share two scenario's. Both around the current position i.e a retracing share price below the agreed benchmark price of 0.77p

I'll keep the numbers rounded for ease of maths given it's the principle I'm more interested in explaining. We know the number of shares sold to D-Beta is 680m. We know that the total value of the offer is £4.8m with £1.5m already paid in a lump sum in a subscription at 0.70p The balance is to be paid monthly at £275k over a period of 12 months making up the £4.8m total.

We also know that payment to Prem is the therefore equivalent to £400k per month although £275k of that is subject to adjustment calculated by a formula using the previous months Market Price and Benchmark Price. Finally we know the Benchmark Price agreed is 0.77p and the number of shares involved in the adjustment on a monthly basis is 57m which is derived from the 680m total.

In both scenarios I have assumed the Market Price in August was 0.45p which I imagine was about right. The formula for the adjustment in both cases is £275k -(57,142,857 Ordinary Shares x (Benchmark Price-Market Price)) given we're below the benchmark.

Scenario 1 - the Market Price falls in September from 0.45p to 0.40p. This is close to reality I think.

The amount paid by D-Beta therefore for it's 57m shares is £125k subscription + £275k equity share -57m x (0.77p - 0.45p)

That's £400k - 57m x .32p

Giving £400k - £182k = £218k total cost.

If D-beta were to sell it's shares now then it would realise 57m x 0.40p = £228k revenue less trading costs.

So a profit of less than £10k which I'm sure D-beta wouldn't be very happy with.

We should be able to see there is no incentive for the funder to be selling it's shares in this scenario.

So now lets consider what would happen if the Market Price had risen instead.



Scenario 2 - Say the Market Price rises in September from 0.45p to 0.50p.

D- Beta's costs are the same given their based upon the share price in August i.e £218k

In this case if D-beta were to sell it's shares the income or value would be 57m x 0.50p = £285k less trading costs .

So a profit of £67k in this instance which I'm sure D-beta would find far more acceptable



We should be able to see from the above the merits of the new deal and that the funder much prefers to see a rising share price rather than a falling one. Exactly the opposite to spiral finance deal in fact. If Prem does well so does D-Beta so it's a win win arrangement not a punitive one for Prems shareholders!

And last but not least D-Beta has a much better return too if and when the Market Price goes above the 0.77p benchmark. So that's an added incentive for them to help us get there and beyond.

I personally think it's wrong to imagine D-Beta would be selling any of their shares at the moment. It makes no financial or commercial sense to me.

I believe those that think we have a spiral finance deal and GR has broken promises are naive. Unless of course they can show me where I'm seeing it wrong.

AIMHO

GLA

[doctor 69] 19/9/2017 10:41

But at the top offer recently , should be blue soon

[doctor 69] 19/9/2017 09:44

Volumes very low today

[donald tramp] 19/9/2017 08:32

He's playing a dangerous game here that's for sure.

Needs to produce multiple rabbits out the hat in double quick time.

[1madmarky] 19/9/2017 08:26

Keeping it in his back pocket

[ianbag] 19/9/2017 08:18

If there was a chance he could have had assay results ready for the last investor presentation 2.5 weeks ago - you would have thought they should be available before this Thursday

[nicosevos] 19/9/2017 07:54

31/7/17 RNS....Needs to be read more than once,imo....

[mike_f] 19/9/2017 07:51

Lithium $142.51... price up 20% in the past month! A great time to release blockbuster assays!!

[wallyjumblat] 19/9/2017 04:39

Is there anybody on here going to the meeting on Thursday?

[jungmana] 19/9/2017 03:34

Tedoboy- do some research in D - Beta please. They are simply a subsidiary of YA. We can all see the impact of the horrific finance deal and fhe subsequent issue of shares for circum ( which is different) as we have plummeted from 0.8p to 0.4p today.The monthly repayments to YA on the first tranche has not even started yet. Whatever you call it the finance deal is horrendous and is in no way suitable for shareholders interest.

[wallyjumblat] 19/9/2017 00:34

I would expect news shortly or George is going to face a very hostile crowd on Thursday.

[tedoby2] 18/9/2017 21:09

jungmana you're implying D-Beta and YA are one and the same.They're not. YA is a main fund and D-Beta is a hedge fund

YA have no shares or warrants so how can they issue them at a discount and it be categorised as a spiral finance.

D-Beta have bought roughly a third of their shares at 0.70p and are paying for the rest on formula based monthly payment terms.They have a fixed number of shares and no warrants.

It's an equity share agreement.It's not spiral finance arrangement.

GLA

[dodge city] 18/9/2017 20:54

Thanks for clearing that one up.

It might be an idea for the guy to keep his story consistent as regards units of measure.

[tedoby2] 18/9/2017 20:41

dodge city the 3000 figure was in MTU's

The 4500 figure is in tonnes of ore.

The two units of measurement are entirely different.

Hopefully you can do the maths but just ask if you can't.

Being a bit hypocritical aren't you? Matthew 7:1-29 comes to mind!

GLA

[dodge city] 18/9/2017 20:26

It's not difficult to get my head around the fact that the guy running this company was out by a margin of at least 50% in just 4-5 months.

So the story has changed has it, right. What's the next story.

[banksy] 18/9/2017 20:15

DCThis has already been covered. Underground more expensive, but upside is more concentrate in samples and as you mentioned surging price. Not that difficult to get your head around really!

[jungmana] 18/9/2017 19:32

If that's not death spiral finance then what is? And the equity sharing part of the finance with D - Beta (again YA) is even more complicated.
Basically death spiral is a term use for issue of shares at a discount to satisfy loans received. This is going to go on monthly basis from 28th of October. Similar ( but larger ) deal with Darwin took us from 1.6p to 0.22p and number of shares in issue from 709m (October 2015) to about 4bn (march 2017) i.e within 18 months.

[tedoby2] 18/9/2017 19:19

Jungmana thanks.

So as I say why is YA a spiral finance in this case?

They have no shares or warrants to issue. It looks like a straightforward loan to me.

[jungmana] 18/9/2017 19:15

Tedoboy- the first tranche of the loan which has already been drawn I.e $1.65m has to be paid back monthly for 6 months or else paid in shares. In addition the loan is at 18% interest.Payment commences on 28th of October. This is the just one part of a very complicated finance deal

[tedoby2] 18/9/2017 18:56

Jungmana why is YA a spiral finance in this case?

They have no shares or warrants to issue. It looks like a straightforward loan to me.

GLA