Sunkar Share Discussion Threads

[augustusgloop] 09/7/2014 08:31

one day soon

Not hundreds of thousands of tonnes at all:

2012

"During the year the Company generated revenue of $1.5 million from sales to farmers and industrial users. Temir-Service LLP, has shipped 12,223 tonnes in bulk to a Russian fertilizer plant, and 13,960 tonnes has been bagged and sold to farmers."

2013

"The Company continued the pursuit of its strategy for marketing DAR to the local agricultural sector as well as ground phosphate rock sales to industrial customers and generated revenue of $1.5 million from sales to farmers and industrial users. Temir-Service LLP ("Temir") sold 16,711 tonnes during 2013, which were bagged to farmers in Kazakhstan and Russia. "


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[one day soon1] 09/7/2014 05:55

Augustloop Thank you for your comments. They are very useful. However What about the DFS? The sales of hundreds of thousands of tonnes. Hardly an `unwanted` product.
Also the KAZ Government are actively seeking outside investment and making it easier for other countries to invest and do business in the country.
Some of what you say is correct but you also seem to paint an extremely dark picture and I do wonder why? Regards ods1

[augustusgloop] 09/7/2014 00:03

danandrews 8 Jul'14 - 21:31 - 8763 of 8763 0 0

The current offer price means SAPC are paying out only £3m to take full ownership of a company with balance sheet assets valued at $74.978m.
Pittance for an excellent project, with proven assets located in a country with an ever favorable climate for foreign investment. A country where Mr Mynbayev has the ties and influence to ensure that this project succeeds.

Insolvency is certainly not an option for SAPC after all they would look to potentially lose not only the $16.73m they have invested to date.
But also there other projects appear dependent on the successful development of the Sunkar Resources business post completion of the Offer.

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Rubbish.

The assets may be valued at $74.98m on the balance sheet, but what are they actually worth?

I believe that the 'syndicate' acquired the asset about 7 years ago for about $1m (shady dealings - so perhaps even less).
Since then, farmers have not been willing to buy the product and fertiliser manufactures wouldn't buy it either.
There is a probability that the subsoil licence will be withdrawn (unless someone with connections buys in).

They convinced mugpunters that the asset was worth many millions - that is how they made over £100 million on this.
But where is the evidence that it has any real value?
The Soviets thought it was uselss.

How can you call the assets 'proven' and the projet 'excellent'
And Kazakhstan is about as far from being an ' ever favorable climate for foreign investment' as you are likely to get.

[This is not the first Kaz company that I have seen shaft foreigners.]


" Insolvency is certainly not an option for SAPC after all they would look to potentially lose not only the $16.73m they have invested to date.!

You are having a laugh!

If that money actually went in, where do you think it went?
You should consider that the SKR bank account is just another off-shoot of Mr Mynbayev's bank accounts.
When he bought shares from the company - he diluted other holders and effectively paid the money to himself.

Do you think that SKR have really spent all those many tens of millions over the last few years digging up a resource that didn't sell?

[danandrews] 08/7/2014 21:31

It is not pretty, but it certainly isn't over.

The current offer price means SAPC are paying out only £3m to take full ownership of a company with balance sheet assets valued at $74.978m.
Pittance for an excellent project, with proven assets located in a country with an ever favorable climate for foreign investment. A country where Mr Mynbayev has the ties and influence to ensure that this project succeeds.

Insolvency is certainly not an option for SAPC after all they would look to potentially lose not only the $16.73m they have invested to date.
But also there other projects appear dependent on the successful development of the Sunkar Resources business post completion of the Offer.

Between advfn, iii, lse we managed 6% alone. Tomorrow at the earliest i expect the rejection of the offer, the true test will be how high SAPC second offer is, after all this will indicate how desperate they really are to take over.

[augustusgloop] 08/7/2014 20:54

paulb10,

It is not so obvious that SAPC want to buy SKR to make money.

They have already made the money and can acquire the asset at less cost by busting the company and taking the asset in payment of a loan.

The main reason for buying SKR is to hide the fact that it was a scam.
- nobody gets to see the true paperwork.
- no tarnishing of the reputation of the Directors or backers
- no chance of a Govt investigation
- no chance of legal action.

Gives them a clean sheet to go and do it all over again with another asset.

[one day soon1] 08/7/2014 20:42

Fall back position will be to up the bid! Preferred option for all of us.
Try to keep positive everyone! It`s not over yet.

[paulb10] 08/7/2014 20:01

Sorry i pressed the wrong button in that in the previous post. IF SAPC get the required percentage to take over the company then it is game over set and match and all PI shareholders will loose. If SAPC fail to get the required amount then it is all to play for (COMPLICATED BUT STILL TO PLAY FOR). They are clever and have advisors and they are thinking about what to do next and will have fall back positions. We are disconnected and unorganised and dissconnected and basically need to ask our selves the the question WHY DO SAPC WANT TO BY THIS COMPANY ?,(ITS TO MAKE MONEY) This is a good question. DO they anticipate down the line they will loose money. I think they are not a charity, so i think NO NO NO. Are they following their current actions of eliminating all shareholders under their control for NOTHING, I THINK NO NO NO. Do they have a game plan I think YES YES YES.

[topthat] 08/7/2014 19:11

tagrat:


Your last 5 negative posts on all boards flag your job and payment profile...do yourself and the rest of us a favour and post your one liners elsewhere, please.

[targatarga] 08/7/2014 19:02

Trouble with investors is they capitulate as x day draws close

[vikingwarrier] 08/7/2014 18:57

I would settle for 5p.

[one day soon1] 08/7/2014 16:43

Between 4p and 6p Fair Value? Yes. Raise your Offer SAPC

[loading] 08/7/2014 12:00

West African Minerals (LON:WAFM) Started MOVING on Tuesday up 7% on on bid speculation surrounding a neighbour.

Today, 11:48 AM

[danandrews] 08/7/2014 11:45

Following talks with Charles Hendry MP, I will be pursuing a complaint with regards to the withholding of price sensitive information irrespective of the offer price.

Today 1pm is deadline time, perhaps outcome will be confirmed prior to the closure of the stock exchange.

Many lessons learnt on SKR for all i'm sure. GLA.

[augustusgloop] 07/7/2014 21:20

paulb,

What are the assets?

A mine that may not have a licence.
A milling plant that has no feed if the mine stops.
The (possibly knackered) trucks.
A bit of office equipment.

What would they get for this in Kazakhastan?

And then that must go to pay the creditors = SAPC.
That's why the debt was set up.

All this has been planned well in advance.
These are conmen with brains
Not a bunch of theiving thickos.

Every move has been well thought out.
Brilliant really in a technical sense.
Look through the history of what they have done - its majestic how they have manipulated and covered their tracks.

Like a symphony.
Only now can you see how it all fits together.

[paulb10] 07/7/2014 21:03

AS who pays the liqiudaor the courts pay the liquidator i.e. the liquidator takes all fees incurred from the sale of existing asserts to pay their costs.

[paulb10] 07/7/2014 20:59

GET IT RIGHT, A LIQIUDATOR GETS ALL THE ASSETS AND DEBTS OF THE COMPANY i.e. everything the shares the debts everything, and then values the company, in terms of goodwill (what a laugh) and debt, and potential, and all any other assets that exist, including licences, plant, resource, and everything else etc and then makes an attempt to, firstly to sell the company to a bidders. UNDER THEASE circumstances i.e. everything up for grabs 100%. I think they would find a number of bidders.

[augustusgloop] 07/7/2014 20:17

paulb,

who is going to pay the liquidator?

Do ou know of any British liquidators that could sell off assets in Kazakhstan.
Who would buy the asset if it doesn't have a subsoil licence?

That is the way they have kept predators away for the last 4 years - permanently being under their producton quota - so the licence could be withdrawn at any time.

They are on the in with the govt - but anyone else would not be.

So somebody buying the 'mine' could have its licence withdrawn immediately.
Then it would have zero value.

This is what you have to expect when dealing with companies in tin-pot corrupt regimes like in Kaz.

[paulb10] 07/7/2014 19:10

I THINK that it is not possible to do anything now as tomorrow is the deadline either they have 90% of the shares or not. If they do then we are forced to take their price i.e. 1.835p if they DONT then what PERSONALLY I want to see this Britsh company liqidated. But I don't fully understand if they can still take the company private or not with not having 90% of the shares. ITS a bit late in the day but I think that if a liquidator is appointed for 100% of the company he could get a better price for the shareholders for the asset than what is on offer. Your probably all fed up with this situation I am but below is interesting



If a company's assets are worth more than it's market cap, can one say the shares must be undervalued?
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Imagine a company sold a 10% stake in one of its assets to a 3rd party for $100 million. It would be fair to assume that the asset is worth $1 billion.

If that company had 200 million shares issued, and were trading at a price of $4/share, then its market capitalization would be $800 million.

Does that mean the share is undervalued, because its market cap is only $800 million but yet by outsiders/a 3rd party transaction, one of its assets alone is worth $1 billion? Hence, the share price should be worth at least $5/share? Else, what am I missing?

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edited Jan 12 at 20:58

Chris W. Rea
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asked Jan 12 at 18:05

Nathan
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ACTIVEOLDESTVOTES
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You haven't mentioned how much debt your example company has. Rarely does a company not carry any kind of debt (credit facilities, outstanding bonds or debentures, accounts payable, etc.) Might it owe, for instance, $1B in outstanding loans or bonds?

Looking at debt too is critically important if you want to conduct the kind of analysis you're talking about. Consider that the fundamental accounting equation says:

Assets = Liabilities (debt) + Capital (equity)
or,

Assets - Liabilities (debt) = Capital (equity)
But in your example you're assuming the assets and equity ought to be equal, discounting the possibility of debt. Debt changes everything. You need to look at the value of the net assets of the company (i.e. subtracting the debt), not just the value of its assets alone.

Shareholders are residual claimants on the assets of the company, i.e. after all debt claims have been satisfied. This means the government (taxes owed), the bank (loans to repay), and bondholders are due their payback before determining what is leftover for the shareholders.

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answered Jan 12 at 20:48

Chris W. Rea
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+1 for the accounting axiom. Don't forget that market capitalization is only common stock. Any preferred stock (which sometimes is issued like debt) is also going to reflect enterprise value but won't show up in market cap. – THEAO Jan 13 at 16:17

@THEAO That's a good point. Thanks. – Chris W. Rea Jan 13 at 16:17
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Look at Price/book value and there are more than a few stocks that may have a P/B under 1 so this does happen. There are at least a couple of other factors you aren't considering here:

Current liabilities - How much money is the company losing each quarter that may cause it to sell repeatedly. If the company is burning through $100 million/quarter that asset is only going to keep the lights on for another 2.5 years so consider what assumptions you make about the company's cash flow here.

The asset itself - Is the price really fixed or could it be flexible? Could the asset seen as being worth $1 billion today be worth much less in another year or two? As an example, suppose the asset was a building and then real estate values drop by 40% in that area. Now, what was worth $1 billion may now be worth only $600 million.

As something of a final note, you don't state where the $100 million went that the company received as if that was burned for operations, now the company's position on the asset is $900 million as it only holds a 90% stake though I'd argue my 2 previous points are really worth noting.

The Following 6 Stocks Are Trading At or Below 0.5 x Book Value–Sep 2013 has a half dozen examples of how this is possible.

If the $100 million was used to pay off debt, then the company doesn't have that cash and thus its assets are reduced by the cash that is gone.

Depending on what the plant is producing the value may or may not stay where it is. If you want an example to consider, how would you price automobile plants these days? If the company experiences a reduction in demand, the plant may have to be sold off at a reduced price for a cynic's view here.

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edited Jan 12 at 18:48

answered Jan 12 at 18:34

JB King
5,2001515

Thanks, the price to book ratio is roughly 0.9, and the 100 million was used to reduce it's leverage. The company isn't making losses. Can I view this positively, and "should" the share be considered undervalued? The asset is something like production plant/factory, so I think the value should stay around the same as it produces x amount of the goods yearly. – Nathan Jan 12 at 18:40
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@Nathan If you say "the 100 million was used to reduce its leverage", then that means the company has/had debt. See my answer. – Chris W. Rea Jan 12 at 21:01
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It doesn't deserve being placed in a separate answer, but keep in mind as well that actually liquidating an asset will frequently diminish its value. For instance, your home may be worth $400,000, but if you go to a realtor and say "I need to sell it tomorrow," you might only sell it for $300,000. – Benjamin Chambers Jan 12 at 21:16
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Imagine a poorly run store in the middle of downtown Manhattan. It has been in the family for a 100 years but the current generation is incompetent regarding running a business. The store is worthless because it is losing money, but the land it is sitting on is worth millions.

So yes an asset of the company can be worth more than the entire company.

What one would pay for the rights to the land, vs the entire company are not equal.

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answered Jan 12 at 20:00

mhoran_psprep
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Thanks, if the entire company is valued (from the stock market) less than the value of the land that the company owns, can't someone just buy the company at the undervalued price and sell the land to gain a profit? – Nathan Jan 12 at 20:24
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@Nathan Buying an entire company looks easy on paper, but when you actually start trying to buy up all of the shares for a company, the share price quickly gets driven up in the market, perhaps even to a premium. Once you own a certain percentage of the shares, you also have to disclose that fact. Additionally, many companies have provisions to prevent a hostile takeover, such as "poison pills", dual-class or multiple voting shares (putting control in the hands of a minority shareholder or family), etc. It does happen, but it isn't easy enough to say somebody can "just" do it. – Chris W. Rea Jan 12 at 20:50

This is the closest to the point I wanted to make... the value of the asset licensed at a $1 billion valuation is the value to the entity buying the license. The owning company might not have the capabilities to unlock the $1 billion value an asset represents. An argument can also be made that the licensee probably sees very much more than $1 billion in value from an asset, or they wouldn't have paid the price. – THEAO Jan 13 at 16:22

[danandrews] 07/7/2014 12:57

Email from the UK Prime Ministerial Trade Envoy to Azerbaijan, Kazakhstan and Turkmenistan.


Thank you for your email

As you may be aware, the role of the Trade Envoys is to support British companies seeking to trade or invest overseas. There are over one dozen envoys, working in fast-growing secondary markets.

Whilst we have a strong focus on measures to improve corporate governance in general, as I am sure you can therefore appreciate, we do not get involved in issues relating to individual companies. There are, of course, appropriate authorities to whom expressions of concern can be made about a company's governance, especially in relation to the handling of price-sensitive information, and if you have relevant information, I would urge you to make contact with these authorities.

Yours sincerely,

Charles Hendry


Charles Hendry
Member of Parliament for Wealden

[one day soon1] 07/7/2014 08:32

We know that they look at this bulletin board.
So I will state quite clearly that If we do not receive a better offer I will open a case with the FSA /FCA Maybe even the Fraud Squad Investigators.
I do not want to do this and would far prefer a better offer and be out of here but I will not sit and do nothing.