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85c Leo at IPO - what's your guess for free shares?, page-6

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Cookiecutter567

2,122 Posts.

378

05/06/22

10:33

Post #: 61826149
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Originally posted by GARETH78: ↑

Well I would imagine by now most holders would have been tapping away on their calculators and come up with 85c (84.7c) as the break even back to the 2nd June close to get their holdings value to the same.

This demerger is actually extremely complexed and to be honest yesterday is not really the right time to see how the demerger has gone. LLL is not yet trading for starters.

Complexed also in the fact that FFX has retained a 20% stake. Now I think @fooca pointed this out early on that FFX is not a shareholder of FFX, so for it to retain a stake it was in essence given shares (paid a nominal fee) that belonged to FFX share holders.

Now obviously for that to benefit FFX holders this stake needs to be reflected in FFX Market cap / Share price.

Add to this when LLL lists it will have already raised $100m through an entitlement. If you did not partake you have also been diluted. Of course it could be less than 70c, but more on that in a moment.

So yesterday FFX market cap dropped $714m reflecting no LLL in specie.

LLL raised a further $100m so that gives $814m

LLL shares on issue will be 1.197b less FFX holding this is 958m, so it’s no coincidence that’s 85c per share to get the required MC.

So if we expect LLL to list at IPO price FFX 239.5m shares will be worth about $167.6 m or 14c per share, or 40% of the MC.

Now we all need LLL to list at 85c, 70c won’t cut it. But at 85c FFX holding will be worth $203.5m or 17.2c, nearly 50% of yesterdays close.

I’m not going to estimate where we open with LLL until maybe closer to the time, the key thing is that FFX is looking super cheap if you honestly think LLL will open at 70c

Also if it opens at 85c the entitlements will be looking good with a paper 21% profit.

The above is reflective of the share structure outlined in the prospectus on the basis of $100m being raised which it was.

It would certainly would have been far cleaner for FFX to have demerged the whole asset and not retained any of LLL as unless the LLL holding is truly reflected in FFX SP the FFX holders pre merger are not getting the benefit.

I think Tuesday could see a last swathe of selling and then the bargain hunters will sweep in. IMO

GLTAH

Expand

I believe the exposure of FFX to LLL has been severely undermined by a few posters.

Clearly states in FFX prospectus and LLL demerger and offer briefing that FFX holds 210.9m shares pre demerger plus 28.6m shares issued via firefinch offer for a total 239.5m shares.

The 210.9m shares instrument pre demerger was on provision of a successful demerger vote. These will be issued to FFX along with everyone else's now that the demerger vote was successful.

Remember when LLL eventually pays a dividend, that FFX will receive those dividends like every other shareholder.

On another point the pro rata offer implies a 35% MC attribution of LLL MC to FFX.

At 70c this should reflect 24.5c value to FFX SP.
At 85c this should reflect 29.75c value to FFX SP.
At $1 it reflects 35c to FFX SP.

And these examples only reflect the LLL shareholding component! Remember we have 2.5 Moz of gold in ground. Production ramping up to 200k Oz in 2024. 360 million dollars US minus production costs!

If LLL opens at $1 then you are getting FFX for free! Ridiculous.

The true SP value of FFX will play out on LLL listing or even a lot earlier when people realise the FFX sell off is an amazing buying opportunity.

Oh and what better asset to have in recession than gold. Cornerstone of every good successful investment portfolio.

FFX Price at posting: 34.5¢ Sentiment: Buy Disclosure: Held
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