I haven’t commented on this Cap Raise & IDC loan since it was officially announced.
As I suggested in an earlier post both the shares & the options have been issued under the 15% rule and the further 10% shareholders approved at the last AGM, so the options are not subject to shareholder approval contrary to the “Dear Investor” email.
As with most announcements there is good & bad, cap raises are never welcomed by shareholders.
The Good:
The suspension is over
The 2 unsolicited partnership opportunities are stll alive - ongoing
The Govt enabled funding should be sufficient to complete our funding + working capital with no further dilution
It would seem we have a captive market, though wonder the outcome if farmers wanted to import a blend we don’t supply, eg with Nitrogen - MAP, DAP
The Bad:
The Placement was done at a deep discount
They say 23% to the last traded price, however someone got wind of the placement and sold it down from 9.7c to 9.1c the day prior. The discount to the 5 or 10 day VWAP would have been 30% however they didn’t quote those (as they normally do) for obvious reasons.
Then the free attaching option, itself probably worth 2c, so they effectively raised at 5c a massive discount.
The last time they issued attaching options was in 2021, it was 1 option per 2 shares bought, with an exercise price of 15c, the shareprice at the time was 8c - massive difference
Also it went to sophs, Shanghai Jason not involved, these sophs will flip them very quickly when they’re issued, company says on Thursday April 18. These sophs btw could sell it down to 5c and still make a profit based on the free option.
However my biggest concern are these 3 IDC loan conditions (CPs):
- evidence of US$ 11 million of funding raised by borrower.
- evidence of working capital facility of minimum US$ 10 million
- conversion the Grupo Carrinho Memorandum of Understanding into a signed offtake agreement.
Minbos said:
“The Company is in the initial stages of the process to access such credit with Angolan financial institutions.”
So we can’t get the IDC loan until we get the US$10m working capital facility AND raise US$11m which Minbos said will come from these institutions. Maybe not the full US$11m as we’ve just raised A$6m = US$4m, so maybe another US$7m of that to go. This probably explains why they stayed suspended until the IDC loan was approved, then they can claim part of that A$6m was part of that US$11m.
In the “Dear Investor” email, Minbos said “ the company remains confident these discussions will lead to firm funding commitments in the coming months ”
My problem is they say they need to start construction no later than July. At the moment they don’t have the funds to start - phase 1 (US$5.5m - A$8.5m), and going by their record “coming months” probably means 6 months minimum especially as these funds are coming from Africa - notorious for length of approval times. And who’s to say it will be approved? How long did the (still ongoing) IDC loan take? The loan scheme they talk of was implemented in April 2022, wonder why they’ve only just applied?
Although you’d think the offtake agreement with Carrinho would be a formality, they have been working on this for quite a while now, so far with no results. As Chuk points out Phosphate Rock has dropped a lot compared with TSP - back closer to its average, so maybe the pricing is the problem?
They say, phase 1 contract is ready to sign, the engineer is ready to start, trouble is they have no money to execute that contract, unless they can maybe do just the 1st half of phase 1? They are at the mercy of the amount of time these Angolan financial institutions take. Or possibly funds from a partnership with one of the unsolicited opportunities.
If they can get the funding I believe it’ll be the turning point for this company, just don’t expect anything soon, unless of course if one of these partnerships comes off. Meanwhile the sophs can sell down to about 5c (depending on what the options trade at) and still be in profit while the rest of us wait.
