Graphex - we had to wait a long time…but finally and hopefully, it´s coming good…even though in a very unexpected way! The large PE investor, which had planned to finance the Chilalo Graphite Project in Tanzania, shied away from finalizing the financing because of ( mainly ) corona, but also a difficult situation in Tanzania. Phil Hoskins has done a great job in convincing the PE-guys, that the debt owed to them, will be ringfenced and is now only guaranteed by the project itself. If Graphex should be able to sell it for more than 6,2 Mill US$ ( which I think is a chance ), additional proceeds will go to Graphex. In return, the PE gets a few Graphex shares. This is very positive, and saves the company from potentially going belly-up!
I think even more positive, is the move in direction of Grahpex. The largest shareholder, Capital Drilling, has brought a very nice deal to Graphex: Some advanced gold properties in Mali. We will get more detail on them in due course - but I think the two main assets now are very valuable, and further to some exciting, historical drilling results, the company has already started a new drilling program. I will touch on the gold assets some time later ( there is ample time, as the trading suspension will not be lifted for another month or so). All deals/proposals will have to go through a General Meeting to be held on the 20th of July. Once all transactions ( incl a placement and a 1:1 rights issue for shareholders at 2ct ) have been consumated, the company will have 413 mill shares…at the rights issue price of2ct, the market cap will only be 8 mill A$, with 5 millA$ in cash. For a company, which holds two excellent, advanced exploration properties in West Africa, and has the option to receive more than 6,2 mill US$ for the old graphite asset, this should prove very cheap…I would rather believe, that an initial, appropriate market cap could well be 25 mill A$ for the compnay - with further upside depending on drilling results, and the gold price. I have a substantial interest in Graphex myself, and I will certainly keep you posted on developments here.
I think Phil Hoskins has done a terrific job under the circumstances, and while we have lost a lot of money here, there appears real potential from these transactions to make a lot of it back!
Within my core portfolio, I have four., relatively large problem situations . I think Sheffield has made great progress by employing a top bloke, giving them much more credibility / Graphex has completely restructured and changed direction, leading them into a great, new asset. Metro have always done everything I expected of them, and its production of bauxite in Australia is going gang busters - but unfortunately, and thanks mainly to Corona, their product price has much deteriorated. The company is still profitable, though, at current prices and the enxt leg up should defintely be warranted as well. The fourth situation is Panoramic, and we have spoken in depth about the problems they have encountered. But financially, they are in a strong position now - fundamentally, I strongly believe in their long term value…but given the large dilution , we will not see old prices of 40-50 ct again anytime soon…but again, we will make quite a bit of our losses back over the next year or tow!
have a nive evening
WS
Schröder Equities GmbH
MVL Price at posting:
3.9¢ Sentiment: Buy Disclosure: Held
