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Erris is a new stock for me, which I entered into recently. I was surprised to get a letter from my broker on Saturday to say that subject to approval at GM on Oct 26th, I will receive 1 new share for every share I hold. That sounds like good news. Can anyone explain why. I couldn't get a definitive answer from my broker ( HSBC ). Would be interested to know. Thanks.
MyMy...take a look at the 8 Oct RNSs; basically, Erris has purchased a company and is giving us shareholders some stock in the new company, Zinnwald
I'm rather impressed his broker sent him a letter :))
Rajbury,
Subject to Erris shareholder approval next Monday, Erris have agreed a deal with Bacanora lithium to acquire deutsche lithium which holds 50% of the zinnwald lithium project (or 50% of deutsche lithium) . I forget which without checking the admission doc again. It doesn’t matter either way particularly for the purposes of your question.
In exchange for this, Erris are issuing roughly 90 million shares in Erris to Bacanora as consideration for the project. Additionally, Bacanora are giving to Erris €1.35 million euros, as well as the zinnwald lithium project team. The cash was bacanora’s obligation under an agreement it had with solar world who own the other half of the zinnwald project, in. Order to continue the remaining development steps for the next 15-24 months, which should just about bring the project up to a point where they can get it into production (for which financing at a project level of around €159 million euros will be needed to cover the mining/processing infrastructure etc.
Additionally, Erris have just completed a placing at 5p per share, to raise £3.75 million - so another 75 million shares, also subject to approval at the egm.
In total, Erris will have around 204 million shares in issue after the egm.
At the egm, the proposals also include one to change Erris name to zinnwald lithium Plc, and all the issued shares will in effect be replaced by equivalent shares in this new zinnwald lithium company.
Now, Erris up to this point has 38,836787 shares in issue, and at this time is primarily a resource exploration company, and have as at end of last year signed up for an 80% earn-in option agreement with green ore gold ltd, who own exploration rights over highly prospective land in Scotland. The earn in kicks in automatically if Erris successfully produces a jorc compliant estimate of gold of 250,000 oz or more over that land.
The consensus view amongst various people who have history and knowledge of that land believe there is confidence of finding signficant commercially. Viable grade subsurface gold mineralisation up there, and therefore the board determined that this project should not be diluted by the new shareholders joining Erris for the lithium play, and hence the Scottish gold project which rather neatly is actually held by a subsidiary of Erris, called ERRIS gold resources ltd, should be of benefit only to the existing shareholders of Erris (ie those that own some of the current 38,836,787 shares in Erris). So, also as part of the proposals, the existing shareholders in Erris will also receive on a 1 for. 1 basis, share certificates in Erris gold resources ltd which post egm will be an unlisted company, with €400k cash injection from Erris to continue their exploration work.
Their intention is to find a route back to market in the not too distant future.
Dave hall/aiden levelle will go with Erris gold resources, and Anton du plessis and Jeremy Martin will stay with Erris (soon to be zin
Apologies, his was meant for mymy
Rgds
L.
And, the consensus is that this is goof news.
Essentially, Erris is transforming from a small, highly risky early stage exploration play, into a much bigger short/medium term producer of a resource that is expected to become massively in demand in the next 30 years.
On top of that, you have a quality board that knows how to manage finances, and who were instrumental in securing a $325 senior debt facility for another resource project very recently (Jeremy Martin is also involved with Horizonte minerals), and between him and Dave hall , secured said facility, which stands us in good stead for this project.
Further, one of the new shareholders who took part in the placing is a guy called Henry maxey who put in £1.5 million of his own money, so just under half of the placing. Henry maxey is the chief investment officer of ruffer investments, who historically have had a stellar investment record.
This guy knows what he”s doing. He doesn’t tend to back losing projects.....
Also, Bacanora can’t sell their stake for at least 12 months, and I have heard, though I have yet to see this in writing formally anywhere that some of the placees have give similar undertakings (don’t quote me as I could be wrong on that, but it is a rumour that I’ve heard).
This is even better for shareholders because it means that the bulk of the new shares coming into the market as part of this new company, can’t or won’t be traded, so the free float won’t be that much bigger than it currently is.
Free float, is roughly 19 million shares (about half of the current Erris shares, plus around I believe about half of the new placing shares, so about another 30-35 million. The rest are all held by long term backers/investors...
This should help the sp maintain a stable footing post the egm.
At the moment, the sp is motoring because the free float is shrinking massively. 45% of them are held between 4 shareholders, plus a range of other hnwi /long term investors who have signficant shareholder invis, but just under the 3% threshold so they do not have to be reported to the market, and because people are buying in in order to qualify for the free shares in Erris gold resources...
L.
Goof news., I meant good news
Lol
L