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I’ve now read the RNS over and over again and am still really struggling to work out what it really means. So, a commentary below… any assistance working it out appreciated!
“The Company has recently completed an update of its long-term financial model taking account of the current macro-economic situation, which has indicated a requirement for additional capital [THIS WOULD SUGGEST NO SHORT TERM ISSUE, BUT SEE BELOW]…
It should be noted that the current stress on the business is from balance sheet weakness rather than operational viability. The focus of new capital would be to strengthen the balance sheet [THIS MUST MEAN THEY WANT TO PAY OFF LOANS OR DEFER LOANS OR JUST HAVE ACCESS TO MORE WORKING CAPITAL, BUT NO IDEA WHICH] at a time when operational performance has improved following continued development investment…
The principle issues that the Company needs to address on its balance sheet in the short term [NOW THERE ARE SHORT TERM ISSUES - COMPARE PARA 1 ABOVE] are acceleration of the repayment of legacy commitments made during the intense Covid period [WHAT ARE THESE? THE OBVIOUS THING COMING UP IS PRINCIPAL REPAYMENTS TO NEWGEN BUT THIS WOULD BE A CURIOUSLY OBLIQUE DESCRIPTION OF THOSE. IF THIS IS A REFERENCE TO NEWGEN, DOES “ACCELERATION” INDICATE THAT NEWGEN ARE CALLING IN THEIR WHOLE DEBT EARLY? IF NOT, WHAT IS THAT WORD REFERRING TO?]; reduction of current operational accounts payable balances back to current terms [I’VE READ THIS PASSAGE 20 TIMES AND STILL CAN’T WORK OUT WHAT IT MEANS]; rescheduling the repayment of longer term debt to better match Rambler's operational cash flow generation [IS THIS A REFERENCE TO NEWGEN AND DOES IT IMPLY NO ACCELERATION OF THE NEWGEN DEBT? (COMPARE ABOVE)]; and further capital expenditures to further reduce operating costs. In addition, the Company is conducting a continuous review of its operational and capital commitments to identify elements that can be deferred without impacting near term operations, to ensure financial viability in the face of current copper prices [HOLDING OUT FOR HIGHER PRICES?].
The capital to be sought is intended to consolidate the Company's operational gains and commence the process of strengthening the balance sheet in a more permanent way [THE FIRST FINANCING ANNOUNCED WILL JUST BE THE START?]. As indicated in the Company's 2021 year-end accounts, Rambler started the year with limited working capital [REALLY?] and as production has increased in an inflationary environment, the Company's working capital needs have grown. This was accommodated to some degree [EVEN AT 4.50 CU THEIR WORKING CAP NEEDS WERE ONLY ACCOMMODATED TO SOME DEGREE??] with a previously favourable copper price but the current period is such that the Company recognises the need to prepare for a more sustained inflationary environment and one where copper prices may be more inherently volatile.
I don't think screwed as we can turnover more than that debt in a years mining... the issue is managing of finance and efficiency. It sounds like the mine is getting there, they now need to sort finances out.
After an utterly disastrous day I'll play this game :)
“The Company has recently completed an update of its long-term financial model taking account of the current macro-economic situation, which has indicated a requirement for additional capital
[V8 - I like the phrase "long-term financial model" suggesting they are preparing for the future]
The principle issues that the Company needs to address on its balance sheet in the short term are acceleration of the repayment of legacy commitments made during the intense Covid period .
[v8 - This reads to me as Rambler would like to clear this debt sooner, rather than later - don't expect it is NEWGEN calling it in early as they would need contractual terms to do so]
reduction of current operational accounts payable balances back to current terms
[V8 - I READ THAT AS THEY COULD BE IN ARREARS AND PAYING PENALTIES AS A RESULT. I HOPE NOT, BUT THAT'S HOW I READ IT.]
rescheduling the repayment of longer term debt to better match Rambler's operational cash flow generation
[V8 - MAYBE AS SIMPLE AS TIMING PAYMENTS FOR FLEXIBLY TO FIT IN WITH SALE OF COPPER? - I DON'T KNOW]
and further capital expenditures to further reduce operating costs.
[V8 - USEFUL MINING STUFF]
In addition, the Company is conducting a continuous review of its operational and capital commitments to identify elements that can be deferred without impacting near term operations, to ensure financial viability in the face of current copper prices
[V8 - I liked the use of "long-term financial model" earlier, but I don't like "financial viability" at all rather than optimising profitability, reducing costs etc.]
The capital to be sought is intended to consolidate the Company's operational gains and commence the process of strengthening the balance sheet in a more permanent way.
[surely there is a better phrase than "more permanent" but why not, I like a longer outlook]
As indicated in the Company's 2021 year-end accounts, Rambler started the year with limited working capital and as production has increased in an inflationary environment, the Company's working capital needs have grown. This was accommodated to some degree with a previously favourable copper price but the current period is such that the Company recognises the need to prepare for a more sustained inflationary environment and one where copper prices may be more inherently volatile.
[V8 - they refer to a "previously favourable copper price" and then earlier "in the face of current copper price" so I can only read that they planned around a copper price of around $4, somewhere between the "favourable" and "current".
It's an awful RNS for so many reasons, but my interpretation of it isn't all that bad and I'm still invested with a very large holding, having lost a small fortune today. (only lost if I sell though, right?)
Good luck to you all.
Metalhead
A few thoughts from me. I agree with a fair number of your points and interpretations but here are some extracts from your post and my thoughts underneath. (Just my thoughts and open to alternatives)..
Extract 1:
reduction of current operational accounts payable balances back to current terms [I’VE READ THIS PASSAGE 20 TIMES AND STILL CAN’T WORK OUT WHAT IT MEANS];
My thoughts: when I read this I interpret it to perhaps suggest they are behind on payments on accounts e.g. with suppliers...(operational accounts back to current terms).
Extract 2:
rescheduling the repayment of longer term debt to better match Rambler's operational cash flow generation [IS THIS A REFERENCE TO NEWGEN AND DOES IT IMPLY NO ACCELERATION OF THE NEWGEN DEBT? (COMPARE ABOVE)]
My thoughts:
Two things I think it could be
a) either 'reschedule' is to be taken at face value and it IS to do with NewGen i.e. they accelerate the existing debt by reorganising longer terms on a larger debt with NewGen and accelerate payback of the current arrangement...or
b) they are just saying any new debt (loan) will aim to be on more manageable longer term repayments that are more sustainable (but may not be with NewGen). It may just be bad use of the phrase 'reschedule'...
Extract 3:
The capital to be sought is intended to consolidate the Company's operational gains and commence the process of strengthening the balance sheet in a more permanent way [THE FIRST FINANCING ANNOUNCED WILL JUST BE THE START?].
My thoughts: I read this as the opposite. They are saying that the new arrangements will be a strategic longer term fix (by strengthening the balance sheet and making repayments more manageable)...rather than being the start. They are saying they need to do this to fix it longer term to avoid more capital requirements (obv subject to copper price/profit)
Thanks F79 - interesting. I really wish it was clearer. Very hard to make decisions
No probs MH.
Without dissecting it again (as it is clear as mud) i believe the general vibe of today's RNS in a nutshell is....
RMM can't support its operational costs alongside the current structure of the debt so need to refinance to.
a) reduce the debt payments by making the debt over a longer period & perhaps use part equity
b) to use some of the debt capital to implement some improvements they've identified to reduce the costs of production
c) to shore up the balance sheet while progressing the above improvements in order to be more resilient against copper price volatility
d) potentially to catch up on payments on accounts to suppliers
Its certainly not an insurmountable situation but it's definitely precarious.
The critical path activity to returns here IMO are firstly RMM being able to secure a 'restructured' debt arrangement, them being able to reduce production/opex costs and them not having to raise significantly via placement of shares. They need to be cash generative which will require either a sustained higher copper price or a significant cost efficiency before any balance sheet uplift from the the debt is used up.
Atb everyone
Extract 2:
rescheduling the repayment of longer term debt to better match Rambler's operational cash flow generation [IS THIS A REFERENCE TO NEWGEN AND DOES IT IMPLY NO ACCELERATION OF THE NEWGEN DEBT? (COMPARE ABOVE)]
My thoughts:
Two things I think it could be
a) either 'reschedule' is to be taken at face value and it IS to do with NewGen i.e. they accelerate the existing debt by reorganising longer terms on a larger debt with NewGen and accelerate payback of the current arrangement...or
b) they are jusmt saying any new debt (loan) will aim to be on more manageable longer term repayments that are more sustainable (but may not be with NewGen). It may just be bad use of the phrase 'reschedule'...
My take on this would be they want to roll up interest/ capital repayments for a period, and pay more later when profits increase. Basically working capital is too low to fund operations and the debt payments. They are at some risk probably of going bust, but they could also spend less on exploration and just concentrate on mining what they have. My feeling is TB is looking to make a step change up with Ming and start up Little Deer. He has proven the mine can produce A LOT MORE, and now wants to accelerate things to make his millions (and ours potentially). He has talked about listing on TSX, that is where I think this is headed, and what the CFO is working on between now and end Sep.