Facts, page-7

First 7 Last

Share
Profile

Follow
tt2000

2,345 Posts.

539

13/03/18

21:58

Post #: 31729393
Share

Originally posted by tt2000 ↑

These are three objective facts:

1. GMC have given up 25% of the project for $6M debt. The debt holder receives title to the 2 smelters and will only invest this debt if certain conditions are met - GMC Announcement yesterday.

2. Applying the metric in point 1, 75% of the project (that GMC is left with) is 3 x 25% (3 x $6M = $18M)

3. Corporate finance is about the relative risk/reward. Debt is less risky than equity, so deserves a lower reward for the same risk - any corporate finance textbook.
(Think return you get at bank - safe, versus return on property or equity - higher return but more risky).

Applying fact 3, it follows that $6M secured debt for a 25% project stake, should cost less than an equivalent stake of unsecured equity.

Therefore 25% equity should be less than $6M. Therefore 75% equity should be less than $18M.

The above are the objective facts.

Not sure why pointing this out makes me a downramper or vindictful or the ex CEO (I must say I did find that flattering). I have said I am not part of ex management.

I simply believe that the facts should be disclosed open and honestly.

If anything I've said us erroneous, please feel free to discuss. I do wish current holders and management the best. Whether you win or lose is not going to affect my investment returns, so I'd rather you all win.

I'm merely pointing out here that based on the secured debt terms with equal upside as equity holders, equity should be lower priced than debt.

Expand

Maybe a better way to phrase this, is does anyone here disagree with either points 1, 2 or 3?

If this post is "spam" please indicate which point you disagree with so we can have a fruitful discussion...

GMC Price at posting: 1.5¢ Sentiment: Sell Disclosure: Not Held
Upvote

0 Great analysis

Reply

Top Stories

TVL

C29 Metals wins Kazakhstani uranium drill run green tick, Kazatomprom talks mature

Palladium's the newest geopolitical hot commodity. But ASX exposure is limited

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

QGL

Aerospace smallcap Quickstep Holdings jumps nearly 100% after 40cps takeover offer

PGO

Pantera begins drilling of maiden test well at Smackover

There are more pages in this discussion • 40 more messages in this thread...

First 7 Last

Add GMC (ASX) to my watchlist

Facts, page-7

Top Stories

C29 Metals wins Kazakhstani uranium drill run green tick, Kazatomprom talks mature

Palladium's the newest geopolitical hot commodity. But ASX exposure is limited

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

Aerospace smallcap Quickstep Holdings jumps nearly 100% after 40cps takeover offer

Pantera begins drilling of maiden test well at Smackover