I tend to agree with danny on this one, the share price has been abysmal for a long time, we have a deal on the able with oaktree but have no idea what it is. Yes it may not be more than offered last time, but I don't see that being relevant, we live in the here and now.
Personally I would rather get to a point of construction and then see a merger with Wolf.
I never understood at the time what the panic was amongst a lot of Wolf shareholders, the same as I don't now. When you buy into a junior miner like this, you are buying into a prospect and one that is going to require a lot of money, skill and tenacity to turn into something that is going to make money. That money is going to come from an awful lot of debt or an awful lot of shares, if it is the form if debt, the annal operating profits of the company once in production is going to be severely depleted by debt repayments and servicing costs. If it comes from new shares, the annual profits are going to be higher (I.e. a bigger total dividend) but it has to be shared among more people. There is no such thing as a free lunch.
From the answer given, there will be NO dilution of Ormondes shares as a result of this deal. However Ormondes wholly owned subsidary (Solaro) is being partially sold to Oaktree to enable the development of Barrucapardo. That means the profits will be split between Oaktree and Ormonde. But your 1 share in Ormonde will still be the same tomorrow.
I think there is more upside than that, we have a resource upgrade as a result of pit wall steepening due, that should at 10%, we also have another resorce upgrade due later this year with an increase in the mining area, that should add another 15%. If the seven day crusher operation gets the green light, that should add another 5%. That is all in additon to the rise than can be expected as we close in on production. I'm thinking a 50% rise on the current position by the end of the year to around 30pps.
The exchange doesn't say whether a trade is a buy or a sell, Its a computer algorithm that takes a stab at figuring it out based on the price.
So from the answer to question 2, oaktree will not be taking any shares in Ormonde as part of the deal, they are taking a majority holding in the peoject, NOT the company, in other words Barruecopardo has become a Joint Venture between Ormonde and Oaktree.
£50-80 million to open a mine of this size, it has to come from somewhere. If it comes from equity, thats reflects to give a better NPV, but conseqently everyone gets a smaller shareholding. there is always going to be major dilution in a project like this. If anyone doesn't realise that, they perhaps need to question whether they should be investing in junior miners....
Danakil is certainly an interesting project, shallow Potash deposits are a rare beast, with most mines operating in the 1000m-2000m depth horizon. Solution mining would make it one of the lowest cost producers in the world as well has having an extremely low Capex - in comparison with Sirius Minerals' York Potash Project (In North Yorkshire), which if it goes ahead will be nearly 1500 deep, with a Capital expenditure of £4 Billion! and much higher OPEX costs than a solution mine in Ethiopia.