Nickel 28 Capital Corp V.NKL

My personal thesis ...

[urai58]

Good Mornig everyone,

we are back in business. After the price correction to CAD 0.47 from mid April 2021, we are now back in the 80 zone. The business case is excellent (see Arlington Note).
 
 
My personal thesis: Pala Investment is building a position.
 
Insert: I know the Cobalt 27 story; but please don't look back; at the time, the dramatic collapse in cobalt prices was partly to blame for the dramatic drop in Cobalt 27's share price and the unfavorable takeover bid from Pala Investment.
 
I have looked at the whole business case again. Very central is the so called Tax-Holliday until and with 2026. I think for Pala - and also for us - it would be a super-invest, if Pala would enter for 60m$. The CAPEX debt could be paid back by the end of 2021. And then 5 years, 11.3% of the FCF would flow; at today's nickel prices that would be more than 36m$ p.a. Of course there would be a dilution and we would have plus/minus twice the number of shares. But our diluted share would be about 18mUSD p.a. with 86m shares this means just under 22m CAD, or 0.25 CAD p.a. FCF - for five year, Total: 110m CAD
 
And Pala Investment would have this capital:
 
https://www.globallegalchronicle.com/pala-investments-65-mil...
 
urai58

[Talchior]

in my opinion (as explained few days ago) with the cashflow of ramu, the debit can be paid in 2023 and then enjoy the tax holiday for 3 years. The current rates is under evaluated and would be a pity to sold it to Pala.

[urai58]

Thanks @Talchior; I see your approach. As of Jan 2, 2021, the total debt is $91.6m. This also increases the annual interest by $535k. They already corrected that in a subsequent post.   Of course, the condition is that as you write, the entire FCF is used to repay the Debt. Nickel 28 would have no FCF for the Company for another 2.5 years, for example for dividends.   The crucial

[Talchior]

I don't think that the 30 millions are so generous. The current share value is increasing in the same time than the nickel. Tje operational debt will be paid (if not already paid) this quarter. What do you think will be the impact on the rates? The target price is including the number of shares and the increase to the 11,3%. I don't that dilution for the full life of the company of 53%

[urai58]

I have no problem with your view at all. The key lies in the price of nickel. urai58

[Popeye82]

Don't know if you already know that. If not, I would read https://mcusercontent.com/bcf952a3fa8185f9a112ba741/files/f7cf6109-c3d6-4e28-a5f0-50f18d835452/Nickel_28_First_Final.pdf I have No Interest in that Company, Many, Many Other Stakes to manage.

[Michiel]

@urai58. Hello, can you explain me the connection between Pala and Nickel28. I follow this action since a year but i never heard about Pala. Thx for the information.

[urai58]

Happy to do it @Michiel - but only short form.   Step 1: Cobalt 27 takeover Highland Pacifics HGI. HGI owns the Ramu Nickel asset.   Step 2: Pala Investments took over Cobalt 27 KBLT with cash compensation plus 1 share Newcompany (Conic) for KBLT shareholders.   Step 3: Pala Investment spun off the nickel assets from ex Cobalt 27. This included the Ramu asset. The new

[Michiel]

@urai58. Thx a lot for this interesting information!!! Grtz

[GoldPathfinder]

The management of Nickel 28 have a very big story to tell the market now when the operating debth is repaid and the 35% attributable cash flow is coming in to the company. But the management seems to be quite silent about this now when it is a reality much faster than planned due to excellent performance of Ramu nickel mine and a strong nickel price. If my company had reacht this huge goal i

[Michiel]

@goldfathfinder. Hello, I follow your analysis. But why didn t they buy any shares already. The buyback period ends next year July 1! Impossible to buy more then 7.000.000 shares in this short period.

[GoldPathfinder]

Hello Michiel, As you understand i am speculating logical regarding the management silience of good news. As you say, they have to next year 1 july to buy back the shares, in this buy back program. Regarding a buy back program there is a lot of rules to follow. I guess maybe they will start after next news release or waiting for more cash before starting the buy back program. If it is not

[Talchior]

As mentioned earlier, I think like you.  However, are we sure that they don't have started the buyback? In the note, they said that the next announcement will be the buyback, they never said that they didn't have started. Moreover, they are using a third party to do it. I don't know how it's work concretely but could we not imagine that the society buy in their name and then

[GoldPathfinder]

Regarding the buyback i repost urai58 from 30/10 below: "Normal course issuer bid” (“NCIB”) Share buyback Here are the main points. According to this, Nickel 28 has probably not yet repurchased any shares. In particular, no shares may be purchased if Nickel 28 has material information that has not yet been communicated. Nickel 28 is considered an insider when buying back shares

[Michiel]

@goldfathfinder. In the NR of November 9, they already published the good news "Nickel 28 is pleased to announce the receipt of its first free cash flow from Ramu, a US$3.2 million payment, as further detailed below." What more good news are you waiting for? I think the market hoped for better news (it is never good enough for speculators), and that explains the fall of te actions. The

[GoldPathfinder]

"Nickel 28 is pleased to announce the receipt of its first free cash flow from Ramu, a US$3.2 million payment, as further detailed below." That is very good news! News that can be told more. Which was my point....  

[Michiel]

@goldfathfinder. I understand your point. They could have made some more noice about it......