End GameThere has been lots of volatility in the stock market lately and clearly IVN is not immune. It has got me thinking about the ultimate end game and how things can play out.
Lots to consider other than the daily movements of the equity markets. We have the following things to consider:
- Zijin owns about 13.5% of IVN and 40% of the KK JV. There is a standstill until 2026 or 2027 but Zijin is released from the standstill if an offer is made for IVN; Their cost base is likely less that $1.50 Cad per share.
- CITIC owns about 27% and is also subject to a standstill that I believe expires sometime in 2023 but might have been extended. Their cost base is somewhere around $3.50 Cad per share.
- Robert Friedland owns about the same as Zijin and has a cost base likely less than $.50 Cad per share.
- The freefloat of the shares ex the three major shareholders is about 45%. Factor in major institutions holding the stock and you are down to 25%.
- DRC Presidential elections are scheduled for late 2023.
- Exploration results are expected on the Western Forelands area later this year. But the area is vast and highly prospective. Lots more exploration to follow.
- Platreef is continuing development but likely production is a couple of years away. Lots of upside in the expansion and additional exploration prospectivity.
- Kipushi is well advanced and could be in production in 18 months or less.
- The next major expansion at KK is 2024. Good timing relative to copper market fundamentals.
- Smelter is being constructed. Additional power is being developed.
Some questions:
What happens next? Does something happen before all these long-term catalysts kick in?
Is there an opportunity to bring a partner in on the WF exploration ground as a precursor to creating an auction for KK? If so, who? A major like BHP or another party like the Saudi's who are looking to develop a mining presence. How about the Japanese? Are they prepared to compete?
What does Zijin want? They have been very active in M&A. They have a low cost base regarding their 40% stake and their IVN stake.
Is CITIC a long-term holder or the king maker? Are they effectively part of China Inc and a proxy for ultimately delivering KK and IVN to the Chinese?