Hello,
Last week I had an interview with CFO James Mackie that lasted about an hour. I didn't learn much new and I gave my word that I would keep the conversation confidential. The following are my general thoughts, which may be useful for some of you. Small disclaimer - I don't want to convince anyone of anything here. I am presenting my assessment here based on the arguments available to me. I am always open to constructive, comprehensible criticism.
1) James Mackie seemed passionate to me. According to the MGM, the well-being of the shareholders is important to them/is a priority and the strong criticism is known and is registered accordingly.
2. the majority of shareholders approved the transfer of assets to Persistance Resource Group, as well as the IPO, without all shareholders being consulted. This means that there is a certain group that is known and has given its approval. The transparency laws are clear, there is only one person or related group of persons with more than 10% of the shares (Fan Kong). Group of persons means, for example, that there are no two brothers with 6% each, as this would have to be declared as a related group of persons. These are therefore all independent persons or groups of persons who each hold less than 10%. Important - these persons/groups of persons can only benefit to the same extent as we small shareholders.
3. fraud. There is none.
4. there is no indication of any fraud. A physical product is taken out of the ground and sold to independent customers through the Shanghai Stock Exchange. During the IPO, many unaffiliated parties are involved or have insight into every little matter of MJS. It is really extremely unlikely that MJS's annual reports contain fraudulent statements. I can understand certain fears and everyone should and can of course act accordingly - as he/she feels. However, it must be recognized that there are no solid arguments for fraud
5. since 2019, MJS has been making good profits and the macro/mirco-economic outlook is very good. Nevertheless, the 4 years were for the shareholders for the ton. Why is that?
Incompetence. You have to say it clearly. In a perfect world with perfect management, the share would be valued according to its (future) intrinsic value on the stock market. Unfortunately, this perfect world does not exist. The world consists of chaos and mistakes happen constantly and everywhere, or things happen that could have been handled better in retrospect. I am not excusing anything that has or has not happened. But I have to acknowledge that from the outside it always seems simple and obvious, but things can be very complicated in detail.
6. IPO Persistance (PRG). During the IPO, the entire group of companies is scrutinized very closely. Chinese bureaucracy is extreme. During this time, any changes or statements by the MGM are either prohibited or further complicate an already very complicated process. As a result, all that remains during the IPO is maximum silence, as anything out of the ordinary endangers/complicates the IPO and thus prolongs it.
7. how PRG benefits from the IPO as an MJS shareholder? There is no direct causality between the future share price of PRG and MJS. However, there should be a correlation. The IPO should significantly increase the intrinsic value of PRG and thus the MJS share. In addition, a new spotlight will be thrown on PRG and MJS. In addition, MJS can finally act freely again after the IPO.
8. future. I think the IPO will succeed. The prospectus has hardly changed apart from a few timings/plans. The MGM confirms that it continues to work on the success and expects a successful conclusion. By removing the IPO restrictions, the MGM can finally act freely and finally initiate shareholder value measures. MJS will continue to hold a majority stake in the mine (can determine) and 75% in PRG and will receive the profits within the company group accordingly. It seems that the dollar will continue to fall in value (good for the gold price) and the general sentiment is also good for gold. The mine expansion should also be completed next year, allowing new higher gold grades at very low costs again.
The big question: Why should it succeed now? Given the history of the last 4 years, it is more likely that MGM will fail again than that the IPO will finally succeed and pay off for the MJS shareholders.
In the end, only the future will tell. My personal assessment is that it is still better to hold and or invest for those who can. The risk/reward ratio has shifted even more in the direction of opportunity over the last 4 years. I have invested a lot of money here and also incurred oportunity costs. Looking at it soberly, with love for my money :), right now - I think it will pay off soon.
best regards as always
Richard
i used deeple to translate from germn to english