Ghost Bites (Alphamin | Glencore | Grand Parade | PBT | Primeserv | Rex Trueform | Royal Bafokeng Platinum | Sibanye-Stillwater | Zeder)

Records tumble at Alphamin (JSE: APH)

Higher recovery rates drove record tin production

A read through the Alphamin numbers is interesting. They compare the quarter ended March 2023 to the quarter ended December 2022, an approach I enjoy as they are behaving like entrepreneurs. Corporates do the whole year-on-year thing, but hustlers are only worried about how they performed vs. recent months.

Speaking of performance, ore processed actually fell by 10%. But thanks to an improvement in recovery rates, tin production increased by 2% to a record 3,187 tonnes. Sales increased by 1% to 3,161 tonnes.

The real win is the 23% increase in the average tin price achieved, a very happy outcome that is beyond Alphamin’s control. It’s lovely when it happens though, leading to blowout EBITDA of $41.4 million vs. just $27.1 million in the preceding quarter.

Even after paying the FY22 dividend of $28.2 million, the net cash on the balance sheet is $86 million. The company invested $15 million during the quarter in the Mpama South project and capital allocation in FY23 will be prioritised towards that project.

Mpama South’s processing plant is 66% complete overall and is apparently on track for a December 2023 commissioning date.

Tick tock. Tick tock.

And to end off this section by giving you a severe feeling of regret, the share price is up 410% over three years. There we all were, buying tech companies in the pandemic instead of a lucrative tin mine.

Glencore offers another rose to Teck (JSE: GLN)

In this corporate romance, will Teck ever swipe right?

Well, give Glencore some credit here. After arriving at the door with roses the first time and being booted into the mud, our plucky suitor has arrived once more with new flowers and clean clothes. Will it go any better this time around?

Glencore has realised that not all Teck shareholders will be happy holding dirty assets like thermal coal. The proposal is to introduce a cash element to the proposed merger and demerger, which would see Teck shareholders receive 24% of “MetalsCo” and $8.2 billion in cash. In other words, a stake in the transition metals business (copper etc.) and cash to avoid equity exposure to coal.

Glencore is also willing to offer a combination of cash and “CoalCo” shares to those who have no problem holding investments in fossil fuels.

I’m old enough to remember when nobody would touch Thungela because it was dirty. I’m also old enough to remember how that tune changed when Thungela delivered extraordinary share price returns.

It gets a bit technical, but Glencore has also essentially promised not to break the balance sheet in the process of adding a cash element to the offer.

Glencore makes a compelling point around the balance sheets. Although Teck is currently trying to split its businesses anyway, there will be intercompany funding arrangements for 7 – 11 years. Under the Glencore proposal, there would be two separate companies with suitable balance sheets from day one, without cross-holdings.

Glencore proposing a better ESG outcome? Well now, there’s a thing.

Not much of a parade for this mandatory offer (JSE: GPL)

The acceptance rate for GMB’s mandatory offer was low

It seems as though most Grand Parade Investments shareholders aren’t looking for a liquidity event. The mandatory offer by GMB Liquidity Corporation (a very funny name in this context) was only accepted by holders of 4.49% of total shares in issue.

This takes GMB’s stake to 53.65%, so the company has crossed the control threshold.

PBT makes shareholders feel special (JSE: PBG)

After selling Payapps, it’s payday for shareholders

PBT Group has been one of the best small cap success stories on the JSE in the past few years. With the sale of its business in Australia, there is cash on the table and management is giving almost R157 million back to shareholders.

There is a special dividend of 75 cents per share and a special capital reduction distribution of 75 cents per share. The tax treatment is what makes the difference here. The total distribution is obviously R1.50 per share, in case your coffee hasn’t kicked in yet.

On a closing share price of R8.30, that’s special indeed.

Primeserve gives a few more details to chew on (JSE: PMV)

The cautionary is slightly less bland

After Finbond released a bland cautionary and then an updated announcement with ever-so-slightly more in the way of details, Primeserv has done the same.

In this case, Primeserv is negotiating a potential acquisition in the staffing services sector which may have a material effect on the share price. This does sound quite serious, as negotiations are at an “advanced stage” – though any deal can fall over in the dying seconds. Trust me, I’ve watched it happen.

Rex Trueform’s earnings more than double (JSE: RTO)

We will need to wait a few more days to get full details

With interim results due for release on 14 April, Rex Trueform has released a trading statement confirming that HEPS will be 114.9% higher for the six months ended December 2023, coming in at 270.8 cents.

Part of the same group is African and Overseas Enterprises Limited, with HEPS growth for the same period of between 138.7% and 158.7%.

I’m afraid that you’re more likely to find a road in Joburg with no potholes than any liquidity in these stocks.

Royal Bafokeng aims for management stability (JSE: RBP)

The execs are sticking around a bit longer

The CEO and COO of Royal Bafokeng Platinum retired during this difficult period of prolonged corporate action by Northam Platinum and Impala Platinum. With Northam deciding to walk away, the only uncertainty now is the extent to which Impala will achieve acceptances from other shareholders.

The distraction for the company has been severe and would’ve been a lot worse if the executives hadn’t agreed to stay on under fixed term contracts. Of course, such contracts won’t do their pension savings any harm at all.

As a final extension while the Impala offer plays out, the CEO and COO will stay until the earlier of “certainty on the corporate action” and a “transition of the company to its new end state” has been secured (good luck debating that in court), or 7 October 2023.

I would bet on 7 October for the farewell party.

Sibanye is good enough for ten international banks (JSE: SSW)

The revolving credit facility has been refinanced and significantly increased

In this macroeconomic environment, debt is a fun place to play. Yields are strong and in many companies, debt providers are doing better than equity investors at the moment.

So although Sibanye-Stillwater quite rightly points out the macroeconomic uncertainty and reasons to feel proud about a refinanced and enlarged revolving credit facility, the reality is that the banks are loving life at the moment. This is made clear by no fewer than ten international banks participating in the syndication, led to Citi and Royal Bank of Canada.

This is a US dollar denominated facility, so local banks aren’t the focus here. Sibanye needed to raise debt from global markets.

The facility has been refinanced and increased from $600 million to $1 billion, with an option for Sibanye to increase it further to $1.2 billion. The margin (above a benchmark rate i.e. not the total cost of debt) is between 1.60% and 2.00% dependent on leverage. This is essentially Sibanye’s credit spread.

The maturity is three years, extendable to five years at Sibanye’s request in the form of two one-year extensions.

Sibanye loves dealmaking and you can’t do that without access to finance, so this is good news for the group.

Zeder: read this one carefully (JSE: ZED)

The trading statement is no reason to panic

At first blush, the trading statement from Zeder looks like a reason to run for the hills. Or perhaps away from the hills, since the investments are agricultural in nature.

Luckily, the reason for the huge drop in net asset value (NAV) per share is that the company simply became smaller through deliberate actions. When investments are unbundled (as was the case in KAL Group – previously Kaap Agri) or sold and then paid to shareholders as special dividend, Zeder has transferred value from itself to shareholders.

The net result is a drop in NAV per share for reasons other than performance. With an expected drop of between R2.04 and R2.10 per share in this trading statement, it helps that R2.06 is because of corporate actions. In other words, NAV is approximately flat with a bias towards slightly lower.

Not great, but not a panic.

Little bites:

• It’s been a while since I made all of us feel poor by noting the share repurchases by Naspers (JSE: NPN) and Prosus (JSE:PRX). Between 3 April and 6 April, Naspers repurchased R1.15 billion in shares and Prosus repurchased $138.6 million worth of shares. Interestingly, Prosus put another 96 million Tencent shares in certificated form into the Hong Kong Central Clearing and Settlement System – this step is necessary before selling those shares to continue funding the repurchase.

INVEST IN SHARES