866 replies to this topic

[Spell Jammer]

Frightening!

It gets worse. Turns out that entire fossil fuelled Power stations for exclusive use for Chinese developments are being built in our country. Wonder how much of this work will be contracted to local construction companies and workers.

 

 

 

The new coal power station in Limpopo will only be used by the Chinese – here’s why it’s an ‘irrational’ project

Helena Wasserman , Business Insider SA

 Sep 11, 2018, 06:35 PM

  

 

The planned new coal-fired power plant. (EMSEZ)

 

• President Cyril Ramaphosa has signed a deal with the Chinese to build a new 4,600-megawatt coal power station in Limpopo. 
• The power station will only serve a planned new Chinese-controlled industrial park, which will contain at least 7 metallurgical processing plants.
• A top energy expert says there is no rational reason to build the coal power station. 

There has been some confusion in the energy industry this past week after the announcement that a new coal-powered power plant is planned for Limpopo.

According to reports, President Cyril Ramaphosa inked a deal with the Chinese to build a new 4,600-megawatt coal power station during his visit to that country.

This came as a shock, as the brand-new Integrated Resource Plan (IRP) does not include any new coal-fired power plants.

See also: Government has trumpeted China's pledge of R193 billion – but South Africa has invested much more than that in China

It has since emerged that the planned new power plant, called the “Power China International Energy Project”, won’t produce electricity for South African households and business – it will only be used for a massive new Chinese-controlled industrial park.

 

Earlier this year, nine Chinese companies committed to invest $10 billion in the Musina-Makhado special economic zone at a signing ceremony in Beijing.

 

 

The companies are specifically investing in a large new planned ferroalloy industrial park, which will span 60 square kilometres on an area outside Musina.

The location of the new Chinese industrial park, according to the EMSEZ website.

 

(Google Maps)

 

According to the Chinese website for the South African Energy and Metallurgical Special Economic Zone (EMSEZ), as it is called, the park will contain:

• A coal washing plant (with capacity to process 12 million tonnes per year)
• A coking plant (3 million tonnes)
• An iron plant (3 million tonnes)
• A stainless steel plant (3 million tonnes)
• A Ferro manganese powder plant (1 million tonnes)
• A ferrochrome plant (3 million)
• A limestone plant (3 million)
• An apartment building, hotel, shopping mall, hospital and school will also be built.

A rendering of the aerial view of the new metallurgical special economic zone. (EMSEZ)

 

Artist impressions of the coking and lime plants (EMSEZ)

 

The planned iron and ferrochrome plants. (EMSEZ)

 

Included in the plans is the new coal-fired power plant, which according to the EMSEZ website, will be built “specifically for the project”. According to the information on the site, it does not look as if it will deliver electricity to the rest of South Africa.

“I can see no rational basis for the power plant,” says dr. Grové Steyn, managing director of Meridian Economics and one of South Africa's leading energy and infrastructure economists.

Firstly, there is currently a surplus of electricity available on the network – the Chinese project wouldn’t have to generate its own power.

In addition, coal will be the more expensive option for the Chinese investors. Steyn says it is highly unlikely that a new coal power station will deliver cheaper energy than new renewable power projects on the national transmission grid, backed up by gas turbine generators. 

“A coal-powered power station will create fewer jobs than renewables and will obviously have massive implications for the health of local communities and the broader environment – which is unnecessary given that there are cheaper and cleaner alternatives.”

Work on the power plant is supposed to start this year.

According to the EMSEZ website, investors are attracted to the project because of the nearby coking coal reserves (estimated at 10 billion tonnes) as well as SA's chromium reserves (83% of the global reserves) and manganese resources (81% of total global reserves). Water from the Limpopo River, 30km away, will be used in the project. 

The participating companies will get substantial tax breaks: apart from VAT and import duty relief, they will pay a reduced corporate tax rate of 15%, instead of 28% for SA companies.

https://www.business...-project-2018-9

Edited by Spell Jammer, 13 September 2018 - 06:36 PM.

[Queen B]

That would be a f up of all f ups. Thanks for the link

Frightening!

[Lionelza1]

https://www.moneyweb...infrastructure/

That would be a f up of all f ups. Thanks for the link

[Spell Jammer]

Our economy is in turmoil and that's when gov normally pump money in this sector.. Job creation etc.
I do not know the t's & c's of the loan but if gov allows Chinese companies into this sector then it's not good.
Low investor confidence, poor governance, politically unstable..... Pretty much doomed I'd say.... Sure hope Ramaphosa makes wise decisions

 

https://www.moneyweb...infrastructure/

[Lionelza1]

Wouldn't count on it. SA is loaning money from China at a scary rate with even scarier conditions and consequences. Wouldn't be surprised if Chinese State owned construction companies start getting lucrative government Capital intensive tenders\projects.

Our economy is in turmoil and that's when gov normally pump money in this sector.. Job creation etc.
I do not know the t's & c's of the loan but if gov allows Chinese companies into this sector then it's not good.
Low investor confidence, poor governance, politically unstable..... Pretty much doomed I'd say.... Sure hope Ramaphosa makes wise decisions

[Spell Jammer]

Just a matter of time before government pumps money into this industry.......

Wouldn't count on it. SA is loaning money from China at a scary rate with even scarier conditions and consequences. Wouldn't be surprised if Chinese State owned construction companies start getting lucrative government Capital intensive tenders\projects. 

Edited by Spell Jammer, 13 September 2018 - 09:18 AM.

[Matrix]

Ok jtsuch, i have read that latest Sens in more detail.

the bondholders are going to get  shares valued at 10c ( similar to the recent rights offer issue per share by a conversion)

Aveng also calculate the NAV per share, after all the adjustments to be 3 cents

 

So can one assume that those those new 14 billion ordinary shares held by bondholders will not be  trading in the market because they might perhaps be be getting a special dividend?? or what..As far as I know bondholders get interest payments and are paid a before  ordinary shareholders...So does it mean that the bondholders have actually lost out now because they agreed to have a conversion of  their bonds into ordinary shares? Also how can you have 14 billion shares which is really a debt valued at 10c and perhaps not tradeable and 5 billion shares at 3c trading in the open market? 

 

At lionelza1: hope gov gets construction going and can get involvement of local construction..In the same vein....one  of Aton's problems with MuR was the fact that Aton does not want MuR to be involved with the Gautrain project. Can not understand that reasoning by Aton.  

 

Hi Trader001,

 

I don't really understand what your question is.

There is no mention that this will be a preference share or any special type of share.

They are purely converting bonds into shares at a rate of 10cents per share/rand.

As Polly mentioned this can either be due to the fact that they have had extensive meetings and believe the share price to be at least that value.

Or they just had no alternative choice otherwise they would have lost out.

 

You also mention that you have read the latest SENS in more detail.

This is not not new news that was detailed in only the latest SENS, but has been communicated in at least the last six (6) SENS except for the SENS related to resignation of director.

My point being that I cannot understand the market confusion from yourself as well as joe public, as this has been explained and approved by all parties in detail and is being followed accordingly.

[Trader001]

Ok jtsuch, i have read that latest Sens in more detail.

the bondholders are going to get  shares valued at 10c ( similar to the recent rights offer issue per share by a conversion)

Aveng also calculate the NAV per share, after all the adjustments to be 3 cents

 

So can one assume that those those new 14 billion ordinary shares held by bondholders will not be  trading in the market because they might perhaps be be getting a special dividend?? or what..As far as I know bondholders get interest payments and are paid a before  ordinary shareholders...So does it mean that the bondholders have actually lost out now because they agreed to have a conversion of  their bonds into ordinary shares? Also how can you have 14 billion shares which is really a debt valued at 10c and perhaps not tradeable and 5 billion shares at 3c trading in the open market? 

 

At lionelza1: hope gov gets construction going and can get involvement of local construction..In the same vein....one  of Aton's problems with MuR was the fact that Aton does not want MuR to be involved with the Gautrain project. Can not understand that reasoning by Aton.  

[Lionelza1]

BSR was first of listed construction companies to go into business rescue. Changes of success coming out as going concern due to mining order book. Had lovely plan and then BANG out of blue into rescue. If you want to take long term risk any construction company at that price that in your opinion can survive for next 2 years.
Check construction % of GDP very low. Either government get sector to grow or total country stuffed. On knife edge....

Just a matter of time before government pumps money into this industry.......

[Matrix]

Yes Magnet ..I agree with you..they say they gonna sell new shares for 10c per share but I am not so sure anymore. My problem is..who is going to buy that share at 10c if the current value is hovering around 3-4 cents. You do not need to be a space scientist to work that one out ..then

 

have they got the assets in Aveng to cover that huge share issue??? ..even ALL PUT TOGETHER... the defunct sections like Trident Steel and Grinaker with the assets of  Moolmans and the mining division ( and their new contracts books ..which is also not cast in stone, i.e. that they will get the contracts!!) to equate to the billions they want to raise now with this special share issue.... It is a bit of a conundrum to me...the figures just do to add up in my books..but maybe I am still pre-school and the these accounting calcs are for Matrics LOL.

 

I know what I am going to do....I am not going to buy any more shares..even at 3 or 4 cent...I am just going to wait until this share ever gets to about 11.8c/share (my brakeven point) and then I am going to sell the whole lot

 

Trader001,

 

As Polly mentioned you understand it completely wrong.

It's important that we stick to the factual happenings in order to collectively make sense of everything.

 

They are not selling shares at 10cents.

Outstanding Bonds of about R1.4billion are being settled by issuance of 14billion shares to these bond holders.

Both bond holders as well as shareholders have already agreed to settle this debt, at a conversion rate of 10cents per share.

The timeframe has also been communicated on the implementation of this within the month of September.

[Polly]

Yes Magnet ..I agree with you..they say they gonna sell new shares for 10c per share but I am not so sure anymore. My problem is..who is going to buy that share at 10c if the current value is hovering around 3-4 cents. You do not need to be a space scientist to work that one out ..then

 

have they got the assets in Aveng to cover that huge share issue??? ..even ALL PUT TOGETHER... the defunct sections like Trident Steel and Grinaker with the assets of  Moolmans and the mining division ( and their new contracts books ..which is also not cast in stone, i.e. that they will get the contracts!!) to equate to the billions they want to raise now with this special share issue.... It is a bit of a conundrum to me...the figures just do to add up in my books..but maybe I am still pre-school and the these accounting calcs are for Matrics LOL.

 

I know what I am going to do....I am not going to buy any more shares..even at 3 or 4 cent...I am just going to wait until this share ever gets to about 11.8c/share (my brakeven point) and then I am going to sell the whole lot

 

 

Read again..You got the whole thing wrong about share issue!!  Eish

[Trader001]

gov has killed construction in SA and has been feverishly  working for the past 10 years to kill the ..once lucrative  mining industry as well

[Trader001]

much of the demise of this companY's construction business has to do with this county's non existing economic development plan and policy and their non performance on many fronts. Nothing happened in the building industry in the past 5 years..even more. What about transport building projects..the western and eastern sections expansion of the gautrain for instance ..The current governmnet has done absolutely nothing to stimulate the construction industry in SA. They should carry 80% of the blame. Why don't the local gov. stimulate the building industry..upgrade roads and transport routes and infrastructure...and create jobs in the process. I am sure the gov could have worked in partnership with private sector on this one.. Sadly, there just are'nt any  inititiatives from the this gov. 

[Trader001]

Yes Magnet ..I agree with you..they say they gonna sell new shares for 10c per share but I am not so sure anymore. My problem is..who is going to buy that share at 10c if the current value is hovering around 3-4 cents. You do not need to be a space scientist to work that one out ..then

 

have they got the assets in Aveng to cover that huge share issue??? ..even ALL PUT TOGETHER... the defunct sections like Trident Steel and Grinaker with the assets of  Moolmans and the mining division ( and their new contracts books ..which is also not cast in stone, i.e. that they will get the contracts!!) to equate to the billions they want to raise now with this special share issue.... It is a bit of a conundrum to me...the figures just do to add up in my books..but maybe I am still pre-school and the these accounting calcs are for Matrics LOL.

 

I know what I am going to do....I am not going to buy any more shares..even at 3 or 4 cent...I am just going to wait until this share ever gets to about 11.8c/share (my brakeven point) and then I am going to sell the whole lot

 

[Magnet]

I think the market is saying that once there is 19 billion shares in issue we are going to price you at 3-4c which would equate to a market cap of about R800m.  Which is about 5x the current market cap of Group 5.  So shares may still be well over valued even after partial debt paid off.  Industry in a mess.  No work available.  The 10c value of shares shouldnt be looked at as it means nothing.  Mr market will value the shares at the end of the day.

Edited by Magnet, 12 September 2018 - 11:14 AM.

[Polly]

My bad I didn't read any of the latest updates.

Weird though that the price is 3c when bond holders agreed to pay 10c for shares? So after they pay for the shares they immediately lose 66%?

Sent from my SM-G965F using Sharenet Sharechat mobile app

no ones paying anything for anything..

 

Merely converting bond to shares @ 10c per share...Bondholders prepared to write off 66% of bond value in exchange for shares...

 

Reason

 

1. if insist on bond , may get nothing as company may go bust!!  rather some then none

 

 

or

 

2. May feel company still has value as company may be worth more than 10c per share although trading below that..

 

 

Effectively this conversion good for shareholders as put more value on shares..Mr Market has not seen it this way YET!! MR Market pricing in bust scenario

Edited by Polly, 11 September 2018 - 10:29 PM.

[Magnet]

My bad I didn't read any of the latest updates.

Weird though that the price is 3c when bond holders agreed to pay 10c for shares? So after they pay for the shares they immediately lose 66%?

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[andi222]

So lets say there will be +-20 billion shares after the conversion.

Current market value is sitting at 212 million rand.

New issue of shares by way of conversion will bring in 1,4. 14 billion shares at 0,1.

So after the conversion the share price should be 8 cents.

Current shares (5 billion) @ 4 cents = 212 million

Now new issue (14 billion shares) @ 10 cents = 1.4 billion rands.

Now if we take the 212+ 1400 million we get market cap of 1612 million. This divided by 19 billion shares we get to +- 8 cents.

Latest NAV (interim) was 5 558 million. Loss reported at 300 million.

So new NAV in my opinion would be 5558 plus 1400 - 300 million loss = 6658 million

6658 million / 19 billion shares would be a price of 35 cents per share.

Now taking in a 50% discount I see a good price at betwenn 15-20 cebts a share.

This is just my opinion and not any advice to buy or sell shares

Sent from my SM-G950F using Sharenet Sharechat mobile app

[Matrix]

Hi Magnet,

 

That is not my understanding, but I may be incorrect.

If you refer to the updated Sens wrt bond buyback the following is stated:

 

In Rm:

"Total to be settled by Specific Issue 1 403.53

Number of shares to be issued (bn) 14.035"

 

Hence about 14 million shares will be issued.

A portion of the bond is bought back, only R1.4billion is settled with issue of shares.

 

Furthermore you must remember that bond holders as well as share holders agreed that bonds are converted to shares at 10cent per share.

You refer to 1cent per share, but unless I am missing something all approvals were done at 10cents, including the latest Sens of today.

 

Magnet,

 

In addition to the above, my estimate is therefor that there will be just below 20billion shares.

 

Currently just over 5billion, as per following Sens after the last rights offer:

Following the Rights Offer, the total number of Aveng shares in issue (including treasury

shares) will be 5 348 525 326.

 

Then as per my message and AEG's Sens 14billion will be issued for the settlement of bond.

@andi222 mentioned an amount of 23billion, but I may be missing something.

But somewhere between 20 and 23 Billion.

[Matrix]

Hey man. I think you need to times the 23 billion shares by 10.

23 billion shares at 1c will give you R230m only... They need R2.5bn so they need to dilute with 230 billion shares at 1c each. Hence why 1c price = market cap of R2.5bn

Sent from my SM-G965F using Sharenet Sharechat mobile app

 

Hi Magnet,

 

That is not my understanding, but I may be incorrect.

If you refer to the updated Sens wrt bond buyback the following is stated:

 

In Rm:

"Total to be settled by Specific Issue 1 403.53

Number of shares to be issued (bn) 14.035"

 

Hence about 14 million shares will be issued.

A portion of the bond is bought back, only R1.4billion is settled with issue of shares.

 

Furthermore you must remember that bond holders as well as share holders agreed that bonds are converted to shares at 10cent per share.

You refer to 1cent per share, but unless I am missing something all approvals were done at 10cents, including the latest Sens of today.