If you hold your shares in a segregated nominee account (supposedly safely), particularly if it happens to be through a minor, rather fragile broker, then you should be very concerned at the precedent this move - if PWC are successful - could have on your wealth should that broker go into administration. At that point no matter what share you hold you will find it particularly interesting - think on it. The point being made is not specific to CAML, but to trading in general across shares and cash.
Not sure if many are aware of the ongoing saga on the administration of Beaufort, but if not then this may be of more than passing interest. For the avoidance of doubt I have no holdings with Beaufort. I believe what is going on affects just anyone who holds stocks in nominee accounts and the implications for the outcome of this could be profound. Never did I believe that ring-fenced share and cash accounts were not secure. My enquiries of professionals in the City show that most of them were unaware that the loopholes now being exploited by PWC existed.
The tone of the letters from PWC are dictatorial and very much as if the power of the administrator is absolute. There is not a hint of contrition nor question as to their perceived right to take cash and shares that never belonged to the two Beaufort companies they are winding up.
Surely, the FCA or the administrators should have immediately appointed another broker to take over the client accounts? They admit these are more or less complete and untouched. A number of companies expressed interest in doing just this. Quite why client portfolios are not in the care of another broker is unfathomable - other than it is clear that PWC, with the seeming complicity of the FCA, had decided on where they intended to get their staggering fees (upto £100M is mooted by them) from: the supposedly segregated client accounts.
PWC have stated that anyone with a holding of more than £150,000 in cash and shares will probably have some of their assets (upto 40%) taken to pay for administrators fees and other costs. This would not be the case if the administrators were dealing with nearly all other kinds of companies. They would not be able to unilaterally raid the segregated assets of the innocent.
Not only will Beaufort clients suffer - so too will the taxpayer. The FSCS will pay up to £50,000 to compensate or partially compensate most clients. There are some 17,000 of them. This is a huge, unnecessary bill for the taxpayer to pick up and is the result of ineptitude by the FCA from the outset. It represents staggering waste.
The administrators propose appointing a committee of clients and have called a meeting to discuss this and other matters on May 10th. It should be an interesting session. Creditors and clients at the meeting may well reject the administrators proposals to take money and shares from clients accounts. Then PWC will have to go to court. This would delay proceedings further. Innocent clients will then have to wait even longer than the given date of September as the earliest month when they might be able to have what is rightfully theirs back under their control.
The administrators must not be allowed to have their way. Segregation of assets is fundamental to the security, wellbeing and working of the private investor community and ultimately a significant part of the City and economy. To not respect it in the full and absolute raises issues with very wide and negative ramifications. Clients unwittingly placed faith in Beaufort and if this raid of value takes place then all trust from the private investor community in the sanctity of holding their investments in nominee accounts will be trashed - as possibly will be some of the utility of CREST. If the administrators get their way then for security reasons investors would be better off demanding paper certificates and holding these themselves as a number already are.
The reputation of the FCA is deservedly low. To have a body of such ineptitude playing a key role in an economy so dependent on the financial sector is a travesty. Should you feel strongly on this I urge you to write to your MP and please disseminate the issue wider.
Hope this is helpful. It's just my opinion based on what I think the chart is suggesting. This is always a balance of probabilities so my opinion can be wrong and other analysts may have differing views.
Proactive Investors' One2One Mining Forum are organising a presentation which is taking place on Thursday 16th November at The Chesterfield Mayfair Hotel from 6pm. Presenting on the evening will be Berkeley Energia (LON:BKY), Central Asia Metals (LON:CAML), Hummingbird Resources (LON:HUM) & Mkango Resources (LON:MKA).
Central Asia Metals (LON:CAML - Market Cap: £276 Million)
Central Asia Metals owns 100% of the Kounrad SX-EW copper project in central Kazakhstan. The company's proposed acquisition of Lynx Resources is also expected to complete this year.
The combination of CAML and Lynx is expected to provide commodity, geographic and operational diversification which should enable the group to remain well positioned throughout the commodity cycle.
Management will be on hand to speak with investors and provide more details on the rationale of the transaction.
You can register on this link (maybe need to cut/paste):
Originally I thought that the movement in the sp was related to the takeover and how it was being seen by the markets. However, when I plot the sp against the sector index over the past 12 months it just seems that the movement is just reflecting the sector movement over the period from the initial suspension to now. It will be interesting to see if CAML can continue to outperform the index in the coming months (see 3 month chart).
A bit of a formality but clears the way for the Lynx acquisition to take place over the next month or two.
Synergies should give a little saving for the amalgamation of two low-cost, high-divi companies, but I think that continuity is the key here.
Kounrad has a defined life expectancy and Copper Bay, while a viable project, will be much higher cost to run and is one to keep until copper prices improve. I have high hopes for Shuak in due course.
Lynx acquisition gives the reassurance of multiple income streams while transition between different projects occurs - it seems extremely prudent to me. I am sure that the company had been looking for other value copper sites but has decided that if nothing appears to offer sufficient value then diversifying gives a better RoI.
The trade data I see on IG indicates that we opened today at 245/249 bid/ask, which correspond to my number 2 price option. However, It seems that a lot of investors are dumping their shares, so the price has now dropped to 225/227 (a 11% drop from the suspension price) indicating that the takeover is not seen in too positive a light.
Hopefully the price will stabilise soon, and we can see it moving in the opposite direction!
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