Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Is this a show of ability to raise the money needed?
What happens to zen if zen fail to fully subscribe the 1m in each currency by Monday ?
Zen : “ The subscription period will commence on January 21, 2020. The intended issue date of the Notes is January 27, 2020.“
Rns next week confirming the loan either way.
One thing you can rely on 100% is Forums pursuit of what is in their best strategic interest financially.
Some scenarios as follows, with what may be a potential outcome for AAOG PI:
1. Less than 2000 boepd production by Zen in year – Call option enabled and sold to Zenith for £1m – no RTO and liquidate company, some value may be assigned to PI?
http://aaog.com/archive/Admission-Document.pdf
P299, Section 5.7
Distribution of assets on a winding-up
“On a winding-up, the liquidator may, with the authority of a special resolution of the Company and any other sanction required by law, divide among the shareholders in kind the whole or any part of the assets of the Company and may value any assets and determine how the division
shall be carried out as between the shareholders or different classes of shareholders.”
2. Call option and Congo asset sold, Forum enable a successful RTO, gain the Accrued tax losses upto £30m and AAOG go in a new direction with new impetus and investment – PI could gain some value in time.
3. Zen produce more than 4000 boepd - Forum sell asset in a year to Zen for £2.5m, no RTO, they liquidate the company at that time.
4. Zen produce more than 4000 boepd - Forum keep the asset and don’t exercise the Put option sale, gain revenue form Congo oil revenue, perform a successful RTO and remain in business.
5. The disposal doesn’t complete, Forum retain all asset control, no need for RTO as wont be a cash shell, they sell all to another party and liquidate the company
6. The disposal doesn’t complete, but Forum make a go of producing oil from Tilapia with SNPC backing, they too have cash to pay for the licence, don't even need the debt paid back and have deep pockets for field development.
There are of course other scenarios, but of these 3 out of 6 provide a chance for PI having some return, with the other 3 options being company liquidates with nominal or no return to PI in a year.
Tilapia is valuable, if production can occur its well worth developing and keeping the revenue for all involved, makes more money and the best option strategically.
Dec 27th RNS - "The SPA is conditional, amongst other things on .....certain regulatory requirements in the Republic of the Congo, including consent of the Minister of Hydrocarbons."
That’s why zen were chanting ‘ $2m licence bonus’, got to atleast try grease the palms.
Cash on hand - assume £100k left from ATOG money
ISA sale - £361k
Assumed burn rate of £100k a month as stated in RNS, assuming the Zenith loan is received tomorrow for £250k
This lasts current board 6 months, time to find a RTO target whilst they are a cash shell. But the current board will be long gone, within weeks expected as Forum take their three controlling director positions, and the urgent cash to stay in business is no longer an issue, Forum had £14m on account in summer, new accounts issued Feb 29th.
The Call option is in place where in if production is lower than 2000 boepd (includes gas notably) then AAOG have to sell their remaining asset to Zen for £1million.
But would Forum want to invest and take control in AAOG when Zenith could stall production and acquire the full asset in a year for £1million?
Forum make £600k in this scenario after paying for the ISA shares plus what they are worth in a year, but have to pay their new directors costs, inherit claims, debt etc making this deal at best neutral for them. Any RTO investment and development is down to them, buy they don't need a shattered company like AAOG to do this, they could do it themselves.
So whats in it for Forum? hope that Zenith produce more than 4000 boepd and they can retain the remaining 11% of the licence and get some production revenue?
That's a risky one with Zens performance to date in Azerbaijan and the hurdles in Congo, especially as SNPC want to go for Mengo which means nowhere near 4000 boepd will be achieved from one drill.
So it could be for Forum to gain the Accrued tax losses upto £30m as Skittish highlighted, or something else?
Paul Forrest, Chief Executive - "Forum is pleased to have taken a strategic stake in the Company"
That's current company and its assets and potential in Congo they have a stake in.
Meanwhile, 11 days after the GM (with a wapping 5% of PI voting yes for the disposal), it has still not been ratified in Congo, nor any progress made on regulatory matters.
Dec 27th RNS - "The SPA is conditional, amongst other things on .....certain regulatory requirements in the Republic of the Congo, including consent of the Minister of Hydrocarbons."
How long by law until this SPA agreement lapses due to zero progress in Congo?