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" That could have the effect of a considerable dilution."
Hi Crusty, As far as we all know, TPDC back-in rights, is upto 15% of the Ntorya development, which would dilute Aminex 25% of Ntorya down to 21.25 %, plus of course Aminex's share of costs to develop Ntorya is also reduced to 21.25%. So I see it as a bit of a plus having the TPDC on board, making it all more certain.
And considering a 15% dilution to Aminex's eventual income from Ntorya, might in time prove to be immaterial when now we see what the 3D seismic has revealed and just how big a resource/development Ntorya could become.
"As far as we all know, TPDC back-in rights, is up to 15% of the Ntorya development"
So I am making what I heard at the AGM up am I? Believe me, they were discussing the expectation of a 20% dilution. Agreed, that has yet to be evidenced BUT BG I am NOT making it up.
As regards the costs versus the loss of income - I stand by my claim earlier - saving 15 or 20% of the costs of Ntorya development is immaterial compared to losing 15 -20% of all future Ntorya income streams; future income, revenues, P&L are important metrics in the valuation of any entity, the cash on the balance sheet has minimal contribution to valuation. So $7m in additional cash will have no effect on the sp / MC or anything else, $8m of future revenues could add enormous value.
So no, BG I emphatically and totally disagree with you; any dilution of that scale is "material". Indeed the greater the value the underlying asset the greater the value of any dilution; increase in assets and resources, the bigger the impact. We might never be able to identify or quantify the direct impact to shareholder value, MC or sp but to simply dismiss it as unimportant or immaterial is pretty short sighted in my view.
I do though agree that I would rather have TPDC in the tent and not out but is that worth 15 -20% equity? I don't think so. Then again there is feck all we can do about it, so little point in arguing the toss - but again to dismiss it as immaterial is frankly out and out Ostrich mode.
", that has yet to be evidenced BUT BG I am NOT making it up."
Well OK, but they have never made public in any report that the original Ruvuma PSA 15% back-in rights are being negotiated. Tell me Crusty, was the % ( Back-in )info part of their general presentation, or was it stated on a more private one to one basis ? I'm generally inquisitive Crusty and thanks
And yes, it is a big thing, the 15% I can live with but 20% is a lot harder to swallow.
I wonder if our friend Emptyend could shed any light on the subject ?
It was information volunteered in the Q&A sessions from the floor. In context it was in discussion regarding the GSA, terms and likelihood of selling gas at wellhead with TPDC doing the pipeline or the alternative of ARA building the pipeline for a better price etc They stated that they believed that whilst not their preferred option the former was the most likely outcome and with TPDC taking up their full back-in rights of up to 20% which is what they are entitled to under current legislation.
"which is what they are entitled to under current legislation"
Well, it sounds cut and dry then Crusty, and that TPDC back-in % has been renegotiated. So a simple question to Aminex regarding TPDC ( BACK-IN ) % rights should or can be easily answered. Thanks again
It was only their expectation BG and not a given, conceivably, it may not have been put into effect. Maybe they managed to negotiate that away for (I am making this up) immunity from payment of historic costs? Most of which were probably due to AEX and not ARA!
BG, I have ben doing a bit of digging and it seems that the Government of Tanzania began a review of all existing PSA's in 2018 to be completed in Feb 2019 with the expectation of amending and renegotiating those existing PSA's. What I have been unable to find is the outcome of that review but then maybe it is specific to each and every Agreement. Though I would freely admit that if our PSA had been amended under that review I would assume that we would/should have been informed - I don't recall being notified of any change.... but then again maybe those changes are contingent of the conclusion of the GSA? But I am purely guessing.
See https://arslaw.co.tz › review-of-production-sharing-agreements