Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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I'm personally very encouraged by the efforts that RM and the team have been making over the 9 months since the assets were (re)launched Aug-21 with Caracal having taken over from GoldPlat a massively under-invested Kenyan gold mine that was effectively under "Care & Maintenance" for many years producing enough gold to "just" pay the bills.
I've been involved in plenty of Junior explorer, developers and producers with very different management & communication styles of variable effectiveness. To date GCATs have been the most informative and open that I have come across and given the shear scale, speed and ambition of the BoD to date I can only applaud them. However, given some of the recent confusion over possible future funding, what it may be used for, terms and timing of such RM would be wise to address some of this to avoid further investor speculation as this has not helped the SP especially given recent POG weakness.
Roll on Q1 Operational Report & Nyakafuru mine development updates
ATB APR
Morning all,
In my opinion, whether a Capital raise is to fund a mine development in Tanzania and/or further Development spend at Kili, I would not be surprised if the Company followed the example of THX ( who RM seems to like), by arranging a Debt/Stream/ Equity stake for the whole amount of Capex required, with a provider such as Africa Finance Corporation.
Time will tell of course, but the future here still appears very positive to me.
OOSM/APR - as I've said, you might well be right in your interpretations, but we will find out soon enough, so best now to wait for the confirmation now me thinks. It hasn't been the best communication from RM, in that he failed to expressly confirm at either interview, or do so in clear terms, that the company is fully funded for the current expansion at Kili. Whatever the position, the company is on a growth trajectory with plenty of exciting news flow to come in the coming weeks and months. And if they are about to announce the development of a new mine at Nyakafuru, with timelines and funding details as well, that will just add to the news flow.
@aprogerson
Yes I had to listen and re-listen to both of Robbie's April presentations around about 20 times, his accent is so soft that even now a few of the exact words have eluded me, but thankfully none at the important places.
As you rightly point out though, I'm not actually saying much that you haven't already said, but just putting it in a timeline to give context. Thanks for your many informative posts by the way.
ATB and GLA
OOSM Again thankyou for taking the to transcribe the interview which confirms that additional funding is for new mine as part of Expansion programme at Nyakafuru that has been confirmed many times as a near term development project ready for mine build. Excerpts from Caracal presentation ... https://caracalgold.com/wp-content/uploads/2022/01/Caracal-presentation-Q1-2022-final-PDF.pdf
> Page 23 = "Previous positive development studies completed by Resolute Limited and based on
large scale conventional open pit operation and CIL processing plant"
> Page 26 = "NYAKAFURU - STRATEGY TO PRODUCTION" full page breakdown of next steps
Quite how this can be misinterpreted as somehow referring to Kilimapesa and current 3 phases of development works (as I have pointed out many times) has been subject to 2 rounds of specific funding in Aug-21 and Feb-22 is beyond me.
ATB APR
@OOSM Thankyou for also picking up what I have been saying about Tanzanian asset planning, development and Robbie's narrative for end of May as I was beginning to think I was listening to a different interview.
I missed the bit about the Phase 3 development being itself split into 3 so I will listen again
ATB APR
@Legalwolf
You are correct in one aspect of Robbie's reporting - he uses the identical terminology interchangeably, so the Phase 3 expansion of Kilimapesa is itself divided into three phases:
Phase 1 of 3 => The Heap Leach
Phase 2 of 3 => The upgraded Tailings circuit
Phase 3 of 3 => The upgraded Milling circuit
You say Tanzania is not specifically mentioned, but of course it is, just not in the answer to the development and expansion program, but Robbie had already stated that Frank was running his ruler over it, and would give his report to Robbie, following which, at the end of May Caracal will, 'announce the closure of the deal and present the work program and what we are doing'
All fairly unequivocal, but perhaps not joined up there in a way that brings it together neatly - SO ROBBIE IF YOU ARE READING THIS, PLEASE CLARRIFY BOTH THE KILIMAPESA FUNDING SITUATION AND THE OUTLINE PLANS FOR TANANZIA IN YOUR NEXT PRESENTAION, LATER THIS WEEK - THANKS.
But for me LegalWolf the information is all there if you are prepared to follow the trail.
OOSM - many thanks for that. Firstly, you (and others) might well be right in your interpretation. However, and at the risk of labouring the point, it is important to consider BOTH the 11 April interview (which Swamp posted earlier), and this one that you have quoted from. What we know from BOTH interviews is the following:
- Phase 3 has been referred to by RM as "the big expansion".
- Work has NOT yet started on Phase 3 - it is still at design/testwork stage.
- At the first interview, RM was asked specifically about funding for Phase 3/the rest of THIS year. Now, the easiest and obvious thing for any CEO to say in response to this would have been 'we are fully funded'. But he did NOT say that. Instead, he gave a much longer answer, in which he said CGAT are continually investigating funding options, and referring to things as not cheap. He did NOT mention the TZ assets, nor was he asked about them at this first interview.
- In the second interview on 28 April, he was asked a question about the big expansion programme. This time he mentioned the likely need to come back to the market, saying Kili was not making enough money. Again, he did NOT expressly mention TZ in his answer, but he did refer to 'a completely new mine'.
-Now, we can pick out reference to 'a completely new mine' as supporting it being TZ, but when you take all of the above into account, the possibility (I would say probability) is that he was referring to phase 3. The reference to 'a completely new mine' could simply have been RM's clumsy way of referring to "the big one" - i.e. the milling circuit.
-Moreover, I am struggling to see why CGAT would come to the market to fund a completely new mine at TZ - the costs are likely to be prohibitive and well beyond the levels where it would be sensible to raise them via the market. When you are 6 months away from producing 24Koz, and likely to generate revenues, which would dwarf what you could raise from the market, and with the dilution that would come, again it doesn't make sense.
-Finally, I do not see GCAT embarking on any development of any new mine in TZ this year. The most I would expect in TZ in 2022 would be drilling programmes. I'm not even sure how development ready the TZ assets actually are?
I think I will leave it there, as I am actually annoying and frustrating myself as well now, by repeating the same points :-) We know that GCAT are likely to confirm the position in the next few weeks, and all will be revealed, and so it is best to just wait for that. Like I have said, I hope I am wrong in my interpretation, and that others have got this right. GLA
@Swampmonster and Legalwolf
Here is a more or less verbatim transcript of the Q and A in Question:
Q: How do you intend to fund the development and expansion program?
A: Most of what we have done to date has been funded by working capital, All the drilling we have been funding out of working capital, Funds that we have been generating from the mine - So Far on the heap leach its been done. The big expansion, we are going to have to come to the market to raise money to fund it, we are not making enough money to fund the developing of a completely new mine. The first thing we need is to know how much money we need and we are very close to finalising those numbers I had the numbers on my screen while I was waiting for this conference to begin, I've been working with the team on them for the last 2 weeks. Rhiian has given me a commitment that by the middle of next week, we already have those numbers refined, what they are doing now is overlaying the the project program over those numbers. When we announce the expansion program, we will announce how we will fund the expansion program.
So we know Robbie is talking about the funding of a 'completely new mine', and that, 'the team are working on overlaying the numbers on the project plan', at that time - so well after the Phase 3, Kilimapesa expansion had been approved.
Finally the clincher for me is, 'When we announce the expansion program, we will announce how we will fund the expansion program'. I think we can safely say that the Kilimapesa phase 3 plan had been announced for some while at this stage?
So IMO we are still awaiting a plan for the Tanzania Mine expansion, and the funding is being considered at this time, and will be announced soon.
ATB and GLA
@aprogerson
Yes agreed regarding your post below at 17.31 where you say:
@Balanced Please be clear that the Year End results and the statement you provided was for the period to 31-Dec-21 which was AFTER the initial RTO £5.5m capital raise but BEFORE the Feb-22 £2m Capital Raise which was explicitly for "Acceleration of Phase 3 development" as per the 14-Feb-22 RNS.
@Legalwolf Agreed. We are expecting Q1 Ops Report anytime and also RM stated that he was also reviewing Nyakafuru mine build costs just after last call with view to updating market end May-22 so I'm expecting a lot of the "known unknowns" to be addressed over the next 0 to 4 weeks as the RNSs feed through.
ATB APR
Nail on the head LW. Except I don't need to get back to bullish fundamentals, because I never left them and am trying hard not to get sidetracked by the speculation, which is ultimately a zero sum game. Whether they raise money in six months or a year is (for the most part) irrelevant to me. What is relevant is that any capital raised, by whatever method and timing, is spent to produce a strong return. And everything that I see here, including most critically the amount of shares owned by management, indicates that to be the case.
at the end of the day ....if I , like Robbie....had 104m shares....I would be not wanting to rock the boat medium to long term....so I wouldn't really be concerned....short term noise for the time being!
Swamp/APR - I certainly hope that you are both right (and that my own interpretation of the interviews is wrong). I hope we can all agree on one thing at least, which is that it would be good for RM/GCAT to clarify the remarks/funding situation, as this speculation is doing none of us, or our investments here, much good. It would certainly be good to get back to the bullish fundamentals and the positives, that we were all discussing prior to the interviews, and which have led us to invest here in the first place. GLA
With apologies for my many typos. Bloody hopeless.
Also (and this is just my own wild speculation) looking at the amount these guys are pushing, it seems to me that if they are going to dissapoint shareholders, it will be due to not getting through all the capex and expansions promised, rather that than knocking of the considerable list ahead of schedule and looking for more. At a glance, they do look to have a lot on their plate for a new team.
Legalwolf. Looking at it (yet again) we largely agree on the phrasing. I think he is referring at least to part of the cost of the milling circuit. But the fact that he says that they are exploring funding options for this work that sounds at least 6 months off, is fair enough for me and doesnt scare me. Its a fairly fluid environment and they are fast expanding their low grade extraction and have had pleasant surprises on the the output. This may well be changing the maths on future funding. Where we differ though, is that if a future raise is done on equity, after exploring debt and current cash flow options (and bearing in mind that management are large holders) if the raise makes sense and gives a positive return, which depending on the prices could be multiples, that's normal. Either way, we know for sure that right now, there's no raise being punted and both operations and current capex appears to be well managed.
@Balanced Please be clear that the Year End results and the statement you provided was for the period to 31-Dec-21 which was AFTER the initial RTO £5.5m capital raise but BEFORE the Feb-22 £2m Capital Raise which was explicitly for "Acceleration of Phase 3 development" as per the 14-Feb-22 RNS.
For clarity I am of the mind that the Stockbox interview refered to further funding being required for:
> Future Mine build at Nyakafuru, Tanzania project when costs became available end May-22
> Kilimapesa production expansion from 24koz/annum to 48koz/annum ... stated aspiration but costs not yet published
> Any other acquisitions that may make sense to the BoD ... mentioned but again aspirational
IMHO I believe this to be the case because RTO capital INCLUDED Phase 3 and Feb-22 £2m Capital raise was to ACCELERATE it. IF (and it is a big if) phase 3 to get to 24koz production is in some way in question then the BoD have an honesty issue and everything I have seen or read about GCAT says they say what they mean and then deliver on it!
I sincerely hope I am not proved to be wrong!
ATB APR
Balanced66....I think this is a standard risk warning phrase used by "not yet generating revenue" companies....??
My understanding is that all three phases are needed to get us to 24Koz and all three phases are planned for completion within the next 6 months. Have I gotten this wrong?
IF not, and IF any of these phases require funding from the market, then that is not much "further down the line" but probably in the near term. Again, form your own opinions about all this.
And for the avoidance of doubt, that is just my personal interpretation of both interviews. I might well be completely wrong, and there might be no raise needed for phase 3 at Kili. But, I think there is enough in both interviews to explain why people are now talking about this. It is not something that has been pulled out of nowhere.
Everyone is entitled to form their own opinion and interpretation of these interviews and what they mean. I have simply shared my own interpretation. Time will of course tell. DYOR
Swamp - the actual interview that has given rise to the talk/speculation was the Stockbox event on 28 April, where RM provided his answer at 23 mins. I have provided the link below.
In fact, the interview that you have provided for 11 April is really helpful. In it, RM refers to the "expansion" and "optimisation" of the milling circuit as "the big one". This is phase 3 of the overall Kili expansion. RM confirmed that work on this phase has not started and they are still in the design and test work phase. When asked about funding, RM did not say they were fully funded, but said they were investigating funding options, and everything to date had been paid for by working cashflow and the recent placing.
On the 28 April, he again referred to the "big expansion programme", and this time stated that they were not making enough money at Kili to fund this and would need to come to the market. I believe the expansion in question is the phase 3 milling circuit. Others think he was referring to TZ assets.
You can make up your own mind, but for me, all your 11 April interview has done is to further reinforce my view that it is phase 3 at Kili that is going to need the next funding.
https://www.youtube.com/watch?v=0y3nYLMCnWM
Hi
I have a few miners so always interested in looking for new situations. This was in the results. An interview is mentioned in the posts below but the results announcement clearly refers to funding.
"Going concern
The interim condensed consolidated financial statements have been prepared on a going concern basis. The Group's assets are not currently generating substantial revenues and therefore an operating loss has been reported. An operating loss is expected in the 12 months subsequent to the date of these financial statements. As a result the Group will need to raise funding to provide additional working capital within the next 12 months. The ability of the Group to meet its projected expenditure is dependent on these further equity injections and / or the raising of cash through bank loans or other debt instruments. These conditions necessarily indicate that a material uncertainty exists that may cast significant doubt over the Group's ability to continue as a going concern and therefore their ability to realise their assets and discharge their liabilities in the normal course of business. Whilst acknowledging this material uncertainty, the directors remain confident of raising finance and therefore, the directors consider it appropriate to prepare the interim condensed consolidated financial statements on a going concern basis. The interim condensed consolidated financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern."
Legalwolf that's discrimination against us insolvent warriors....lol
Hive it a listen LW. To me it's pretty clear. The current projects are funded, but down the line cash may be needed to for bigger stuff. To me it's a statement of the obvious for a small miner. I have absolutely no doubt that at some stage more capital will be needed on a mining company that is barely out of nappies. But every other piece of information has been that current operations are funded.