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The Nov 22 Marketing Agreement can be rewritten if 50%+1 share of MPD changes hands. IMO that is a dead cert if Baowu get involved. They'd want every last ton they could get their hands on. That being the case then any Manaraa Minerals - Glencore surplus off take issue would likely disappear...
(m) If there is a direct or indirect change in ownership of MPD amounting to 50% + 1 share or more of the issued share capital of the relevant target entity, and, following such change in ownership, MPD notifies Glencore International in accordance with the terms of the Marketing Agreement that it wishes to cancel the Marketing Agreement and enter into a new life-of-mine marketing agreement (a "New Marketing Agreement") in respect of 100% of the production of the Mine with the relevant investor or its Affiliate (a "New Buyer"), then Glencore International may notify MPD, subject to the terms and requirements of the Marketing Agreement, that either:
(i) it shall match the terms of the New Marketing Agreement, in which event the parties shall discuss and agree in good faith such minimum amendments required to the Marketing Agreement to align with the key commercial terms agreed between MPD and the New Buyer under the New Marketing Agreement; or
(ii) it agrees to the termination of the Marketing Agreement, in which event the Marketing Agreement shall be terminated upon execution by MPD of the New Marketing Agreement and thereafter Glencore International shall be entitled, for the term of the New Marketing Agreement and / or any replacement or supplement to such agreement, to receive a fee in each calendar month by way of consideration for the initial marketing role played by Glencore International under the Marketing Agreement ("Royalty"), and
the Marketing Agreement shall be terminated only upon execution of the Royalty by Glencore International and MPD in a form acceptable to Glencore International acting reasonably.
If Glencore International fails to provide a response to MPD in accordance with the requirements of the Marketing Agreement, it shall be deemed to have accepted the termination of the Marketing Agreement, in which event the terms of paragraph (m)(ii) above shall apply.
Hi MM,
This joint arrangement - Saudi Inc/ BaoWu - is certainly one of the likeliest outcomes.
Manara has already made its position on offtake clear.
BaoWu, meanwhile, heads up the ore purchasing consortium of Chinese steel mills that is trying to 'break' the historic Australian 'single desk' point-of-sale pricing structure, so is likely also to have strong views on offtake arrangements.
If Saudi/BaoWu are working together, GLEN won't be able to play 'divide and rule' and may have to blink and make concessions on its marketing/royalties offtake 'lock'.
We don't AFAIAA know whether the C-B 10% free carry also includes an entitlement to a corresponding share of offtake, your suggestion that BaoWu/China might have a say in this side of things may be a negotiating point : after all, GLEN/its bankers are also owed unpaid oiltrade finance debt....whether other parties (eg IMF/Paris Club creditors) would agree to hypothecation/credit preference of this type is a further complication.
Wheels within wheels....
GLA and ATB
There's nothing that precludes both Saudi Arabia *and* China from both being Strategic Investors in Zanaga. In fact this news from last May suggests they could well be part of a consortium. Baosteel, Saudi Arabia and PIF....
CHINA'S BAOSTEEL, SAUDI ARAMCO AND PUBLIC INVESTMENT FUND SET UP VENTURE TO BUILD STEEL PLANT IN SAUDI ARAMCO
By Reuters
May 1, 2023
...Baosteel will take 50% stake in the joint venture, while Saudi Aramco and PIF will take 25% stake each, Baosteel said in a statement.
https://www.reuters.com/markets/deals/chinas-baosteel-saudi-aramco-pif-set-up-jv-build-steel-plant-saudi-aramco-2023-05-01/
Intriguingly the legal name of the company that Baowu incorporated for Simandou is 'Baowu Resources West Africa Company (Baowu Guinea)'.
West Africa...
Firewalls - ugh.
The point being is that even the giant Baowu needs authorisation to in vest. Hence perhaps too the Chinese Ambassador touring Chinese miners in Congo last week, looking for on the ground confirmation of investment conditions?
We shall see of course....
Chinese company Baowu establishes Guinea subsidiary to develop Simandou iron mine
After receiving official authorisation from Beijing to invest in the Simandou project, the Chinese steel giant has now been formally established in Guinea.
https://www.africabusinessplus.com/en/818553/chinese-company-baowu-establishes-guinea-subsidiary-to-develop-simandou-iron-mine/
Thanks Marcus. I think it's important to have a theory that fits the facts on the ground - helps makes sense of your investment, particularly if there are some blanks that need filling in - and we have a few.
The theory is supported by another tweet from the Chinese Ambassador, from yesterday. Big D swears allegiance to President Xi:
"A great leader with far-sightedness and profound admiration"! President Sassou said this about President Xi Jinping.
https://twitter.com/LIYanChine/status/1774463837938319548
My view is that the Chinese will be our primary Strategic Investor, in the form of Baosteel. I also see the chance that the Chinese would assume the 10% free carry Zanaga of the Congo Gov., this in exchange for some form of debt forgiveness by the Chinese on their estimated $7bn of sovereign debt with the country. Wheels within wheels, but you've got to have a theory - otherwise to you are running in the dark.
Great post MM. Suggests an imminent conclusion to the EPC.
April could get very interesting!!
That phrase from the RNS: '...a near-final report has been received from the Company's Chinese EPC Partner...'
Why 'near final' not 'final'? The answer must be something outside of the EPC's hands. Given that securing African iron ore is a Chinese State-directed imperative (and the amounts involved so big (think 'Simandou')) then the Chinese EPC 'final report' is very likely waiting on official sanction. That official sanction is going to be the official thumbs up from CPP representative(s) for the country andits investment conditions.
So what did the Chinese Ambassador and 5 of her colleagues do last week? She toured the country, travelled the length of the RN1 (Chinese built), and visited 4 Chinese-Congo projects which significantly included a copper and a zinc mine.
At the end of it Mde l'Ambassadrice pronounced that, 'La coopération sino-congolaise aura un #avenir encore plus radieux ' 'The future of China-Congo cooperation will definitely be more radiant!
> Sounds like the country got her thumbs up and, I reckon, that near-final report can now be signed off.
LI Yan @LIYanChine Ambassadeur extraordinaire et plénipotentiaire de la République populaire de Chine en République du Congo
5:40 PM · Mar 27, 2024
The first copper plate and the first zinc ingot in the history of Congo (Brazzaville)! Today I visited the Soremi Mine invested and operated by a Chinese company. This is not only a modern highland for Congo’s mining industry, but also the cradle of local professional and technical talents.
https://twitter.com/LIYanChine/status/1773042314380018067
7:29 PM · Mar 28, 2024
It lasted 4 days and visited 4 China-Congo cooperation projects in three provinces of Congo! From Mengo to Lifoula, I drove more than 500 kilometers through the Mayombe forest, and I completed the entire National Highway 1. ( )
I would like to pay tribute to the friends who participated in the construction of Road No. 1 and the cooperation between China and Congo in various fields! The future of China-Congo cooperation will definitely be more radiant!
https://twitter.com/LIYanChine/status/1773432229911498891
Beautiful!
There's a phrase in the RNS which merits much closer attention, and some related activity in the Congo that could well be key to our future - and imminently so.
As I wrote into here on Thursday:
'We haven't been shown any numbers, which likely rewrite the BFS and all-important metrics such as IRR and the NPV. These will certainly directly impact the buy in price for our Strategic Partner/s. Given that we haven't been shown the results then it appears logical that Strategic Partner/s' dependencies are keeping them under wraps - for now.'
Was very much what the company delivered in the RNS later, '...FS...key to further engagement of strategic partners...:
'Clifford Elphick, Chairman of ZIOC commented:
"ZIOC is pleased with the progress of the FS update which is nearing completion. This is regarded as being key to further engagement of strategic partners.
1) FS update process
a) The review and re-costing phase of the 2014 FS has been completed and a near-final report has been received from the Company's Chinese EPC Partner, and this has progressed to peer and ZIOC board review.
b) The final results of the 2014 FS update are expected to be announced during April 2024.'
> So every day through April is a potential RNS day, and I fully expect the SP to firm markedly in anticipation of the above as well as numerous other reasons.
This from 28th December 2023:
o The initial review and re-costing phase of the 2014 Feasibility Study ("2014 FS") has been completed, indicating potential cost reductions versus the 2014 FS.
o The market enquiry and financial modelling phase 2 is underway and will now be extended into Q1 2024 given the comprehensive nature of the update.
> This news flow is in the company's hands, as will be the timing of any news release.
We haven't been shown any numbers, which likely rewrite the BFS and all-important metrics such as IRR and the NPV. These will certainly directly impact the buy in price for our Strategic Partner/s. Given that we haven't been shown the results then it appears logical that Strategic Partner/s' dependencies are keeping them under wraps - for now.
A positive for me.