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Hi ash
I agree with all the sentiments but what I would say is that if the directors recommend the deal then given their expertise and knowledge they should be supported by the shareholders
However clearly the dynamic will have changed massively and if there is an unwillingness to redistribute a substantial amount as a special dividend then it would be reasonable for the shareholders to expect an updated business plan so we can see what they intend to do with it and then whether as a shareholder it ticks the boxes. I don’t agree that it would help to fund an ongoing regular dividend because my own personal view is that regular dividends should be paid from sustainable profits.
Given the uncertainty expressed from the BBs I also think that Ariana could benefit from appointing a non exec director (possibly a shareholder with a decent shareholding) onto the board to oversee the private investors interests. I think if they did this it would benefit the share price as it would give shareholders some confidence that their interest / voice is being heard. How about putting yourself forward!! I’m staying invested but am hoping for an updated business plan before the deal is concluded. By the way Cyprus scares me only because I read a book recently about money laundering and the Panama papers and the amount of dirty Russian money in the Cyprus economy. In fact I think it was the Russians would bailed out the Cyprus banking system not that I’m in any way suggesting Ariana would be involved in anything dodgy. Sorry for waffling on!
All the best
Hi Ash
If Ariana get $30m from the deal then I would support it and I think the share price would rally north of 3.5p up to the date of the deal being completed. It would have to.
The key thing for me is would I stay invested thereafter. If say they only distributed a small (say £3m) special dividend then what are their plans for our money? They are still a small team so can’t do everything. Maybe they’ll sink it all into prospecting for copper in Cyprus. Would you be happy with that? Or maybe they have their eyes on something else that’s outstanding . Or maybe they will become a lifestyle business for the directors. So what they plan to do with the money (if they don’t return it to shareholders) is the key point for me and hopefully that will become clear before the deal is completed, if it isn’t then I’ll sell near that time! Cheers ash
Ash -that’s a great response thank you . Let’s hope that the due diligence includes financial and legal as well as operational. I guess you have to trust that the management team know what they’re doing, they have a good track record so far. You’d also like to think / hope that the Ariana team aren’t being rewarded separately from Venus Minerals as well as Ariana noting that Kerim is a director of both. Anyway plenty of upside on all activities put together to keep me invested.
Thanks for comprehensive response
Does anyone have a view on the Cyprus deal? Have done a little bit of research on the internet and it looks like Venus Minerals Cyprus Limited changed its name from Eastern Mediterranean Minerals Cyprus in September this year . It would seem this company claims that over the last 20 years various exploration companies have poured in around 100m Euros looking at potential copper mining in Cyprus and EMM have acquired various licences / databases etc. they also claim to have then spent around 5m Euros themselves looking at it, but I don’t see any accounts to corroborate this. So the question is presumably the companies that spent 100m have backed away and then EMM must have run out of money otherwise why would they bring in Ariana and dilute their interest . And I guess the next question is what do Ariana think they can do where others have failed. Is it not just flogging a dead horse? After all there is only 1 copper mine in the whole entire history of Cyprus. Would welcome everyone’s views as I might be totally on the wrong path here. And I guess it is only 3m which in the scheme of things isn’t massive .
Ariana have recently spent 600k - Ash if you’re reading this maybe this is why Arianas expenses have increased so much? Or maybe it’s an intangible asset?
Cheers
Would love to see a substantial dividend of say 30% of share price of say around .7p but don’t know how the directors will feel about the effect on their options as the share price would fall by the the same amount. The way I read it from the notes in the accounts there are 44m options and they aren’t exercisable until 1 January 2021. The exercise price is 1.55p, so based on today’s share price the value of the options in £368,000 which would fall to about £60,000 if a .7p divi (for eg) was paid out. So I think the directors are more likely to opt for a capital reduction which could actually enhance the share price and maybe a small dividend. Or they may seek a way of exercising options early? Anyone else got a view on this?
I don’t know whether anyone can clarify my understanding. in Kerims last you tube video he said that revenue for the first 6m was $20m, cash costs were around $350-$500 per oz (so that to me is around 1/4 of revenue ie $5m). So net cash revenue is $15m shares 50:50 for 6 months is $7.5m. Kerim says Arianas share is $3m so presumably the other $4.5m is interest on loan (or interest and capital? / or looking at it another way amortisation of investment). It sounds like a lot. However once this is paid off then Ariana should be getting $7.5m cash every 6m or $15m a year. Is that about right? Which makes investment case unreal given market cap of £20m
The Kurds seem to be aligning with Syria Iran and Russia so I can’t see how US will implement sanctions against Turkey who let’s face it are a NATO ally and so important strategically. Having said that who knows with Trump. If the Kurds had offered to rename the region Trumpistan then maybe the US forces would still be there!
Hi john
The reason why we should feel comfortable about the working capital loans is because it’s normal business practice to fund current assets (£8m) in this way. I guess the alternative would have been for Ariana to do another capital raise if any of the funds generated by the JV were used to fund working capital and not directed to Ariana as dividends. In fact personally I would be more than happy for the JV to continue to utilise a working capital facility throughout the JV - at some point in the future the current assets unwind and the loan can be paid off., far better than using cash generated to pay these down. This of course is on the basis that the working capital loans are not funding losses (which they’re not) or capital projects (which they aren’t). There will be very few miners that don’t have a working capital facility. We should see it more as an overdraft than a loan that fluctuate as working capital needs are met. It is in fact more relevant that Ariana focus on repaying the capital loan which poses a far greater risk to the company if repayments aren’t made on the scheduled dates. Therefore I think it’s right that that’s the focus of the commentary in any update.
I agree that Ariana should have explained this in a better way and perhaps Kerim isn’t the best placed, they need someone with a finance background to provide an update - Michael perhaps?
I love your posts on the operational aspects of Ariana. You show great insight and helps me to understand that part of the business
Hope my points make you feel a bit better
I think Ariana is a good investment. If you look at how quickly the mine is being amortised there should be a big uplift in profits in few years time!
Great work ash
I feel comfortable with the working capital loans. They are covered by current assets and it would seem perfectly normal to have these in place as there are no trade creditors to fund current assets. My only query would be why they’re classified as non current liabilities as wc loans are usually repayable on demand and fluctuate in line with the amount of working capital requirements ie current assets . Ash do you think the wc loans have been used to fund the capital project and not just the current assets. I don’t think so but would welcome your thoughts.
Motifbio is now like a person who has been taken off life support and placed into cryogenics. Nightmare
Hi ash - I have a question that you might know the answer to in the accounts.
In note 4 there is a finance charge of £2810k. Do you know whether this number will stop once the loan has been repaid or is it something that is spread over the estimated life of the mine. If so how many years? There could be a spike in reported results once this number is non recurring. If you’re not sure is it something worth asking?
Hi Ash - I have a question for the con call if you think it’s relevant. If after a few years at kilzepe other miners/ explorers in the region want to use the JV facilities do Ariana get to share in any revenues eg if we entered into a sub JV could we get say 25% - is it possible that we could become a processor for that region given high set up costs for other explorers? Or do proccea have control? Any thoughts? Is it a stupid question!?
Brilliant- looking a lot better now
I don’t get what the panic about lack of information is about. August is the holiday season. Everyone is on holiday. Nothing gets done in August. Look at last years releases. It’s the same. Chill. This company is going places