Member Info for Boffin

PadayachiS Re the inferred reserves. These were put at around the same size, at least in tonnes of ore, as those currently being mined. The problem is that's all we know and its based on simple extrapolations from the data we have rather than direct measurements. Thus we aren't really sure what the shape and size of the ore body may really be, little idea of how much bigger the pit may have to be and potentially huge amounts of non Cu containing overburden may need to be removed to access it. Nor is there a single piece of analytical or metallurgical data telling us about Cu content or ease of extraction. ie it's little more than a best guess and gives no reliable evidence for how much of it, if any, would be economically recoverable. Of course at least some of it may turn out to be worth something depending on the price of Cu at the time but personally I wouldn't give it more than a very nominal value at the moment.

I don't think there is much prospect of a significant debt for equity swap unless another substantial indepedent investor can be found to take up a tranche of new shares. And even then that wouldn't help much. Orion already own 25% , currently worth around $3.25m . They can only increase this by just under 5% , circa �800k, before they will breach the 30% ownership when LSE rules would require them to make a takeover offer for WTI. I doubt very much that they would want to do that. And also an additional �800k ($1.12m) doesnt exactly make much of a dent in $125m of debt. Even if an additional investor could be found to take say an additional 25% that probably wouldn't even raise �3M plus a bit extra for Orion makes absolute tops �4M ( and probably less) say $5.5M if you are optimistic. Again not much of a dent in $125M.

Well I personally hope the loan negotiation isn't concluded until mid April. Then I can shift a further �20k into my ISA at say 1.5p rather than half as many if it has already bounced back to 3p!

Funds. Quite right, I was being lazy and didn't notice the increase in inventory. That though at circa 1000 tonnes does seem quite an increase. About 3 weeks production on top of the inventory from the previous period. I hope they managed to sell it when the price was over $7k per tonne!

this is a bit better than it perhaps appears. When I divided the revenue by the tonnes produced in the half I got a price per tonne of $5393 as the average for the half. This is obviously very low compared to where we are today. I guess this was the impact of lower prices and low fixes for much of the half . However many of the lowest fixes have now expired and I would expect the average price per tonne received in the second half to be at least $1000 per tonne ( and possibly more) higher than in the first half ( assuming the Cu price doesn't implode). However with the C1 costs in Q2 down to $4555 in Q2 even a $600 a tonne increase from there onwards due to the adverse exchange rate moves should still leave us with a margin of at least $1300 a tonne in Q2 ( and just possibly over $1500). A gross profit of at least some $11 m. Not great but a lot better than where we were.

Roughly what we expected I suppose. The production level was good even though they obviously expect it to fall back a bit in the second half to hit nameplate. The exchange rate comment is hardly surprising. As I commented a short while ago the rise of the ZAR?Nab$ vs the US$ from Q2 to the current Q is something like a $600 increase in the C1 costs. A bit alarming. I was though surprised that they made no mention of the low level fixes in the CU price which were in place have largely expired which should give some compensating increase in the revenue received per tonne for the 2nd half of the year. I feel a bit disappointed that there is no news on the restart of Central Ops. Its the quickest and cheapest thing they could do to increase revenue.

Of course trends can change and the forecasts for much higher prices sometime down the track may prove correct. However the price today is almost exactly the same as at the beginning of September. And whilst the price has oscillated up and down since then a simple examination of a graph of daily Cu prices since then shows a virtually horizontal line as the rolling average in that time. That suggests to me that currently the supply and demand is essentially in balance with no sign of a substantial shift anytime soon. I just hope I'm wrong! With flat Cu prices and the ZAR:US$ exchange rate doing us no favours at all it seems to me the only option available to generate additional revenue to get debt down at a credible rate is to rapidly increase output and the only short term candidate for that seems to me to be Central Ops. Berg Aukas might be a possibility but I think that it will take longer and cost much more to get a decent revenue flow from it.

Ronnycant. If Orion get effective control of 30% of WTI capital then Stock Exchange rules require they make a full takeover bid for WTI. They don't have to immediately or directly own 30%. Entering into a deal where that was a potential ( eg options) or almost inevitable (eg awarded warrants) outcome would trigger the requirement. I very much doubt that would be on Orion's agenda nor in their wider interest.

I certainly don't think it wise, nor much chance, of raising substantial debt in the near without either an equity deal or a concomitant significant increase in revenue by eg a restart of Central Ops. I could imagine though an equity deal such as that entered into with Logiman to enable say the restart of Berg Aukas without needing to find too much up front cash. Both contractors and mining equipment manufacturers have often entered into deal like this. It can even be done including an off take deal where the contractor/supplier gets partial repayment by receiving an amount of product at either a fixed price or an agreed discount to the prevailing market price of the product. But however it gets done it seems to me improbable that Berg Aukas and Kitumba can be opened up by just racking up huge amounts of further debt in the near term. I personally prefer a phased approach, getting revenues up via a restart of Central Ops with Berg Aukas coming on stream late next year to further increase revenues and channeling the proceeds towards getting Kitumba going from 2020 onwards. It will take that long to get a BFS for Kitumba done anyway and borrowing and or a fund raise at that point with Tschudi, Central Ops and Berg Aukas underway would be rather more supportable.

Well unless Central Ops restarts fairly soon there was never much prospect of restarting Berg Aukas let alone Kitumba out of revenue. Even if Central Ops gets going they will probably need a further debt/equity arrangement. Given that Orion already hold 25% of the equity there is little prospect of them taking on further ( at a 30% holding they would be compelled to make a bid) unless there is a wider issue to other(s). Orion could then buy more to either maintain their % holding or even extend it to 29.9% if they are feeling confident in managements ability to deliver. I suspect that the already announced discussions on "debt restructuring" may indeed be more about preparing the ground for a major fund raise of some type to get the recent acquisitions moving forwards as quickly as possible. I know fund raises are often seen purely as diluting existing shareholders but if they help create a much bigger "cake" then a modestly smaller slice of it can actually be worth more than the slice we have now.

If you recall the original summary of the DFS published in 2013 you will see that there was a substantial inferred resource beyond the measured and indicated categories. This was then updated in the 2016 technical report which can be found here weatherlyplc.com/wp-content/uploads/2016/11/Tschudi-Technical-Report-Nov16.pdf So whilst there may well be additional Cu its not at all clear exactly how much nor how much of it (if any) will be economically recoverable. Probably highly dependent on the price of Cu at the time

TD2 Hi. Sorry if I have duplicated but where did you post it as I can't see it here

on Cu pricing in the near future? Unless that is the oft discussed labour issues really do have a serious impact. https://www.reuters.com/article/us-copper-spreads-ahome/copper-spreads-a-bear-anomaly-in-a-bullish-market-andy-home-idUSKCN1GE2IU If there is really excess Cu available for delivery then could it be that mine management may well be prepared to have some substantial stoppages? The resulting increase in Cu prices and thus margins could well more than offset the costs of the stoppages

Debt is currently about $125m so my best guess would be something like $25 a year for 6 years. However if Central Ops does restart sometime this year we could be looking at 30k tonnes a year at circa $2500 a tonne gross profit ( assuming website statements are correct and Cu stays at around the current price). An EBITDA of $75m a year from then on would allow something of a more aggressive repayment schedule as well as getting Berg Aukas restarted out of revenue rather than further borrowing. A very tasty prospect.

Sorry, that should have read "saleable product"

There is no date for interims that the BOD have committed to. Last year it was Feb 22nd the year before 1st March. Personally I don't mind waiting a bit longer as it may give a better opportunity for them to include forward looking commentary on debt restructuring or even some timing targets for Berg Aukas or Central Ops restarting. Until we get more certainty about how much they will cost upfront and when we can expect them to actually start delivering saleable project the market will only give a relatively nominal value to them in the market cap. Unknowns and uncertainty are never the market caps friends

Given the various uncertainties I thought it may at least be useful for colleagues here to be aware of the various rules surrounding this. A reasonably readable explanation can be found here https://uk.practicallaw.thomsonreuters.com/w-009-1710?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1 What still to me isn't entirely clear is how do the authorities bring pressure to comply with the disclosure rules on foreign privately owned entities. Also it is open to WTI to search their own share register if they have reason to believe a material change may have occurred. The way I read it is that they have a month in which to do so and should anyway check the situation for the half and full year results publication.

Agreed, quite typical of shares on the up. No-one knows exactly where fair value at any particular moment lies. The other thing that could change which we all probably have some speculative idea about is IF Logiman have been selling into every rise when will they run out of shares to offload? That could help the SP in the shorter term ( however long that piece of string is)

What happened is unfortunately more complicated and made so partly by naming issues. There was CAR plc , which was the AIM listed entity. CAR plc had a wholely owned subsidiary called CAR Namibia which was the entity which actually owned Berg Aukas. To effect the RTO CAR Namibia (and thus Berg Aukas) was given as an in specie dividend to the original shareholders of CAR PLC ( WTI had 25%) thus turning CAR Namibia into a privately held entity. The other part of the deal was the issuing of a large number of shares in CAR plc to dilute out the original owners. WTI went from 25% down to 2.6% in CAR plc. This was then finally restructured and renamed as Pembridge resources. There is another item in the annual report on p4 under the heading Project Development Review. which reads "In December 2016, AIM-listed China Africa Resources plc underwent a substantial restructure, the end result of which is that Weatherly now directly owns 25% of China Africa Resources Namibia Limited, a private Namibian company and holder of the Berg Aukas zinc-lead-vanadium development project in Namibia. Weatherly also now holds 2.6% of LSE-listed Pembridge Resources plc (formerly AIM-listed China Africa Resources plc)." I spoke to Keith Ellis at the time about this as I felt it was very poorly explained and communicated to shareholders. We had essentially given up a share in an AIM listed company, which was at least in principle a negotiable asset for a privately held asset where WTI were in a weak minority position. As it has now turned out I needn't have worried but I still think it was poorly handled and explained at the time.

WTI was certainly awarded shares when the Berg Aukas project was spun out of CAR ( as Pembridge used to be called) via a kind of reverse takeover mechanism. Essentially the people that wanted CAR for its stock exchange listing agreed that the then owners would get the sole significant asset, Berg Aukas, as an in specie dividend plus a small percentage holding in the residual CAR as a non cash fee. Berg Aukas thus became a privately held asset largely between WTI and a Chinese company. The Chinese entity that had as a result a 65% holding in Berg Aukas (until WTI bought it a couple of weeks ago) are still listed as a significant shareholder in Pembridge but WTI's holding is now under 3% and is thus not declarable (unless they were to have some kind of board membership).