Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Sorry, I should clarify, if it got to Phase 2 Y2, and MMA still do nothing, then OMI will take ownership of the JV, 51%. This brings a whole host of legal complications as this ownership technically permits OMI to spend $4m per year on the project yet have MMA pay the invoices! Tic tok Brad, start the clock, give us Phase 2 start and put pressure on MMA.
LW, not sure why you are saying I got it wrong, I have to challenge you on that. My statement is fully correct.
I did not mention the carry over from Phase 1 which was clearly covered in other posts. Yes, it counts towards Phase 2 Y1 obligation so MMA only need to spend $350k, or pay OMI $350k to fulfill this. In my view they have no intention of doing so, which is why MMA do not want the clock to start ticking on Phase 2. In Y2 MMA needs to fund $4m of drilling or pay OMI $4m, or otherwise exit the JV. It would be a shock if it got to this stage though, surely not? But in order to protect our interests the clock needs to start.
We went from "they can bugger off" to "give them as much time as they like while our share price is decimated".
Unacceptable. The market is demanding a plan to resolve this.
The thing that angers me most around OMI handling of this is that there appears to be no plan, even though as Brad admits this outcome was not a surprise to them via their "chats".
Simply saying that the ball is in MMAs court at present with no defined timescale is not acceptable. How did he think the market would react to this? Brad says "we can resort to legal action if we think they are delaying". Ok then, at what would point does it become unacceptable? Next month, next year, when exactly?
It is also not true that "there is no benefit in MMA delaying" as Brad claims. I pointed out in previous posts that once Phase 2 begins MMA need to spend or pay OMI $4m per year. Why is OMI ignoring this? Are Newmont pulling the strings on OMI decision-making? They are a 15% shareholder after all.
It is also not true that there is no defined timeframe between Phase 1 and Phase 2. The contractual timeframe is 90 days. Is this just poor legal advise given to the company? Or Newmont making all the decisions?
If I was CEO I would be firstly trying to resolve amicably by asking MMA to give a target date as to when they plan to formally enter Phase 2. If they cannot or will not provide this, then we are into the realms of dispute, and the next step is to write to MMA advising that the contractual timeframe for commensing Phase 2 has lapsed, give them a reasonable time period (30 days) to enter Phase 2 otherwise hold them in default (s14 of the Agreement). Default means ownership will revert 100% to OMI.
We are in limbo at present which is the worst place for a small company with no revenue stream. I am trying to find a silver lining here and one possibility is that majors will have a strategy and some excellent projects simply do not fit in it, majors pass, then those projects are picked up by others and become a success. Somebody mentioned GGP as an example recently, and I believe Newmont passed on nearby Burrita which was subsequently proven up and sold for $1.2b. I would like to hear other examples. Seems like a longshot to me, if Anza was Tier 1 why would both majors pass?
I wonder if Brad is getting (bad) legal advise from AGEOS? I have posted my legal analysis for free here and also emailed OMI with the question for the webinar. The contract states 90 days from Phase 1 completion to setup the new structure for Phase 2. Very clear to me and it is about time that OMI put our "partners" on notice of this.
I guess most here bought in because of the backing of a major JV, with "free funding" of the project to PEA stage, with at least $30m of investment. Now that the Phase 2 $20m of investment is off the table my investment case is also.
I also do not accept Brad's comments about there being no time limit between Phase 1 and Phase 2. Utter non-sense.
Very disappointed.
Well, it seems the chat on this board has forced an early explanation rather than wait until the webinar.
JV partners, or at least one of them, want out. But if they do not enter into Phase 2 they lose all rights so, they want to enter into Phase 2 to get their 51% but want to delay this because once the clock starts ticking on Phase 2 they need to spend or pay OMI $4m per year. This is bad for us unless we can stop them progressing to Phase 2, legalistic and against terrible for us to get involved in such a dispute. One silver lining is if MMA can get a big buyer for their 51% valued at X and then we have a clearer valuation for our 49%.
My shares are in a SIPP so I cannot just move them out to a completely new non-UK broker, which would require me to open a SIPP with the new broker. No, I will just hold the shares I think, as I will not accept being a forced seller.
Director buys! Small but still better than nothing.
AGEOS, "enter into" means register or otherwise give legal effect to. The second part cannot be clearer, "legally establish a JV company" (I have summarised as the types of company available are irrelevant). The words are right there, no implication or inference needed.
It is clear that the 90 days was intended as a time period for the parties to "get their ducks in a row" for the Phase 2 JV company, subsequent to which the Phase 2 clock starts ticking. Brad will need to answer why OMI have decided that this interim period should be extended, especially in the face of project "care and maintence" from our partners, which usually means medium-long term. Reading the agreement I am furious with the delay in formally beginning Phase 2, it is against OMIs interests to permit delay on this.
And the date of creation of the new company is the date that Phase 2 begins. This is crucial for OMI. Brad needs to explain why they are letting MMA delay this.
AGEOS, thank you, but I respectfully disagree. The whole paragraph reads "within ninety (90) days following delivery of such Phase 1 Earn-In Notice to Minera Anzá, the Parties shall enter into the Mining Company Constituent Documents for a joint venture or partnership agreement or other contractual arrangement, or legally establish a limited liability
company, joint stock company, or other type of legal entity, as may be acceptable to Newmont and
Minera Anzá, each acting reasonably." This clearly means that the new company, in whatever form is deemed applicable/lawful/advantagious to to the parties is created within 90 days of Phase 1 earn-in completion.
AGEOS, I do not know how I missed your post from 24th April, I was not aware the Agreement was in the pubic domain, so thank you for the link. I have read the agreement, I hold an LLB so this is not a layperson attempt, and things that stood out to me on first pass are:
1) MMA completed "Phase 1 Earn-In" back in September, RNS at the time confirmed it. The new company to crystalise the new ownership stakes 51% to MMA was to be formed within 90 days of this earn-in which has not happened. There must have been some agreement made by the parties to extend this; I can perhaps understand some goodwill from OMI, but at this stage the goodwill must stop. The new company must be formed to begin Phase 2. In the absense of any plan to restart drilling, OMI must serve notice of breach of s9(a) which means OMI can terminate the JV and retain 100% rights over Anza.
2) Exhibit C s3(d) sets out the consequence of Phase 2 non-performance, once it has started. If MMA do not spend $4m per year, they need to pay OMI the cash directly. If they do neither, they will fail to complete Phase 2 and OMI will own 51% stake in the JV rather than 49% (Exhibit C 2).
Throwing $2m at this a few weeks ago only for them to not progress/default on Phase 2 does not make any sense to me at all. There must be some other negotiations ongoing around ownership and/or management of the project.
Scrap that, 8p is optimistic considering that the question will remain as to why two of the top miners in the world are potentially walking away from the project. Eagerly awaiting the webinar.
LW yes! I agree with you. TPI note is clear but so is their disclaimer, I would rather get the confirmation of contract terms from OMI directly and expect price to return to 8-10p region if Brad confirms in the webinar "100% ownership will return to OMI if MMA do not spend $4m per year once Phase 2 formally begins" (caveat $3.65m carried forward which buys them some time).
I agree with LegalWolf's 5 points. One of the issues for us at present appears to be that Phase 2 has not yet formally started (as far as I can tell) this is one of the questions I emailed Brad. We need the clock ticking on Phase 2 as thankfully it appears that an MMA default/failure to spend $4m per year, will return 100% ownership to OMI. This is certainly a silver lining that means pressure is on MMA once Phase 2 starts, but I am hesitant in relying on TPI for this, will need OMI to confirm. I wonder if there is any protection against MMA dragging out the transition? We need the clock ticking on Phase 2.
Found it in my emails.