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I now think that this will need to be paid off at FS.
Two ways to do that , a roll up bank loan or equity raise.

The main reason is that if the loan is fully used at production it will be the full 50 million plus interest accruing.

GGP will also have funding from the banks which IMO at production will have repayments kicking in.

Because of the non take up of the 5% by NCM, payments to GGP have changed from a non-cash transaction to a cash transaction.

The terms of the NCM are 80% of cash due to GGP will be used to repay the NCM loan.

I see the implications as these,

- Non cash to cash will mean a significant delay to first payment to GGP.

-Ore Mined- ore processed- customer receives gold/copper from NCM- Customer does their checks /approval process- customer pays NCM by their terms 1month after approval?- NCM pays GGP by their terms of business 1 month?.

It could be 5 or 6 months from ore being mined to cash being received.

And on payment terms of 80% that means that of the 30 million estimated by Bamps that will be due to GGP we will only get 6 million.

If i was in a bank consortium lending say 75 /100 million to GGP i wouldn’t sit behind that loan especially as it has first charge.

So my conclusion is that it will be paid off.

So the cornerstone investor is helping GGP to raise capital, GGP is dealing with the banks so i guess they will be talking to II’s. GGP still has circa 600,000 million shares that it has the ability to place before they run out in December.

Should GGP need to rely on funds from those shares and the market gets to know about it, that might be problematic.

Whatever happens i think that the cornerstone investor will be paid in shares for their efforts so IMO they will receive more shares.

My summary is that the funding still to be agreed will have a possibly signifiant impact on the SP,

Bank loan roll up at decent terms SP rises
equity financing + Bank loan at comparable rates SP falls
Some equity financing plus Bank loan roll up at better terms perhaps neutral to the SP.

It's a wait and see for me.

Thanks Bamps very quick getting it out and away...

Thanks Bamps,

Could i ask how long you would estimate for the ore extraction to be done, once we have reached the ore and can commence mining properly?

Months or years?

Thanks

Very helpful

TBF to Freddie. SD did say a few interviews back that the II;s wouldn’t invest because

1. The great gains had been won
2. The people who he talked to wouldn’t take the risk as they didn’t want to lose their jobs.

Given that SD knows them from the past and they are a cornerstone investor now, i would surmise they didn’t like the price before and they do now.

Hi Monty, this is my view and it’s cautious.

The current loan is 8% + libor ( now 4% from basically zero last year) rolled up quarterly which gives circa 12.5%
Currently the 10year Gilt in the UK is 2.85 and in Australia about 1 percent higher, IMO those will go up as short term interest rates will increase.

So the lenders will want a premium over risk free gilts., and they IMO will use the current terms as a starting point, GGP will of course say that loan was set up in times of great uncertainly about the asset and so guide lower.

I personally doubt they will give terms much less that 6% plus Libor. A couple of years ago a company i was invested in re-financed at less than 3% + Libor but the gilt rate was almost zero as was Libor.

So i think we will be stuck with high rates going forward.

Until i see the loans / bank debt RNS’d i am taking the view that more equity will be issued to get on top of this loan and then be debt free going into bank negotiations.

It might cost me a couple of pence buying back in to where i was before, but i am wary of another equity raise , if there is another one I am hopeful it will be at the same price as today or higher.

But who knows certainly not me.

GL

I think we will need to see some top negotiating from the GGP team to manage this.
SD made it clear in his interview that that 50 million would be used up, or almost used up, he didn’t give a date but say by FS.

The loan has three terms that are important

1 First Charge
2. The current interest is 12.5%
3. It will be paid back by NCM by them retaining 80% of the earnings due to GGP on monthly basis until it is repaid.

So at current interest rate if the loan tops out at 50 million , interest payable will be around 6 mil per annum.
Say first earnings are 18 months away from Dec 2022 the loan will be circa 60 million
The impact of that will be that the new bank borrowings, the interest will be rolled up, until the NCM loan is paid off.

I remember Bamps doing revenue estimate of cash coming to GGP after mining starts but i couldn't find the post, but that number is going to very important. It will need to be enough to cover the monthly interest payable to NCM and reduce the principal, and very quickly.

The new bank loans will need to be significantly less penal than the NCM as all we will be doing is replacing one for the other.

I will wait to see what the terms are for the loans, before buying again.

I posted once before in the past about my preference for issuing equity to get rid of this loan its a drag IMO.

GGp had almost billion shares that could be used to raise capital under its existing mandates, you bet that anyone wanting to invest will be after the rest of them IMO

I think they will all be used.

Then the company will be in great position albeit from lower base

The arrival of the Chairman will have put every major action on hold until the 6 month review was over, we will know more next month.

4% interest compounded since 2016 is fantastic as well

The mid cap fund was up 10% in July i would think that redemptions will have slowed a bit seeing that jump.

THG has a gross margin about 10 points below ELF , elf makes a profit .

I think the strategy is for THG is to drive volume by keeping a very competitive price point without increasing costs pro Rata.

This to be achieved by the large capital investment in technology and processes.

If we see progress towards this that will be very encouraging.

- First quarter was strong IMO with decent growth
- Estee Lauder reported last week ( Y/E June) their last quarter Ie April to June was 8% above estimates after a poor 1st Quarter , if we follow suit that will be grand.
- Guidance on Growth and EBIDTA was maintained in the last report
- MM guided margins down at the end of the last quarter due to increased commodity prices and thought they would reduce in the second half of the year, they have in fact reduced more quickly that that. So perhaps an uptick on margins.
- The last three broker reports are all above the current SP , they range from £1 to £2.20, Barclays cited Nutrition a a great proposition whilst Citi cited beauty. So two out of three ain't bad.
- Of course the director buys
- The work on dividing the business up into discrete units has been done and reported to the market. With an upbeat statement regarding the flexibility this gives.

Finally i feel that MM has become less Social Media focus is keeping a lower profile and quickly retracted his last announcement fast.

I am fairly hopeful of un upbeat report in September , and TBF i should be as i added again today.

GL

HH I think the reduction will be CHRYS. They are worried about cash going forward although TBF they were a little more upbeat today than the last report.

If there are redemptions from the JUP fund they will sell the amount of CHRYS shares that they need to meet the redemption, that could well be part of the reason that CHRYS is going down apart from the down value of Klarna REVB and THG

JUP will be selling down their holding of THG that they have in the fund as redemption come in.
and if they want to reposition some holdings.

One or two posters on CHRYS are quite bullish about the future of CHRYS given the discount to nav.

1 pencil I don't think that how it works with the fund.

Klarna for example has gone from 27 percent of the fund to 6 percent of the fund due to the 80% down value at the last funding round.

As the value of the holdings go up and down the percentage of the total fund value changes.

We were over 8% of the fund at one point and now are 1.2.

Our SP has fallen faster than the value of the fund so our percentage falls.

CHRYS Nav update is due anytime, it will be interesting to see how much THG they have. their last buy was 15 million pounds at 195.

The article mentions avoiding price discovery event, i think that GGP should now sell 2.5% of hav to the highest bidder, certainly 2.5% of the 85 million offered by GGP would be enough to clear the NCM debt and leave blank slate for discussion with lender for the next phase.

That would give a price discovery event that would IMO be very helpful to GGP by giving higher value to HAV, get that 12.5% interest being paid on the NCM loan off the table and allow future funding discussions to be be independent of any NCM involvement as the first charge would be dissolved.

Interesting times.

TBF I can get a bit paranoid. That has been on my mind since my last post here.

The main worry for me is that NCM don't take up the 5%.

That means that GGP will have to find a lot more cash. The loan terms include that it can be paid back when the first ore has delivered cash. I think NCM will take 80% of GGPs she until the loan is paid in full.

NCM have a first charge on the asset and as we know, because SD told us, that the banks won't lend with NCM having a charge against the asset.

Come the FS- There will be a funding discussion between the JV partners either for the next year or to first ore. Once that is concluded GGP will have to show that they have the funding.

So 72 million was the number if i recall but that will have gone up quite bit IMO given inflation and will be revealed at FS driven by NCM

GGp will not be able to get a secured bond away because of the charge, and so it will have to be an unsecured bond, if they go that route and that that will cost a lot. The current interest payment on the NCM loan is 8% plus Libor which today is 3.96 rolled up quarterly. That equates to 12.5 annual.

I would suggest that an unsecured bond will need to be at least that.

They could perhaps do an unsecured convertible but of course that is just delayed dilution.

If GGP try to sell the 5% to another party NCM has first refusal, so if you were a lender would you go through DD and so on with the chance that NCM will just buy it anyway? I don't think they will.

I think that puts GGP in a very poor position.

We need the money for the 5% if they agree it and ideally immediately not after a couple months at NCM timetable.

Finally SD has basically told us there will be fund raise, he wants to have 150% of operating expenses going forward as buffer ( very sensible IMO),and he ruled out a rights issue when he was across.

SD and his team will be all over this of course but it is not an easy route IMO

It's always about the funding when you are the size of GGP

He seems very well respected, i imagine the big earners in the industry will take positions in the next weeks and months.

Very interesting timeline, it looks like he or much more likely IMO the board decided that he should leave. Either at IPO or shortly after.

The new FD resigned her position with her last company on the 31st December 2021, she was due to serve 6 months notice but Joined REVB in Mid May.

The recruitment process to find and appoint her would be a minimum of 3 months and could be as much as 6 months.

So near or just after IPO.

In order to make the decision to join REV she will have been all over the books and had some serious questioning for the board. So IMO she must be confident that issues that she is facing can be dealt with with limited damage.

Of course it could be that the previous FD made the decision to go, but i doubt that.

GL