RE: Funding scenarios17 Dec 2023 10:27
Hi Jiving,
Thanks again. Some thoughts/observations :
.." Our problem is: raising serious development funds around our current mkt cap produces either negligible capital: 100m shares at 8p = under $10m, or vast dilution ie $100m = 1b+ shares. "
If you think we have problems, put yourself in Elphick's shoes ! With 82.4m shares and minimal shareholder dilution over the last 11 years, I can't see option (b) :
@ the current market s/p, his stake is worth £ 6.4m; @ a notional £ 5, he'd be sitting on a £ 400m+ payout. The BoD has no authority to issue 1Bn+ shares, and even if it did - @ current s/p he'd still be at £ 6.4m , with a reduced interest going forward of around 5% instead of his current 13.2%... all that for a paltry $100m/£80m, which still leaves an enormous funding gap and/or a much reduced project scope (a goldplated EPP ++?), so no near-term £ 5 prospect...and loss of Board control...and a lot of p*ssed off mates.
Upsum : v little upside and lots, lots of downside. Conclusion : ain't gonna happen.....
Option (a) $ 10m might cover a 'basic' 2-3mtpa EPP, scraping and trucking (?) to Franceville, but (a) then what? (b) not material in context of understood 'green ore' demand (c) no economies of scale (d) postpones later phases/payday. Some uplift to s/p as co is showing signs of life , maybe to 20-25p. Hardly exciting stuff.
So I don't see either happening.
OTOH, while I like parts of Driving's GLEN alternative, it does also look like being somewhat 'lower scale' and slower.
What if you were to combine bits of your original proposal and Driving's ?
(a) ZIOC issues 120m shares@ NPV £ 5 to a strategic investor (the Chinese EPC ?) to raise funding/equity capital for Phase 1. Total shares = say, 800m. (15% Chinese co). This implied value gives PI's a first opportunity to cash out. Note that GLEN would be diluted to 36%, which with Chinese 15% would give combined 51%....so maybe raise a little less?
(b) concurrently or immediately thereafter GLEN (286m shares out of then ?800m = 36% makes an offer (GLEN shares or cash equivalent to £ 5) to buy in enough of the free float to take its stake + Elphick's 82/800 = 10% (+ maybe a few favoured folk) + Chinese 15% (+?C-B 10%) to 90% (if that's the BVI threshold), enough to de-list/force take-out of the 'rump' PI's.
(c) GLEN can then parcel out/scale back its shareholding to bring in a consortium; Elphick + mates stay at 10+ %(materially) in the game; potentially pesky/pointless PI's are silenced, their mouths stuffed with gold - either cash or, if they take GLEN shares, an ongoing (diluted, indirect) interest in ZIOC's fortunes.
GLEN, meanwhile is in the driving seat , from (b) or (a)
PS : my (increased) ZIOC shareholding isn't tax-sheltered, so I may be talking my own book !
There are probably all sorts of practical (and maybe legal!) issues I haven't considered, but what do you /the 'team' think ?
ATB
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