Member Info for extrader

This whole thread is speculation about possible ways of structuring a deal to monetise ZIOC.

Vet10 pointed to one structure that (IMO) appears to offer useful read-across...

HTH

Just shy of 6 months since the ‘simplification’ and H1 reporting deadline 6 weeks away…

It's an ill wind, etc...

As highlighted in SRT's 3 May RNS topical (Nordstream) reference to .. "potential threats to critical infrastructure such as undersea pipelines...", these vulnerabilities are getting a little more airtime...

hxxps://thespectator.com/topic/americas-undersea-lifelines-cables-fiber-optic

It is out of sight and usually out of mind, but recent events are forcing Americans to focus on the security of a vast network of undersea cables that the nation depends upon.

In early February 2022, cables connecting Taiwan to its Matsu Islands off the coast of China were cut in what appears to be an act of sabotage that Taipei later ascribed to Chinese vessels. It took nearly two months for the internet to be up and running again, highlighting the importance of a largely ignored element of a country’s critical infrastructure.

etc, etc.

Hi Vet10,

Thanks!

So we have an SWF - Mubadala- fronting the money for a cross-GCC venture, with project management by Vale...

See https://en.wikipedia.org/wiki/Vale_S.A.

Apart from being the largest producer of iron ore and nickel in the world, Vale also produces manganese, ferroalloys, copper, bauxite, potash, kaolin, and cobalt, currently operating nine hydroelectricity plants, and a large network of railroads, ships, and ports used to transport its products.

Iron ore; other 'overlapping' C-B minerals expertise; hydro expertise; rail, shipping and ports expertise....

It would be interesting to find out how much of the actual construction work Vale itself undertakes vs how much they subcontract.

All good stuff.

It's 1 item on a checklist of 16 bits of common-sense advice.

Here Barclays invites you to 'explore ways' to monetise inventory.

Elsewhere - 'supplier contract and payment terms' - they tellingly invite you to ' consider the range of trade

finance solutions AVAILABLE'.

The report was written Sept 2020, so they should have had enough time to get up to speed on SYME's offering.

GLA

The RNS extract has to be read (IMO) as part of a roadmap and a 'for sale' sign : ZIOC (as presently constituted, ie with us as shareholders) isn't in a position to stump up all or any part of the 'funding required for the development of the project' .

.."Once funding has been secured [we have been bought out, outright or with a 'free carry' ie no funding from us] and work on the development of the Project has commenced [the new majority owner is getting his ducks in a row], the Company [of which we will have either no or a minority shareholding] expects to recruit an executive team to meet the demands of the Company [as then constituted] and the Project..."

At most, we [the current shareholders] would be in Ma'aden's position, with a non-operating, (tiny) minority equity position, requiring minimal management involvement(other than monitoring the dividend payments...... ;->).

AFAICS

You need someone ( the adult in the room) to project manage the whole complex coordination of infrastructure - port, roads, rail, water, power - for the various potential/identified customers (who will then each need their own dedicated project managers) : ZIOC, Sapro Mayoko, the potash/phosphate co's; 'any other business' eg bauxite processing.

Remember that there's little local infrastructure worth speaking of. You're basically boot-strapping a country. The US Corps of Engineers did that for Saudi, starting in the '50s.

Because of their broader skillset, these guys would be my dream team https://en.wikipedia.org/wiki/Bechtel.

Maybe the IMF/World Bank could strong-arm C-B into 'nominating' them (or the various project end-users swallow their pride and agree that they're the best compromise candidate?).

If DSN was halfway sensible (or listened to DSK?) and there's an impasse, he/DSN Jr could even seize the initiative and make the appointment of Bechtel ( or someone of equivalent calibre) a Condition Precedent to any deal.

Otherwise, I suspect it'll be like trying to herd kittens.

jonny velloza ran bhp's biggest mine, back in the day. but that's a whole different proposition from project managing a start-up. glen is 'a dealer, not a digger'.

"round up the usual suspects" would be my guess : vale, as mm has 'coughed' and i've previously suggested ; one of the indians (arcelor mittal, tata, vedanta); one of the aussies (anglo, bhp, fortescue; han****; even rtz ? (synergies); baowu/china inc......

let's hope there's a lot of folk burning the midnight oil atm!

The mechanics of Simandou's model is set out in more detail by RTZ's oppo, the Winning consortium, see https://wcsglobal.com/en/1054.html

in particular in the Notes to editors:

Shareholding of La Compagnie du TransGuinéen will be split between development partners Simfer Jersey Ltd. and WCS each receiving a 42.5% equity share and the Government of Guinea taking a 15% free carry equity stake

WCS is a consortium of Singaporean company, Winning International Group (45%), Weiqiao Aluminium (part of the China Hongqiao Group) (35%) and United Mining Suppliers International (20%). WCS is the holder of Simandou North block 1-2 (with the Government of Guinea holding a 15% interest in the mining vehicle and WCS holding 85%) and associated infrastructure.

The Simfer joint venture comprises Simfer S.A., the holder of Simandou South Blocks 3 & 4, which is owned by the Government of Guinea (15%) and Simfer Jersey Limited (85%). In turn, Simfer Jersey Limited, is a joint venture between the Rio Tinto Group (53%) and Chalco Iron Ore Holdings (CIOH) (47%) – a Chinalco-led joint venture of leading Chinese SOEs (Chinalco (75%), Baowu (20%), China Rail Construction Corporation (CRCC) (2.5%) and China Harbour Engineering Company (CHEC) (2.5%).

The CTG structure is single-product (iron-ore) covering a split concession , with a 'China Inc' theme to the integrated (rail and port) infrastructure providers, so has fairly clear 'sponsors and drivers'.

I don't think we can say the same about ZIOC (yet), it'll be interesting to see how the various ME parties so far 'in the frame' subordinate their individual interests and egos for a collective good : up to now the track record of 'cooperation' amongst the Gulf Cooperation Council states has been indifferent, to say the least (members often taking opposing sides of proxy wars in Libya, Syria and Yemen, for instance).

More relevantly here , in the past they've succumbed to 'me too' projects (industry parks, SEZ's, airports, airlines (think Emirates AND Etihad [within the UAE], squaring off against Qatar Airways..) and port management (newcomer AD Ports and the longer-established DP World).

With all of the above, I think the field is still wide open. I hope we'll be 'surprised...and delighted'

GLA

PS With the Congo Basin being the second largest rain forest in the world , after the Amazon, I'm sure there's lots of scope on your doorstep for earning additional 'brownie points' on the ESG/green metric....

Thanks for this. Confirmation bias may be making me read too much into this, as to how the Chinese are looking at things :

.." BaoWu chairman Chen Dorong said the availability of clean energy and ore make Western Australia ideal as a SITE for the new facility...but is also eyeing WEST Africa, South America and Saudi Arabia as alternatives..."

Working backwards and thinking globally, S America has the disadvantage of distance, S Arabia and WA a lack of [high quality] ore, with WA additionally scoring low on the [political] dependency/reliability ('Five eyes') front.

On a blended basis, WEST Africa, otoh scores quite highly on those criteria.

Hmmm...

.."An incoming investor might well privately conclude that the discount rate should be lower.."

And therefore they should pay more than necessary?

Well, there's a first time for everything, I suppose.

.."Whichever team of select merchant bankers and negotiators Jumelles engage to do a deal will likely appreciate this..."

It's the eventual buyer you have to convince, not Jumelles, the seller.

In any case, let's hope they choose the sort of merchant bankers and negotiators who recommended this - Switzerland - transaction :

.."Per Saudi Crown Prince Mohammed bin Salman's order, the government-backed Saudi National Bank made a $1.5 billion investment in Credit Suisse Group AG last year - that now is almost down to zero following Credit Suisse’s emergency merger with UBS Group AG this week.

Billions of dollars in investments have also been washed out from Qatar’s sovereign fund and the Saudi-based Olayan family..."

;->

PS Asian investors and others are suing Switzerland over the related Contingent Convertible losses that they've sustained, see https://www.bbc.co.uk/news/business-65467019

Country risk is often mispriced - or not priced in at all.

QED

Your NPV 'evidence' is based on Zanaga's document.

This, of course, is a selling document, to PI's and to outright project buyers. It's hardly likely to address any country risk discount, is it?

Apart from anything else, that might seriously upset your host government ;->

A good starting point for the 'country risk discount' is usually the price that its sovereign debt trades in the secondary market (though that's just plain vanilla political/governance risk, not execution risk as in a project).

I'll try to dig something out re C-B.

Point re pellet premium effect on Zanaga NPV noted.

But - unless I've missed something- NPV essentially looks at time value of money generated and does a DCF exercise.

There's no account taken AFAIAA of the considerable country risk discount that needs to be included, as it will by any prospective buyer; esp in the present case, exemplified by the Liouesso Hydro project shambles I cited earlier today, with actors (Obambi; Nguesso; and Ghezouba) that any buyer of Zanaga will likely be working with/dependent on.

Don't get me wrong : I think we're closer to a 'monetisation event' than we've ever been before....but I have serious reservations about how much and how quick the monetisation.

I'll be happy with a 'big discount for early settlement' - but appreciate views will differ.

GLA and ATB

I think this is a bit curate's egg-ish.

Rosatom through its affiliate Rusatom Automated Control Systems (RASU), is planning to build small hydropower plants (HPP) in the Republic of the Congo, with a 500 MW initial capacity. The country selected 37 sites where the construction of HPPs with a capacity between 1 and 10 MW is possible.

See https://www.enerdata.net/publications/daily-energy-news/russias-rosatom-plans-develop-500-mw-hydro-capacity-congo.html

Separately, as you say, CGGC and Energaz have proposed Morala and Nyanga.

CGGC is China Gezhouba, a major dam constructor (and 22% stakeholder in our earlier great hope, COIDIC).

Energaz is an Obambi vehicle, run by this lady

https://www.interholco.com/en/media-news/news/236-the-future-has-a-beautiful-energy-says-congolese-entrepreneur-vouala-obambi

.." As the only woman manager of an electricity production company in the Republic of Congo and the youngest in Africa, Ms. Obambi is participating in a call for tenders for the operation of the Liouesso hydroelectric power plant..."

The auguries aren't particularly encouraging: Liouesso is up-country in DSN's home town. The government-owned power station was commercially commissioned in May 2017.

https://en.wikipedia.org/wiki/Liouesso_Hydroelectric_Power_Station#History

In May 2022, the government of the Republic of the Congo signed agreements with CGGC and ENERGAZ, a Congolese IPP, to REHABILITATE [my caps] this power station, whose output had drastically reduced and to expand the distribution network of the power plant WHICH IS NOT YET GRID CONNECTED.

This supports the argument that Obambi (+family) is DSN's front man; it also supports the claim of unbelievable incompetence and mismanagement. Not a great combination, IMO.

On a brighter note, Nyanga is a lot closer to Mossendjo than to Zanaga, Mossendjo being the likely connection point for any rail spur, if folk go down the old Congo Ocean railway rehabilitation route.... this being what Obambi's used for the so-far miniscule exports from SaproMayoko.

All AIUI.

ATB and GLA

Hi atg,

All the Ks, eh?

Re Kanga, its coCEO Stephane Rigny seems to have come out of this 'colourful' company https://en.wikipedia.org/wiki/MagIndustries, which curiously refers to a claim over a Koilou potash resource....

Its private atm, so not of interest to me, whereas KP2 and KRPZ might be worth a flutter , on the 'rising tide' principle..

ATB

My take is that, under Ivan's leadership and known views, ZIOC / AT were pretty much left to their own devices, to market and promote Zanaga ('spin their wheels') as they liked/could, with GLEN a passive onlooker, having ultimate say.

ZIOC (then) was never in the driving seat, even at a corporate level.

Hence the ongoing initiatives and business development efforts, against an unhelpful corporate and macro business (ore price) environment.

The cake is pretty much ready now; Gary appears more receptive to opportunities; any counterpart that matters will know the opportunity that Zanaga represents.

Hat tip to AT for beating the drum during the darker periods, I think ZIOC (as now re-constituted) has set out its stall, made its offering clear to all and can afford a period of 'masterly inactivity' to let others make their interest known ....and their first moves.

In baking terms, I believe it's called 'letting the dough rise overnight'.

;->

..” Spending time under water is very rewarding. Better class of company..”
Very droll.
As it happens, I’m just back from a fortnight diving in Southern Egypt.
It’s rewarding with or without equipment.
When you’re free diving , there’s nothing to match that fresh air on regaining the surface.
Hence my comment.
Best of luck!

Hi Peakhope,

.."Extrader - let’s be having you where are you lol you were wrong :)..."

I'm genuinely pleased for you and others that your book losses have shrunk : been there, done that, got the T-shirt.

The fact remains that most LTH are still seriously under water, hopefully they're nearing the surface (ie break-even).

As a wise man once said, " This is, perhaps, the end of the beginning...."

ATB