Member Info for extrader

Hi again Mitch 984,

I just wrote : " Since Trahar appears to be a little more in 'marketing' mode, maybe someone should ask him for his views on the likely correlation NPV : M Cap ?"

That was , on reflection, a bit unfair on Trahar who isn't the one making the claim....and can't be expected to talk down ZIOC's prospects

Maybe someone should call out Michelin Man and ask HIM to give examples of real-world deals where NPV-based deals have closed. He claims to have 30+ years in the market, there must be an example or two over the years that would support his current specious equation NPV = potential M Cap...

ATB

Hi Mitch 984,

See my post of 27th March, where I tried to establish , from GLEN-related transactions, how NPV MIGHT translate into real world M Cap ie shareprice.

The examples I quoted came out between 1 and 3 % of NPV...and I haven't seen any counterargument so far.

That's because they're at the early, pre-committed finance stage, granted.

At the other end of the scale, I think we should recognise that no-one will give us NPV...or anything close .

Remember, NPV is an accountant's way of trying to level the playing field, so that we're comparing as far as possible like with like when considering an investment.

Which rational buyer would pay (using MM's conversion, I'll accept for the purpose of discussion, though I'm not clear about the underlying assumptions) £ 5-60 in order to get back the today EQUIVALENT ('cause that's what it is) of £5-60 over the next 20,30 or 40 years ? That's a long time to be exposed to product risk, country risk, technology risk, global pandemic or conflict etc etc.

So the read across, I would suggest is likely to be on a spectrum : a lot more than 1-3%, a lot less than 100%.

The nearest proxy for us that I've found appears to be Kropz (KRPZ), which is in the Congo, about the same stage as us, has a similar world -scale asset with convincing economics (potash) . And a S African owner, who will have (like the Chinese, maybe) a more confident take on Country Risk than most investors, making a 10% discount rate appropriatein his circumstances.

Kropz potash (19 Feb post) : "NPV" of $1,850M acquired for $ 40 M, implied worth MCap/NPV = 2.1%
The S African buyer was OK with a 10% discount rate in C-B, but his perception of country risk is relative. As, in fairness, would be a Chinese buyer, particularly if State or semiState...

Since Trahar appears to be a little more in 'marketing' mode, maybe someone should ask him for his views on the likely correlation NPV : M Cap ?

ATB

Look at 1620

Hi simonthezealot,

I THINK that AT is referring to the Mining Convention.

It's good to see the story being shared with a wider audience.

ATB

Hi all,

This from ENI's 2017 (latest available) A/R :

.." Congo : In 2017, the execution development phase of the Nené Marine Phase 2A production project in the Marine XII block (Eni operator with a 65% interest) progressed by means of: (i) installation and start-up of a new production platform; (ii) the construction of a sealine to export production to the Kitina hub (Eni operator with a 52% interest); and (iii) start-up of seven additional production wells. Planned development activities include the drilling of additional production wells with start-up expected in 2018 and the construction of a sealine for the linkage to Litchendjili hub in the block Marine XII. The development activities of the area include natural gas and produced water re-injection as well as the use of gas production for the power generation in order to achieve zero routine flaring. Furthermore with the completion of planned activities the associated gas will be used to feed the CEC power plant (Eni's interest 20%). In April 2017, Eni signed with the relevant Authority an extension to the gas sale agreement to feed CEC power plant with the gas production of the Marine XII block. The agreement includes also an additional supply of 35 mmcf/d.
... In addition, a project for the construction of renewable energy training and research center started in Oyo, [Ed.: Nguesso's home town and site of the 4th SEZ] in the north of the country. "

ATB

Wait ! There's more...

Michelin Man has got hold now of the same info and joins the dots to the 'deal' last week with COIDIC...

Except there IS NO deal : there's a 'heads of agreement', nothing more.

Meanwhile, rooting around to try and find out WHEN the future gas might actually be available for sale/consumption, I came across this article from L'espresso Italy, per wikipedia :

.."One of Italy's foremost newsmagazines, l'Espresso was founded... 1955l'Espresso was characterized from the beginning by aggressive investigative journalism strongly focused on corruption and clientelism within the Christian Democracy. In the 1950s, it uncovered major scandals in the health and housing industries....etc"

They write rather disparagingly about national treasure ENI thusly :

http://espresso.repubblica.it/inchieste/2018/04/11/news/new-scandal-shakes-eni-in-congo-who-is-behind-marine-xi-gas-field-1.320479

Worth reading to the end , since it wanders off-piste to other African countries in the middle of the article.

You can see why ENI (or its employees/connected persons) might be keen to , ahem 'monetise' their gas flows in C-B.

I'll resume my rooting around for any info re future gas production timings, but thought this added some useful context.

ATB

Hi all,

Two snippets on the power front : there are issues, but at least there's lots of feedstock in the pipeline - boom ! boom ! - that ENI would like to sell to the new station(s)…...

(1)https://www.africaintelligence.com/ama/railways-roads--ports/2019/...

02/04/2019 · ENI offers gas to help miners ward off energy crisis The Italian major is planning to offer mining firms a share of its ambitious future gas production from its Congo-B blocks. The solution to Congo-B's power deficit, which is taking a heavy toll on mining projects in the country , could come from the oil and gas players in the region.

(2) https://www.africaintelligence.com/ama/railways-roads--ports/2019/...

02/04/2019 · Transport hurdles and power shortages can't hold back Obambi and co.'s iron ambitions In the near-bankrupt state of Congo-B, global sector giants and local players are keen to develop the country's iron ore resource despite the hurdles standing in their way: poor transport facilities, a lack of power and massive investment.

Two stories on the same topic, may be it's 'hot'.

ATB

Hi all,

Wonders never cease ! The latest from you know who....

The sizzle : .."A HUGE development, #Glencore committed to invest a MATERIAL amount of the equity required to construct the mine in return for obtaining off take agreement..' This from an interview with Black Iron (Ukraine project) CEO.

The sausage : " March 21, 2019) - Black Iron Inc. (TSX: BKI) (OTC Pink: BKIRF) (FSE: BIN) ("Black Iron" or the "Company") announces it intends to complete a non-brokered private placement financing of up to 25,000,000 units of the Company (the "Units") at a price of $0.06 per Unit for maximum gross proceeds of $1,500,000 (the "Offering"). Each Unit shall consist of one common share of the Company (each a "Common Share") and one-half of one common share purchase warrant (each whole warrant, a "Warrant") entitling the holder to acquire a Common Share at a price of $0.09 for a period of three years from the date of issuance. ..."

followed by :

.."March 29, 2019) - Black Iron Inc. (TSX: BKI) (OTC Pink: BKIRF) (FSE: BIN) ("Black Iron" or the "Company") has closed the first (the "First Tranche") of two planned tranches of its previously announced non-brokered private placement financing of units of the Company (the "Offering"). The Company issued 17,508,440 units (the "Units") at a price of $0.06 per Unit for gross proceeds of $1,050,506...…...
A new strategic investor [Ed.: that's GLEN, folks] also participated in this Offering that brings VALUE WELL BEYOND THE CASH INVESTED AT THIS TIME. This investor has expressed an INTEREST to POTENTIALLY participate in construction financing and MAY also be able to assist in negotiations with other strategic parties that COULD make an investment to construct Black Iron's Shymanivske project."

BKI looks to have about 160 m shares in issue, so @CAN$ 0.06 has a MCap of around CAN $ 10M. GLEN's participation in the placement, assuming that take it all (25 million) is worth CAN $ 1.5 million and gives them 25/185 = 13.5% of the company. If they exercise the warrants (12.5 million @ 0.09 = $ 1.125m, they end up with 37.5m/197.5m = 18.9% of the company for an outlay of CAN $ 2.63 million.

More like a mini-chipolata, then...

This looks like an exercise in keeping the lights on. Maybe there's something coming along later......

Hardly what most people would understand as a HUGE development.....and unlikely to be a MATERIAL amount of the equity needed to finance a project costed around USD 440M, to produce 4Mtpa 68% iron ore.

ATB

Hi sooty,

Well, thank whoever asked ! I thought the question maybe a little sensitive, given that Trahar Senior has recently bought in to Binding Solutions, but to his credit Andrew handled it with a straight bat.

ATB

Hi Ironic,

…"The only real change since then was cold pellets...."

If you followed the IP, Trahar made it pretty clear that they'd kicked the 'cold pellet' side of things into the long grass, in view of the conservative nature of steel mill operators and the 'insufficiently proven' technology.

Sorry to deprive you of even that cold comfort......
ATB

Hi atg,

I'm commiserating with those who are currently feeling over-extended in ZIOC , after serial disappointments caused largely by serial uncritical enthusiastic exaggeration of timeline and prospects.

The 'Africa hands' have all said things are going to be protracted...and it's proven/proving to be the case.

I'm LONG- TERM positive; still just about 'in the money ; and will probably do a new tax year top-up for my grand-daughter - of about 10% of my modest annual contribution to her trust.

Having doubled up in last year's weakness, ZIOC is now around 4% of my investable funds : small enough for wipe-out not to matter (other than to my pride), large enough that , if the mooted 10x to 20x actually happened (barely £1 to £2, not a lot to ask) it would increase my investment pot by 36 to 76 %.. In the meantime, I only have to be irritated by the opportunity cost, at seeing other speculative shares perform better.

In other words, inconsequential down-side, material (if not life-changing, my life is already pretty good, touch wood) upside.

Horses for courses, each to his or her own.

Best of luck with your investment strategy, whatever it may be.

ATB

PS Have a look at the KDNC chart for how 'boosterism' has a nasty habit of coming back to bite people in the bum.

KDNC has a 10% stake in Macarthur Minerals, which signed a distress offtake deal with GLEN a week or so ago, prompting lots of "read-across "...

ATB

Hi all,

I echo sentiments of 'respect' for those who feel it appropriate to re-align their portfolios in light of the IP and its timing implications.

As John Maynard Keynes is reported to have replied, when someone was criticising him for doing something similar,
'When the facts change, I change my mind, sir. What do you do ?

It's not helpful that Michelin Man elsewhere (who has signally failed to comment on - or apologise for - the lack of 'anticipated' impact of the IP) has bounced back from that set-back and instead chosen to repeat the now 'old news' about how …" shortly after the ambassador's comments, Brazzaville ministers sign with China's COIDIC an agreement to build a power station - with specific mention of the new port...."

As I said last Tuesday, when this was first floated : a Heads of Agreement or Memorandum of Understanding is NOT a contract...or anywhere near it. Also

…"And you'll see from the translation jay12 kindly provided that the Chinese are still demurring, whilst the Congolese are bigging things up : note their comment that there's lots still to do. Specifically, an Environmental Impact Study to be undertaken (how long were we waiting for ours, remind me ?); joint venture finance company TO BE SET UP, for businesses in ALL SEZ's; oh, and land expropriations TO BE COMPLETED (so far only preliminary survey and compensation costs estimated) : this was supposed to be finished last August.

I posted 11th March that the Chinese were reportedly baulking at being expected to pick up the expropriation bill :

"..in a Feb 27 update on this topic, MaFulin told us that land expropriations (point 3 of 5) was the NEXT condition precedent for a deal, suggesting that they hadn't happened yet.....and AIUI the Chinese have so far demurred on being asked to pay the associated expropriation compensation costs of $50m or so (maybe on the high side for 700-800 Ha of land ?)."

Michelin Man does genuine PI's no favours with his continual, uncritical 'boosterism'.

ATB

Hi Rafaley,

Good summary !

I particularly endorse your comment re ' the port/IMF can change the field of play' : I continue to believe that the EPP is a useful time-filler (notice : no details given re stand-alone economics or commercial viability) whilst we await for the fat lady to sing...

ZIOC is a strong candidate for the 'patient money / mad money' (take your pick) end of anyone's portfolio.

ATB

Thanks, Sooty ;->

ATB

And again,

What was the capex estimate for 'own port' element of 2014 Study, which would be a saving if the Chinese build it instead.....

TIA

Thanks Sooty,

They've not said anything about cold palletisation / Binding Solutions (in which Trahar's Dad is involved). What's the status there ?

TIA

Hi all,

US$ 1M to upgrade 173 Km of roads to Franceville ?

I can't ask questions, could somebody clarify ?

TIA

Hi atg,

.."he said the roads were too bad, no rail etc for EPP to happen. Looks to be totally wrong..."

I think he was mainly questionong the economics - remember all the stuff re truck size, fuel consumption, journey turnaround time , etc.

Although the EPP is supposedly the nearer term proposition, we've not been given any indication of revenues , cashflow or - dare I say it - profitability ? Never mind any "NPV", which they're happy to provide (after some basic tweaking - although they do leave in, as u point out, the earlier self-operated port assumption) on the more distant Phase 1 and 2.

From what I've seen , this looks to be a 'filler' whilst they await developments on the real 'jam' - IMF debt deal...and the Chinese cavalry coming over the hill with power and port...

ATB

Hi adoubleuk,

Not sure if your Q re CA warrants has been answered , but today's RNS gives the state of play :

…"As part of its 2016 fundraising programme, the Group issued warrants to Crystal Amber Fund Limited to subscribe for up to 23,333,333 Ordinary Shares at a price of GBP0.20 per share. These warrants expire in May 2019. If the warrants are exercised, Kerogen Investments No. 18 Limited is entitled to subscribe for up to such number of Ordinary Shares, also at a price of GBP0.20 per share, as will result in it holding the same percentage share capital of the Company as it held prior to those warrants being exercised. …"

They hadn't been exercised at year end 2018, they will have to be exercised some time in the next couple of months. Which will presumably trigger a pro-rata issue of shares to Kerogen.

HTH