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Hi MM,

Per your 10:42, you rightly point out that Edison's numbers are based on ZIOC 'atributable value' , but I think you (and Edison) fail then to address how much of that 'attributable value' will actually be available to enjoyed by the shareholders owning the current 288 m shares.

From pp 5 and 7, Edison addresses the issue of how to fund 'our' (ie the current shareholders) share of capex.

Edison assumes a 70:30 debt : equity split and that …"ZIOC’s share of equity ($160-400m) could to a large extent be financed using the proceeds from a partial sell-down of its interest in the project (20-40%) or via a pro-rata dilution.

What Edison is suggesting is that EITHER we'll have to give up a chunk of the 'attributable' cake to a new strategic investor ie 'our' share of the NPV is reduced OR there are a lot more shares in issue ie 'our' share of the NPV is reduced. Either the numerator or the denominator change ...or maybe it's a bit of both.

In any event, because of the above , I think the share of the eventual NPV that current (288m) shareholders can expect to receive is waaay below your double digit no's.

As I've posted earlier, I reckon 1 x GLEN equiv may be possible, with a fair wind.

That's ONLY 20x where we are today.

Cue cries of 'deramper'. The more astute will also recognise that I'm unlikely to be short.

ATB

Hi MM,

Using your link, the Edison report best case NPV (schedule 10) shows an NPV of US$ 7660M for ZIOP, based on $150 iron ore price and 7% discount rate.

Half of that NPV (ZIOC) is $ 3830 M, which over 288M shares = $13.30, which is £ 10.20 per share.

This is the most optimistic scenario I can see per Edison, have you extrapolated or tweaked in some way - in which case you really should include.

By the way, Champion Iron Ore ( massive Govt contribution to equity and debt) and Canadian political, country and business risk - which has been used as a reference point here - based its NPV calculations on 8% discount rate.

www.championiron.com/champion-iron-mines/champion-announces-preliminary-feasibility-study-results-indicating-3-3-billion-npv-30-9-irr-west-east-deposits-consolidated-fire-lake-north-pr

If you apply 10% for C-B and the other Edison assumptions, ZIOC share of NPV is £ 6.30 and if you apply 15% it is £3.15.

No buyer will pay 100% of NPV, by definition they'd have better use for their money.

ATB

?

Hi shaun86,

Context.

Why should the IMF give any credibility to a new anti-corruption body (to be set up) , proposed by the President, when the existing body (which he also set up) has signally failed to address existing corruption, mostly in his own Nguesso family ?

An execution or two ' por encorager les autres' would show some seriousness.

ATB

Hi MM,

Wrong (again).

Here's another extract from the link you just posted :

.."De quoi garantir le soutien du FMI ?
Le projet d'une Haute autorité de lutte contre la corruption intervient à un moment où la justice suisse a condamné fin août un ex-négociant de pétrole au Congo pour versements de pots de vin. Une affaire qui impliquerait non seulement la Société nationale de pétrole du Congo (SNPC), mais aussi Edgar Nguesso, neveu du président Denis Sassou Nguesso.'

Translated :

.." What are the chances of IMF support ?

The project of a high authority to fight corruption comes at a time when the Swiss justice has condemned at the end of August an ex-trader of oil in the Congo for instalments of bribes. A case involving not only the national oil Company of the Congo (NCPs), but also Edgar Nguesso, nephew of President Denis Sassou Nguesso…"

The article is sceptical of Nguesso's efforts and the thread title only makes sense with an " ?" at the end.

Feel free to refute or retract.

ATB

Hi PBateman,

Quite - re both your points.

ATB

Hi scottology,

''"Seriously, you're asking about where our products are and have they been delivered to the coast because I mentioned offtake agreements?..."

I think you'll find that's because all the prices that MM shares with us are for product on an FOB basis ie free on board , a contractual term that refers to the requirement that the seller deliver goods at the seller's cost via a specific route to a destination designated by the buyer.

In our case, presumably the new port at PN , the Gabonese port as an interim measure.

Our 'goods' are currently in a raw, unbeneficiated state in the back of beyond , 300+ Km from the nearest yet-to-be built port.

Any offtake agreement signed now will be hedged with so many qualifications as to be worth little more than the Letter of Intent that we and 4 others provided recently to the Chinese construction co.

However, there is - in my opinion - one offtake agreement that would really be worth having , and that would be GLEN's, on a 'take or pay' basis, which would eliminate convincingly any residual concerns about the cold palletisation technology and hence EPP deliverability or quality.

Since GLEN is reportedly (MM ) both actively involved in this and happy with the results, they should not have a problem underwriting the technology risk.

And if they don't want to, you'd want - as a prospective lender or investor - to know why not. Wouldn't you ?

Just my hap'orth, mind. DYOR

ATB

Hi PBateman,

I fear your subtle irony will be wasted here ;->

FWLIW, I think the news about major Chinese investment next door is helpful : if the prize is big enough, it seems, they at least are not fazed by the 'headwinds' Sprott refers to eg

.."The [new mining] code came into effect in June, bringing with it higher royalties and the loss of tax exemptions for mining projects."

Rooting around the Ivanhoe deal a bit, I note that the DRC Kamoa copper-cobalt project had a 40/40/20 ownership split, Ivanhoe/Zijan/DRC Govt. - DRC's 20% being way above the 5% provided for in the Mining Code.

And as GLEN knows to its cost , there's also scope in DRC for jiggery-pokery with your licenses and concessions.

And still they come. Because of the asset quality.

So even if - seeing DRC getting away with it - C-B is tempted to 'try it on' with us in some way, we'll likely still find a pool of investors once we put up the 'for sale' sign.

All to the good. That's my take, anyway. DYOR.
ATB

Hi DGR 1980,

I disagree.. It says that - having been found in error - it's British to 'man up'.

As it would have been, for example, to accept that when the Danish export credit agency states that they do not currently take C-B risk (as I quoted in their email to me and as 2 minutes 'research' on the EKF website would show), it is untrue to repeat the claim that there is a 'done deal' for a new ammonia/urea project (value $ 2.3 or 2.5 billion) with funding committed.

There isn't. It isn't.
ATB

Hi Afric,

If you read Jinkar's post, immediately below, he actually wrote …"a very UN-British trait "...

HTH

Hi Riskisgood,

I obviously expressed myself poorly : I am not denying the existence - in the lab - of our product. What we don't have is a commodity ready for sale and delivery to the buyer in commercial quantities.

Hope this clarifies.
ATB

Hi No.1SS,

There is no forward commitment of US$ 2.5 billion, see my post @1108 today. This from the horse's mouth - the supposed Danish commitment doesn't exist.

ATB

Hi OliverJames,

…"some commenters on this board would do well to stay quiet than be pessimistic in times of slow news flow...."

How do you feel about somebody posting facts in response to a hyped 'breaking news' story like the Danish ammonia/urea plant ?

'Research' isn't just copy + paste uncritically the bits that support your existing view, it's checking the credibility of the source and the plausibility of the story.

Rather than regurgitate today's spot price for our non-existent product, I'd be much more interested in what the 2 to 5 year forward price (and depth) looked like, when we're on the way to having some production (EPP and/or Stage 1) worth hedging.

ATB

ATB

Hi OliverJames

…" this is a news and sentiment driven share...."

They're 2 completely different drivers.

Remember the Ben Graham saying about the stock market : in the short term a voting machine (= sentiment) in the long term a weighing machine (= facts-driven).

The facts re ZIOC are pretty positive, in the long term we 'should' do well. Short-term 'irrational exuberance' is what makes for share price volatility, which doesn't ultimately benefit most people.

ATB

Hi OliverJames,

.."Extrader, out of interest are you an investor in ZIOC?.."

Yes. If you take the time to look through my posts, you'll see that I've
- declared in general terms what %age ZIOC and 2 other miners represent of my total investments;
- reported an increase in my holding at the recent dip (averaging UP);
- that my target/expectation is around 200p - and that I'll be delighted with an early 1:1 takeout by GLEN;
- that I've bought a token stake for my new grand-daughter;
- and that I've set a limit sell order on 10% of my holding at 49p, which if exercised will bring my net 'in' cost to around 4.7p.

You may care to compare and contrast my candour with others.....and then join a few more dots.
ATB

Hi all,

Haldor Topsoe and EKF (the Danish export credit agency) have now replied to my query re their involvement in the upcoming US$ 2.3 -2.5 billion (what's a couple of hundred million $$$ between friends ?) ammonia / urea project announced in Congolese media.

Haldor Topsoe says : “ The only thing that I can confirm at this early time is that we are indeed part of the project. It is much too early to get into further detail.”

Whilst EKF says : “Im not aware of any involvement by EKF on this project. The article does not mention EKF, but does mention IFU…

EKF is closed for cover on Congo by the way.”

IFU is the Danish Development/aid agency. [ IKF, referenced in the Congolese article is either the International Korfball Federation or the International Kabbadi Federation].

The IFU (per its website) has supported approx. 1250 projects with a total value of US$ 30 billion, IFU’s share US$ 3 billion (so an average of $ 2.5 million per project)

Its only (completed 2006-2011) project in C-B, forestry, had a total project value of US$ 50 million, which it supported with a $9 million loan (likely to the Danish suppliers).

As I suggested at the outset, HT is a promotor/catalyst, who MIGHT take a small equity stake in a project of this size, to lubricate its sale of technical expertise, it will be expecting the big money , say 70-80% of the project to come from elsewhere. Typically from the host Government or other multilateral aid/development agencies

It’s a conceptual presentation by business development people and a useful example of ‘build it and they will come’ , helping validate the port in general terms, but it seems pretty clear that it isn’t quite what the Congolese press -or others – would have you believe.

ATB

Hi MM,

As on most occasions, you missed my points

(1): that this really is 'Last Chance Saloon' for C-B to get its act together. Most things in life happen when inclination meets opportunity.

(2) that our coshareholder in ZIOP has lots of other 'skin in the game' , which hopefully will encourage creative solutions to the many issues still facing us.

Never mind.
ATB

Hi MM,

I think you're right that the IMF has baulked to-date to agree C-B's debt restructuring/rescheduling/write-off .

From your link, C-B and Mozambique were name-checked for the opacity of their debt esp oil/mineral-related to private sector lenders - incl GLEN and Trafigura.

"Les États emprunteurs doivent faire preuve de plus de transparence. Un sur dix ne publie pas le montant de la dette de ses entreprises publiques. Certains pays (Congo-Brazzaville, Mozambique) ont omis de préciser les avances sur la production pétrolière ou minière accordées par des entreprises privées"

This https://uk.reuters.com/article/uk-congorepublic-imf-glencore-trafigura/congo-seeks-relief-talks-with-oil-traders-over-2-bln-debt-idUKKCN1G41PS
shows the sums at stake :
…"Congo is seeking an IMF bailout and, as in the case of Chad, the IMF has laid out tough terms before releasing the funds. Congo is regularly singled out by anti-corruption groups for the opaque management of its oil sector.. In December, the country pledged to cut its 2018 spending by 9 percent in a bid to win the IMF’s support. The IMF said in October that Congo’s public or publicly guaranteed debt totalled $9.14 billion or around 110 percent of its GDP as of the end of July. Out of this total, the debt to traders represents about $2.3 billion, the country’s prime minister said in October, without providing a breakdown. He also said the country was weighing a moratorium on payments with private creditors. Trafigura has lent the country around $1 billion together with banks. In the case that Congo defaults, the trading house is fully responsible for the debt, although it has insured it with re-insurers, according to two trade sources.

Glencore, backed by a syndicate of banks, lent Brazzaville about $850 million between 2015 and 2016, according to the company’s annual accounts, to be repaid with future oil deliveries over 5 years. At the end of 2016, Glencore was directly owed $336 million, while the banks were still owed about $500 million.”All in all, we don’t think the government is in a desperate situation and requires a massive restructuring. Some sort of restructuring with a four to five-year timeframe would probably be acceptable,” said a source at one of the trading houses who asked not to be identified because the issue cannot be discussed in public. Congo produces close to 280,000 barrels per day (bpd) and is heavily dependent on its oil sales revenue.
It said last June that it aimed to increase production by 25 percent to 350,000 bpd.Unlike Chad, Congo has a wider set of creditors. "

ATB

Hi all,

Quite apart from the info that we'd all like HUR to provide along the way - and a list of waypoints would indeed be helpful - it may well be that they'll be 'bounced ' into making an announcement or two : whilst HUR itself may run a commendably tight ship, there will be plenty of third party service providers who may be a bit more 'porous'....

And it's not inconceivable that, with the sums potentially at stake here, there may even be the odd bit of industrial / commercial espionage.

The bar staff in Lerwick and Aberdeen have probably already been infiltrated ;->

ATB

Hi JayKay1,

I don't think the MS work sees a binary outcome : note the concluding words :

…"With the wide range of valuation outcomes and uncertainty even in the base case, we think assigning a price target is not relevant at this time."

Seems to leave lots of wriggle room to me....ie " somewhere along the spectrum..."

ATB

Hi NigWit,

Generally agree the thrust of your comments. However, when you write :

.."I think some research concerning these failed fractured basements would be useful so we can better establish the true facts and risk...."

I, for one , am not qualified to interpret and evaluate correctly the import of highly technical documents. Others may be. Dr Trice certainly is.

He has acknowledged that there are issues with FB...and has sought throughout to address them. Maybe there are some 'unknown unknowns ' out there, including for him, in which case the risk/reward equation we are all supposed to make for ourselves skews leftwards.

So be it. AIUI, the outcome is unlikely to be binary, more likely undershoot/overshoot.

ATB