London South East | The UK's favourite investor portal.

Hi Catbert,

.."One way a more balanced political landscape could be constructed for Simandou is if Rio bought and developed Zanaga..."

I like the idea of Rio using Zanaga as a counter-weight/risk diversification to Simandou (and have argued as much for some time) and recent 'resource nationalism' Guinea has shown towards Emirates Alumina shows that Guinea has bite, not just bark.

BUT.... Rio is joined at the hip with BaoWu, not just at Simandou , but also in Australia....and BaoWu is part of China Inc. ....which depends on Guinea for its bauxite imports :

.."Guinea supplies approximately 70–77% of China’s bauxite imports, making it the dominant source by a wide margin.

This heavy reliance is driven by:

- Guinea’s vast reserves and low-cost production

- China’s declining domestic ore grades and environmental restrictions

- Indonesia’s export ban, which removed a key alternative supplier [note the irony!]"

China/Guinea are in an 'interesting' monopsony/monopoly relationship for bauxite- mutual dependency! - and I can't see Guinea doing anything 'challenging' at Simandou to change that.

China itself, for domestic political reasons (Xi power struggle?) and wider geo- political ones is also unlikely to want to rock the boat - any boat - unnecessarily.

By the same token, it would be a 'courageous decision' (copyright 'Yes, Minister') for Rio to ruffle feathers unless it has to...particularly for a new CEO still getting his feet under the table.

I'm absolutely with you at the conclusion :

.."Maybe we are in the calm before the storm. News on the outstanding items can't come soon enough IMHO."

ATB

AI summarizes as :

Mining companies are adapting to increasingly assertive African states, particularly in the context of the global race for critical minerals, by navigating new regulations, renegotiating contracts, and potentially investing in local processing and beneficiation to align with national priorities, balancing the need to secure access to resources with the demands of resource nationalism and the desire for greater economic benefits for African nations.

1. Navigating Resource Nationalism and Fiscal Changes:

Increased Scrutiny of existing mining contracts and implementing new regulations.

Contract Renegotiation pressure, potentially leading to higher royalties, taxes, and other financial obligations.

Local Content Policies, requiring companies to invest in local communities, employ local workers, and potentially establish processing facilities within the country.

Examples:

DRC: actively pursuing local content policies to ensure that mining activities benefit the region where resources are found.

Botswana: its acquisition of a stake in De Beers, the world's biggest diamond miner, is an example of locking in local diamond-cutting activities.

Mali: recent groundbreaking on a gold refinery project, built with Russian and Swiss partners, seen as an assertion of "economic sovereignty".

2. Investing in Local Processing and Beneficiation, pushing for value-added processing and beneficiation of minerals within their borders to capture more revenue.

This requires significant investment in infrastructure, technology, and skills development., but companies that can adapt to these demands and invest in local processing may gain a competitive advantage and build stronger relationships with host countries.

3. Strategic Partnerships and Collaboration:

Public-Private Partnerships:

Cross-Border Cooperation, eg establishing cross-border partnerships to strengthen their negotiating position and leverage regional resources.

Building Trust between mining companies and host governments is crucial for long-term success.

4. Addressing Sustainability and Transparency, eg in ESG Concerns; greater transparency in mining operations, including financial reporting and supply chain management.; active engagement with local communities.

5. The Role of Geopolitics:

US-China Rivalry is intensifying, with both powers vying for influence in mineral-rich African countries, while Russia, through entities like the Wagner Group, is playing an expanding role in African conflicts and resource extraction.

6. Long-Term Perspective:

Mining companies need to be adaptable and willing to adjust their strategies as African countries assert more control over their resources, building sustainable and mutually beneficial partnerships with host countries, as the focus shifts from simply extracting minerals to fostering sustainable development and economic diversification.."

Marty's early " PC" interview fits in quite

Thanks, BBH!

Flies the nationalist /Peronist flag and pushes the 'rapacious vulture funds' theme a bit....(eg repeats the observation that Singer/Elliott Fund was a fishing buddy of Alito, the US Supreme Court judge who opined in the Fund's favour on its $4.65Bn claim...)

2 x snippets :

(1) Says, about the upcoming July 15 meeting:

.."At the same time, the Minister of Economy, Luis Caputo, is holding talks with his friend, the Argentine Gerardo ‘Gerry’ Mato, CEO of HSBC in New York, resident of New York and now a lobbyist for Burford Capital, to reach an out-of-court settlement.

Luis Caputo will argue that if the payment to {? re} YPF S.A. is not ‘settled’, Argentina will not be able to access the capital market, which is obviously his main interest and functional to the large holders of Argentine debt securities, who know that sooner or later the country, which cannot pay all the interest that the debt accrues, will not be able to afford the payment of the capital. And in the face of default, they will ask for the public companies and our natural resources in exchange...."

and

(2) "The need for dollars in the coming years will be very high, so that capital inflows should be significant, not only because of the demand via the capital account, but also because of the financial account (large maturities of public and private debt in foreign currency).

Instead of prioritising fiscal adjustment, which further shrinks the national economy, the government should support foreign currency inflows through investment and exports, and should take all the necessary measures to this end.

The first is to investigate how debt is formed, and the second is to strictly control capital outflows.

The big financial groups know this, they just want to do it themselves, once the public debt collapses, and demand our assets and natural resources in exchange for their holdings..."

Politically, it sees the 'cunning plan' as "Milei's government is trying to get to Sunday 26 October 2025, the day on which the elections for national legislators will be held; they want the population to be discouraged and not to vote, and those who do vote, to do so for them.

And they will use those votes to deepen the fiscal and economic adjustment to the detriment of the majority of the population, as they have been doing since 10 December 2023..."

I'm sure Mr Marroc (or Seb Maril) will have views on the political leanings of this entity!

ATB

Per depeches

Mbalam-Nabeba to go into production at the end of 2025

Pierre Oba, the Congolese Minister of Industry, MInes and Geology, has announced that the Mbalam-Nabeba mine, located

between Congo and Cameroon, will go into production next December.

This cross-border mega-project , operated jointly by the two countries, has reserves estimated at 1 billion 500 million tonnes, i.e. 0ne billion 400 million tonnes for Avima 1 and 679 million (sic) tonnes for Badondo.

The project is expected to generate nearly 20 thousand jobs in Congo and Cameroon.

"The pace of progress is satisfactory. It is said that not all mining projects develop in a linear fashion, but this project is progressing at a very satisfactory pace," acknowledged Awa Goga, Director General of Mining Industries.

The meeting was preceded the day before by a meeting of the technical staff, during which the partners made a number

of commitments, the most important of which were brought to the attention of Minister of State Pierre Oba. "This first

meeting, which for us is very historic and very important, will result in a work outline, a roadmap, a work chronogramme for

the entire project, both on the Cameroonian side and on the Congolese side, so that there is harmony and so that the success of this mega-project will be assured.

Another meeting, enlarged to include certain ministries including those in charge of Finance, Environment and Transport, is scheduled for at the end of this month in Brazzaville. According to its description, the megaproject for the joint exploitation of transborder Congo-Cameroun iron ore deposits provides for, among other things, the construction of the line of the

Badondo-Avima-Nabeba railway, 149 km on Congolese territory and Mbalam to the port of Kribi, nearly 540 Km on

Cameroon territory."

These are the exSundance/ex Equatorial concessions expropriated and handed over to obscure Chinese front companies, currently subject of ICIC litigation.

This is the first ref on the Congolese side AFAIAA to progress on this cross-border project.

The timeline and sequencing of activities seems ambitious or perhaps 'courageous' (copyright 'Yes, Minister')

GLA

Continued...

In that scenario, we see Burford’s shares rising to a $6 billion valuation, or approximately $28 per share. That would reflect a 20x earnings multiple, which we believe is a conservative estimate of the fair value of its shares.

And what about the downside risks? Say, if Burford loses the appeal, or Argentina simply defaults on the judgment and fails to pay? Well, YPF is just one of the assets in Burford’s $7.4 billion portfolio. It’s also worth noting that the company’s all-in investment is approximately $70 million, and it has already sold off a portion of its stake to other hedge funds for $236 million, securing a triple-digit return. So no matter what happens from here, Burford is playing with house money on YPF.

And therein lies the beauty of its business model. Burford’s management has proven to be extremely shrewd capital allocators, by taking calculated risks with limited downside and asymmetric upside. That’s how the company has achieved an average return on invested capital (“ROIC”) of 105% on concluded cases, with only a single losing year. And it’s how the business has compounded its book value at 15% annually since going public in 2009, while the share price has increased at 17% per year over that same time.

Even excluding YPF, Burford’s business model has never looked better. Last year, it generated $700 million in cash and reported a record $327 million of realized gains across its portfolio. Trading at a $3.2 billion market capitalization, Burford trades at less than 10x this year’s expected earnings and at 1.3x book value. Similar business models in the private equity world, like KKR Group (KKR) and the Carlyle Group (CG), tend to trade at 4x to 5x book value and anywhere from 15x to 25x earnings.

In a downside scenario, such as Argentina winning its appeal on YPF, we believe Burford will likely find a floor at around its current book value of $11 per share.

Historically, Burford has rarely traded at or below book value – only 9% of the time since it went public in 2009. And investors who have bought at any of those points have enjoyed tremendous long-term gains, averaging 21% compounded annual growth rate (“CAGR”).."

Article concludes with a table supporting that historic average CAGR.

GLA

Continued...

And if there’s one thing that all of these investors and partners hate, it’s uncertainty. The kind of uncertainty that was just unleashed by Judge Preska’s order for Argentina to surrender its 51% controlling stake of YPF to Burford.

On the day of Judge Preska’s June 30 ruling that ordered Argentina to transfer its 51% stake to Burford, YPF shares fell by 6% – the largest single-day decline since 2020. And with this new cloud of uncertainty over the future ownership of YPF, securing financing for YPF’s growth plans could become increasingly difficult.

But the implications of the case go beyond YPF. The overhang of this case threatens to derail the masterful turnaround effort President Javier Milei has orchestrated for Argentina’s economy.

Within just a month of taking office in December 2023, Milei slashed government spending and eliminated Argentina’s fiscal deficit. His government has generated a budget surplus every month since January 2024, marking the longest streak in over a decade. And along with Milei’s free-market reforms that have opened up the economy and eliminated price controls, Argentina’s inflation rate has collapsed from a peak of over 25% per month when Milei took office down to a five-year low of just 1.5% by May 2025:

The next big step for Milei is to reopen the country to international investors, and refinance the country’s large debt burden at more attractive interest rates. Argentina’s Finance Secretary Pablo Quirno commented in June that the country is waiting for its government bond yields to fall below 10% to begin issuing more debt starting in 2026.

The country was well on the path to achieving this feat until the June 30 ruling that threatened Argentina’s ownership of its most valuable energy asset. The news sent Argentina’s five-year government bond yield higher by nearly 50 basis points. Meanwhile, the Argentina peso has lost 5% of its value against the U.S. dollar.

Thus, the YPF overhang not only threatens Argentina’s control of its crown jewel energy asset, but it could impose significant costs on the overall economy through higher government borrowing rates and downward pressure on its currency.

These are real costs that Argentina will feel immediately, even as it attempts to continue delaying payment through a lengthy appeal process.

Given all of these factors, we believe it will ultimately lie in Argentina’s best interest to make this problem go away. Based on previous precedent of similar cases, and the strength of Burford’s current negotiating position, we believe it’s reasonable to expect a settlement at roughly 50 cents on the dollar of the $16.1 billion judgment – a windfall of $3 billion to Burford, equal to the total current market cap of the entire company.

Continued...

Continued

Judge Preska acknowledged this legal hurdle in her June 30 ruling. But she didn’t consider this to be a big enough roadblock to prevent her from granting the order for Argentina to transfer its YPF shares. She noted that Argentina was obligated to find a way to make good on the ruling, through one of three avenues:

Obtaining the necessary vote from parliament

Changing the law

Striking a settlement deal with Burford

Based on our read of the situation, options one and two are virtually impossible from a political perspective. The real impact here is that it massively boosted Burford’s leverage in bringing Argentina to the negotiating table to strike a settlement deal.

Why? Because this order has thrown into question the future ownership status of Argentina’s crown-jewel energy asset that promises to transform the country into an energy exporting powerhouse.

YPF Holds The Key To Argentina’s Shale Revolution

Argentina’s conventional oil and natural gas production has been in decline for decades. But starting in 2021, the country officially launched its own version of the shale revolution when it began developing the Vaca Muerta shale formation, located in the Neuquén Basin in northern Patagonia.

Vaca Muerta holds an estimated 16.2 billion barrels of oil reserves and 308 trillion cubic feet of natural gas. For context, that’s 34% more oil than the Permian Basin’s 12.1 billion barrels of reserves, and nearly 50% more natural gas than the Appalachian Basin’s 214 trillion cubic feet of reserves – the largest oil and natural gas basins in the U.S.

This makes Vaca Muerta one of the largest shale resources in the world. Best of all, this shale is ultra low-cost, with a break-even price of $40 per barrel – making it cheaper than the Permian basin.

And YPF owns the development rights to this ocean of cheap energy. The surge in shale production at Vaca Muerta has single-handedly reversed the decline in Argentina’s oil and gas production over the past few years:

Today, YPF makes up more than half of Argentina’s total oil production and over 70% of the country’s natural gas output.

And over the next five years, YPF plans to double its production volume, while also building out its energy-exporting infrastructure like pipelines and liquefied natural gas (“LNG”) terminals. Just like the shale revolution did for the U.S., the Vaca Muerta shale promises to transform Argentina from a net energy importer to a major global exporter of oil and LNG.

ere’s the challenge for Argentina: bringing all of that oil and gas to the surface will require substantial investment from international investors. YPF expects it will need to raise $10 billion in capital to fund its growth plans over the next five years. It also relies heavily on partnerships with veteran shale drillers like Chevron, ExxonMobil, and Shell – all of which have been instrumental in unleashing the potential at Vaca Muerta.

Hxxps://members.porterandcompanyresearch.com/whats-next-for-burford-capital/

On Monday, we previewed the bullish case for litigation financier Burford Capital (NYSE: BUR).

As a brief recap, the major upside catalyst for the business lies in its 38% stake in a $16.1 billion judgment awarded in the YPF case – involving Argentina’s nationalization of its largest oil company, YPF, which caused two hedge funds to lose billions of dollars.

The market has so far assigned low odds of Burford actually collecting on this payment because… well, it’s Argentina we’re talking about. But as we’ll explain today, the odds are stacking up in Burford’s favor toward forcing Argentina into a settlement agreement. The punchline: we believe Burford could be on the cusp of a multi-billion-dollar windfall that could send its shares higher by 100% or more.

If you haven’t yet read part I on Burford, we suggest starting with Monday’s Daily Journal to get caught up with the background on this case.

Let’s begin by laying out the appeal dynamics for this case.

Shortly after the September 2023 judgment that awarded Burford and its plaintiff group the $16.1 billion in the YPF case, Argentina filed an appeal with the Second Circuit of the U.S. Court of Appeals. The typical timeline for cases to move through the Second Circuit is roughly 18 to 24 months. Thus, we expect a ruling on this appeal by year-end, or early next year at the latest.

So far, Argentina has lost every major legal proceeding in this case since Burford launched the suit in 2015. Thus, while a successful appeal is the key risk for Burford, we assign low odds to this scenario. If Argentina loses the appeal, its last legal resort is a final appeal to the U.S. Supreme Court. Here again, this is a low likelihood given that the Supreme Court only accepts about 1% of the cases submitted. But should this scenario occur, it could result in another 12 to 18 months for the case to reach a final resolution.

But there’s a key dynamic at play that could bring Argentina to the negotiating table well before either of these scenarios plays out.

Argentina failed to post a bond as collateral for the $16.1 billion judgment following the September 2023 ruling. As a result, the presiding judge in this case – Judge Loretta Preska of the Southern District of New York (“SDNY”) – granted Burford the right to pursue collection on the judgment while the appeal is pending.

And that’s how Burford was able to get Judge Preska to grant its request for the Argentine government to hand over a 51% stake in YPF on June 30, as a means of partial payment on the $16.1 billion judgment. She gave Argentina only two weeks to comply with the request.

Continued.....

Now, we see low odds of Argentina actually complying with this request. Based on Argentina’s expropriation laws, it’s technically illegal for the country to transfer the YPF shares without a two-thirds vote from parliament.

Latest Share Chat

Member Info for extrader

Followers

Following

Posts (Last 30 Days)

Posts (All Time)

Last Post

Member Since

Share Chat Post Distribution (Last 30 Days)

Activity Log (Last 30 Days)

Latest Share Chat

Member Info for extrader

Followers

Following

Posts (Last 30 Days)

Posts (All Time)

Last Post

Member Since

Share Chat Post Distribution (Last 30 Days)

Activity Log (Last 30 Days)

Please enter at least 2 characters

No results found

Search results

Recently viewed

Trending