Member Info for Fundamentally

Very interesting. The big question for PI's is whether this will result in normalisation for the whole company, i.e. will WTI retains ownership of the operating subsidiaries at the end of the administration. If so, will the shares be re-listed?
I hope there will not be some other scheme of arrangement in which PI's effectively get kicked out. Administrators are appointed to manage in the best interests of 'the company' i.e. shareholders, and Orion is by far the largest shareholder.

The agreement to buy an extra 65% of CARN was a legally binding agreement, subject only to regulatory approval. Therefore WTI had to proceed. I am assuming that the purchase has been made by the Namibian operating subsidiary of WTI, as the UK parent (WTI PLC) is in administration and does not have $600,000 cash! Whether Orion would have approved this purchase if it was not legally binding is an interesting question! I agree that this 'looks' like it could be good news, but I think this depends on a lot of things such as: can WTI PLC retain ownership of its operating subsidiaries? (I hope these are not sold off by the Administrator.) Will Berg Aukas be developed? How will this be financed? etc etc.

The other entities are the operating subsidiaries, owned by WTI. I have looked at the 30/6/17 Statement of Financial position. On that date, WTI PLC had current liabilities of only �122,000. It had long-term liabilities of �5,000,000 owing to other companies within the group (i.e. the subsidiaries). It is not worth going into administration to settle debts of �122,000. The administration will cost more than that. The �5,000,000 is owed entirely within the group, to entities owned and controlled by WTI PLC (they have very small minority shareholdings). Therefore I am not clear about the purposes of the administration. The fact that the operating subsidiaries are not in administration might (possibly) be seen as encouraging, if it is possible to eventually resolve the issues at Tschudi and/or re-start Central Ops on a profitable basis. However, this is highly wishful thinking. Firstly it may not be possible, and secondly it is not at all clear that WTI PLC will still own the subsidiaries. I think that (as always) everything depends on Orion. Does Orion wish to give up and write off over $100m, or does it want to finance the draining of Tschudi? If copper keeps going higher this option obviously looks more attractive. We shall see. Hey, Boffin, are you still there? Any thoughts on this?

In the last month copper is up about 10% and the ZAR is down more than 5%. If there had been no problem with ground-water, Tschudi and WTI would be doing very nicely - as expected in February when the price was 3p. So the ground-water ingress is very bad luck and bad timing, which I doubt that anyone could have predicted - except maybe by doing some extra testing for groundwater at the BFS stage. With copper rising strongly and the ZAR weak, I strongly suspect that Tschudi will be drained and will eventually generate some cash for Orion. If Orion do not finance this they will have to write off over $100m. The same applies to Central Ops, I think it will be re-opened within the next couple of years. Copper is already high enough to make this nicely profitable. The big question is, will WTI have lost the ownership and control before the mines are re-opened happens? I have no idea, but I am not very optimistic.

Mikebard, I do not know. It looks like a 'miracle' would be needed. Unlikely it seems, but not impossible. As usual, shareholders are kept in the dark. This is unfair. The Administrators act on behalf of 'the company', this should mean on behalf of us,as we are the owners.

Optimistic - but I agree with you in the sense that if copper keeps rising like this there there will be a point at which Tschudi becomes viable even allowing for the costs of pumping water out. One point worth mentioning is that an Administrator is not a receiver or liquidator, - although these officials often follow on the heels of the administrator, if the company is insolvent and cannot be re-structured. The information we have is that the Administrator has been appointed, voluntarily it seems, by the BoD. This is not the same as a receiver acting on behalf of creditors. The real purpose remains unclear - at least to me! I assume that there may be several reasons why WTI cannot yet disclose further information.

It will be interesting to see whether Orion/the Administrator keeps Tschudi going. I am not sure how much (if anything) of an operational or financial nature gets disclosed when a company is in administration. Does Orion want to drain the pit to try to recoup some cash from sales of copper, or will it write off $100m+ allowing Tschudi to be abandoned and become Lake Tschudi? Either way, I do not see the benefit for Orion of putting the parent company into administration. Tschudi is an operational problem. Who is the administrator acting for?? If anyone can explain I will be grateful.

Maybe you are right Headly. But it wont look good if they buy the assets/operating subsidiaries from the Administration for a pittance and leave the PI's with nothing. Orion have a reputation to maintain. Remember also that Orion are a related party, I think there are rules about their conduct.

by all of this. I do not see how Orion stands to benefit by allowing WTI to fall into administration. It does not solve any of the operational issues, or give them direct control of anything. And they were pretty much in control anyway! Even if they get direct control of the operating subsidiaries, they are no nearer to getting repaid. There has to be something else behind this, but I cant see it ATM. Are they resigned to writing off $100m? This seems hard to believe. Why not allow WTI to drain the flooded pit and then (hopefully) recoup some cash generated until it becomes un-economic in 2020?

I can see why there is buying interest. If, for example, WTI could somehow extricate itself from Tschudi and the Orion debt finance for this, it would be left with a couple of nice assets (Central Ops and Berg Aukas), which would more than justify a market cap of �2m. If WTI could 'sell' Tschudi for $1, or if Orion takes a big 'write-down' in the debt, this looks feasible, - but I doubt that it will be this simple. Realistically, I think that Orion must be starting to recognise that $100m+ plus interest cannot possibly be generated by Tschudi (unless there is a dramatic rise in copper) and therefore that they must (reluctantly) accept at least a partial write-off of the debt. We shall see.

I expected buying to dry up today, and the SP to collapse. In fact it is almost steady and on very heavy volume. Maybe someone knows something? Even without any knowledge of anyone's intentions, I can see that with a �2m cap and valuable assets (Berg Aukas plus Central Ops) and copper strongly expected to rise, this could well be a good 'punt' at 0.2p. However, today's volume of buys looks like more than just a few 'punters'.

Agreed, JP. This is looking more and more like a major write-down (maybe even a write-off) for Orion, and probably zilch for the rest of us. A decent increase in the Cu price could rescue WTI if the mine could continue producing at somewhere near nameplate, but with the mine flooded I doubt that this would help much. Sorry all.

for 5 million plus, is standing in the market. Currently s/he is bidding 0.255 pence.

just released http://www.icsg.org/index.php/component/jdownloads/finish/113/2676 The ICSG is predicting a 330,000 ton copper supply deficit for 2019. This assumes that world copper demand will increase 3% in 2018 and 2.2% in 2019. IMO these demand estimates are conservative. They are lesss than the current rate of world economic growth, and do not appear to factor any increased demand from green energy and eleclric vehicles. Also, they do not factor supply disruptions. These are bullish numbers. They support my view that copper will go a lot higher by 2019/20. Tschudi will still be producing until at least mid 2020. Therefore IMO it is too early to arrange WTI's funeral just yet. Let us hope that Orion is willing to be patient and will allow WTI to retain ownership/control of Tschudi over its remaining economic life. If I am correct, and we see a substantial rise in the copper price within the next 2 years, this would extend Tschudi's economic life despite the costs of dewatering the pit. This could pull WTI back rom the brink. It would also make Central Ops economic. As the SP is only 0.2p, WTI is a 'hold'.

I agree that this is looking fairly terminal - WTI needs a 'miracle' more than ever before. IMO the best hope for a 'miracle' would be a strong rise in the price of copper. However, this would not exactly be miraculous. A lot of pundits are expecting copper demand to overtake supply. Tschudi is expected to remain in operation until mid to late 2020, possibly longer. It would make no sense for Orion to close a mine which is generating cash on a operating margin which is currently around $1500/ton. Tschudi might be expected to generate cash of around $50m by mid 2020, if copper remains at the current price. However, the picture can change dramatically if copper heads higher. If it heads above (say) $8000/ton by 2020, this could extend Tschudi's economic life by several years. I am certainly not going to predict that this will happen and therefore that everything will be ok for WTI. However, there are plenty of well informed people who believe that copper is likely to rise strongly over the next couple of years, for well documented reasons which have been explained often on this board. On this basis, WTI could be a decent bet at only 0.25 pence. The potential upside is a hell of a lot more than the potential downside.

I agree with you Boffin. This looks like it could be terminal. It looks like the only thing that could save Tschudi would be a big hike in copper prices by 2020 - and I am not counting on that. The Strategic Review and Formal Sale Process RNS says it all. It is not surprising that Orion decided to block the Kitumba purchase.

If you are correct about the nature of the 'noises' emanating from Zambia (and I have no reason to doubt your statement), it is reassuring to see the BOD exercising caution. The last thing WTI needs is a major project, involving heavy borrowing, within an environment of relatively high or unpredictable political and/or regulatory and/or fiscal (taxation and/or royalties) risks.

Unfortunately, I have lived long enough to know that if something looks too good to be true, it probably is! Secondly, I know that sellers always have a reason, particularly if selling cheaply! On 26th January I posted the following: "The one bit I 'do not get' is why Intrepid spent such a large sum ($30m) and then did not proceed? I know they are short of cash, but surely mine finance is normally available if a BFS is convincing? I still have a nagging doubt that there may be something we do not know about. Obviously, I hope that I am totally incorrect." It turns out that these doubts may have some basis. Maybe WTI's decision to not proceed with Kitumba might even be good news, a mistake avoided. My hunch is that, in the last few weeks, the BoD may have had some reasons to reflect on the merits or otherwise of this acquisition. Possibly, Craig's departure may reflect some disagreement on this issue. Alternatively, there could be further negotiations ahead. The situation is far from clear. Lets hope that the quarterly report contains some much needed clarifications.

is unusually quiet. WTI appears to be in no hurry to release its quarterly numbers. I am not sure if this delay implies anything, but based on previous quidance I am not expecting any good news.

I do not understand the 'rationale' for the 80% SP drop (on not much news) between Feb and April. Likewise, I fail to understand today's 40% rise, on no news at all. It appears to me that there is very little (if any) rationale for the SP gyrations. Nobody really has a clue what WTI is worth. This stock is extremely sensitive to future uncertainties such as the copper price, debt repayments, production costs etc etc. WTI is for investors with testicular fortitude.