Talkie not a troll21 Feb 2024 13:36
Have RRR not said they will likely make a loss on 1st export sale?
Depends on the price when sold in China: likely doesn't mean will. They intend to sell in the spot market, so no one knows what the price will be. Speculation.
Have RRR not said they thought that CNY hindered buying
They referred to demurrage and yes, there was no point trying to land material in the run up to CNY and during CNY.
Have RRR not said without DRC they will likely need funding - possibly through asset sale / other?
RRR has said that it will seek to monetise its assets several times. It did have a JV lined up for Kenya that was kiboshed because of COVID lockdowns. Regardless of the DRC cash, RRR should be looking to do deals on its assets for lots of reasons. It has too many assets for the management bandwidth, even though most of the doing is done by teams on the ground. It needs to show that it can monetise assets. It needs to show that the assets have value for balance sheet purposes. It has seven licences applications in CDI: two issued, four in process about to be issued and one a bit further down the pipeline. On CDI RRR has already said it is in discussions with at least four companies. On Burkina Faso it has two licences issued and another 3/4 in the pipeline. On Zim it has seven licences in the process. Whether the cash comes in from DRC soon or not, RRR should be on with this process and show it is producing shareholder value.
RRR advised they had completed an export in November which, I agree with you is a milestone but not the end game. The end game was to export to China for sale and build an export market which generates cash flow and hopefully some profits - hence the 5 Chinese Buyers being mentioned. Do you agree?
No. The last bit is irrelevant. They can either sign up offtakers or sell in the market. The company has said it will be selling in the spot market, therefore it doesn't need offtakers. Whoever bids highest in the spot market gets the product. What happens is that they turn up at the warehouse with proof of payment and they take what they have bought.
Higher volumes and/or higher prices we might need offtakers but not right now.
Things change in business. RRR has looked at lots of deals it hasn't proceeded with.
NB my general view of the way forward is that RRR should have a few decent income producing assets and the rest are there to be traded. As I have said several times, near term we should have three possibly four income producing assets: Faso Minerals, ALR, the new O&G deal (if it can be done) and El Limon (though I suspect the timing on this has slipped a bit because of the CEO's issues).
DYOR
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