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4. GOVT FUNDING / ISLAMIC PROJECT FINANCE - an interesting thought - I don’t have an opinion on this; it’s definitely used for projects like mine construction (insomniacs see: https://www.lw.com/thoughtLeadership/islamic-project-finance). It is possible that they’re looking at something like this and the complexity, or simply completing the beauty parade of who to borrow from could be holding up the ESIA, if those two are somehow linked.

However, I don’t have the ‘gut feel’ that this is the main cause of the delay, because the fees wouldn’t appear THAT great a money spinner for the government in the greater scheme of things (i.e. vs. ongoing profit share, discount, equity, etc.). Also it sounds like the new permits here will perhaps be working for the diplomatic non-exec rather than a CFO assistant to work on structuring, etc. The complexity seems to be sitting on the permitting side.

Overall, I’d summarise as saying 1) it comes across (to me) as though government wants more value more than that it sees the challenge as an environmental issue, 2) that EML considers that this will be resolvable, and 3) that EML has not either received an ultimatum on what it needs to do, nor come up with a solution (it could be a genuine delay with none of this by the RNS seems to leak more than that now).

I do assume they will be able to sort it. I don’t think the plethora of funding options reported says anything either way, because they will all have conditions precedent that assume the ESIA is already granted.

So, the questions keeping me awake at night (if there were any) would be:

1) what are the % chances of a blow up and ESIA - clearly low, but also above 0%. Otherwise, the share price would be 19p and we’d see larger more institutional trades going through daily - the market isn’t there yet; and

2) if a value transfer is needed to unlock things, does that come out of the business (e.g. tax, OCP pricing, etc.) or from shareholders (e.g. dilution) - essentially, what’s the impact for us - haven’t thought about this but clearly if it comes from the business then that’s the better for us as shareholders.

These are rhetorical and not intended to drive any reply. Just responding as OnlyOneShareMe wrote a long post on this. Thanks for reading.

That, plus a diplomat on board, should shift it

Shows the scale of the ask!

Don’t disagree with what you say as such Noix, but it’s not accurate that the company has to tell us if it’s not making steady progress on all fronts.

The RNS cannot be untrue, but it only has to disclose adverse news if it’s price affecting AND finally determined / crystallised so as to affect the price. Nothing in here is at that final stage.

Reflecting on my earlier comment, I think it’s unlikely that a shareholding would be mandated because it would be a fundamental restart on the inward investment environment. Some kind of windfall tax seems far more proportionate and I think the suggestion that OCP could agree a deal insulating it from full market price is a very practical way through (though would limit our share price ambitions).

What I read from this RNS is that senior government stakeholders, beyond the normal process, appear to have intervened and asked for more value.

Emmerson may have been challenged to offer a solution and may have offered several already, perhaps with the approval only coming when they have offered deeply enough to secure the best bargaining position. The OCP deal suggested below seems a very pragmatic solution. It could even be that the business does not want this agreed before finance as it will want to protect the best possible profit opportunity to equity and debt partners.

Who knows.

No inference they will but I can’t see just appointing local contractors really washing as ‘mutually beneficial’, if that’s the ask now.

If they do end up giving a 5-15% shareholding to the government (I read 15% is common in some territories), then that will come at a dilution cost to shareholders.

There’s so much language in here about ‘mutually beneficial’, from job creation, to finance, to trade shows that I tend to assume this is a factor in the ESIA - govt stakeholders, perhaps wider than the normal set, saying the country needs a bigger share of the rewards.

Perhaps understandably if wheat prices will damage the economy and the difference has to be found and made up, while this project could be perceived to exploit and move money out of the territory.

Could take a while to unwind if this were the case.

Agree.

I’m interested in that it comes from our shareholder capital account, but beyond reasonable scrutiny the board has to be the one doing the hiring and firing and there must be some reason they’ve valued it this way (a logical reason, I hope!). If he does well, fair play to him.

All my concerns today really start and end at the ESIA, the only thing standing out on the risk register; if that can be bagged, the future’s fully within our control and the road ahead looks very good. Great in fact.

When you say, “at 15p he's got to get the SP much higher for them to be worth anything”.

For context, the board guidance is 18p after debt funding, which they project to clear the mandatory convertible shares from the strategic investment.

In context this means that this would be £3m net pay released by overseeing the debt round and staying for three years, based on a 46p end of 2022 price.

If he stays three years and we reach £1.10, then overseeing the debt round and contributing only on a part time basis for the remainder I’d the three years will unlock £9.9m at an option cost of just over £1m (i.e £8.8m income); I don’t see anything saying the option exercise depends on converting to be a full time employee.

Yes, there is risk in working for a mine that may never be built and taking a (perhaps) reduced salary, but this looks very attractive.

I’m not saying wrongfully so, but, if It were right that that he’s never taken a mine into production or been CFO for a running mine, then it seems a great deal for anyone in his shoes.

I say he’s part time because he also works as Finance Director of GreenRoc Mining focused on Greenland

RNS:
https://www.lse.co.uk/rns/EML/appointment-of-chief-financial-officer-zfhldp79t8ql5aq.html

GreenRoc staff page:
https://greenrocmining.com/about-greenroc-mining/

The options are, I would assume, par for the course on a risk basis that many mines are never built.

The checks and balances I’d be curious about and the Board presumably have considered are:

- his much of his time will EML get;

- what are the challenges of being ‘hands on’ across three territories / timezones (London, Greenland, Morocco) - seems okay day to day but what about during a fund raise for both businesses concurrently, were it to happen;

- is this guy the real future CFO or a tactical hire to get the debt round in - he held junior roles at Anglo American but after that, I can’t see that any of his businesses have reached production and one went bust (i.e. have we got the skills to trade or will that need a ‘new’ CFO, and obviously full time when the time comes - in one sense the bridging of two jobs comes across as meaning this is a figurehead, temporary role or advisor-plus role, also not sitting on the board).

I’m going to see if they have any other vacancies. Ha ha.

If he plays a full part, he’ll need to join full time - and need a pay rise! ??

Am I reading this right? £4,140,000 worth of shares at a 46p a share price for a £1,040,000 option price.

Amazing pay for a part time worker if that’s right.

If I were to speculate on one further thing (and caveats that this is taking a lot from very few words below apply), it doesn’t sound (in its tone) like they’re expecting the ESIA permit imminently or before the end of Q1.

Maybe we and they will be surprised!

My take out is on ‘subjectivity’ rather than ‘positivity’ or ‘confidence’, etc.

I’m sure the team is positive about its work and confident it has put in a good application

Whereas a passport application is largely procedural, this language is more in keeping with there being greater subjective assessment - closer to a job interview - perhaps more than showing alone that the mine would be ecologically sound.

The reason I say that is that wouldn’t say about a passport application that you, “remained confident of a positive outcome”, you’d say, “its in now so I just have to wait”, which is more aligned with Graham’s 2020/21 language on this.

Aligned with subjectivity is that outright confidence about getting it over the line. The passport application would be 99%, assuming you might not have filled it in right. “remaining confident of a positive outcome” after 18 months where others have had theirs could be less than that 60/40, 70/30, 80/20?? There will always be some uncertainty but the tone seems to allow for at least the possibility it might not come off, perhaps akin to planning permission, which I suppose would be fairly aligned. What we don’t know is whether this is a system that works with applicants until it’s tweaked to resolution, or more arms length. My hope and normal assumption would be the former as the country can benefit (subject to any discussion on overage or profit share as prices rise).

As Westie says, this is reading a lot into grammar from a person that might have wizzed this email off before rushing to a meeting.

If I were to take anything from it though, it would be that there could be more subjectivity in the process than was first anticipated, and that could align with the silence - that there’s no real reason that the company can say because it’s unsure too and thought this was more procedural.

This explanation is easier (for me) to take in now than an OCP discussion of any kind because uncertainty around the delay may not have been known or wouldn’t easily have come up in the ‘strategic investors’ due diligence, whereas 10 months pressure to sell all or part to OCP would have done and may have led to them backing out as too uncertain as to what they were investing in.

Repeating for alignment with Westie that this is a lot of tea leaf reading from very few words. Great shame the opportunity couldn’t be taken to be more categorical and specific about remaining times and steps to see this speculation off!

I think it’s the interview and some good ramping on Twitter.

The buys look in their size like private investors rather than institutional, being many and small.

The promise is alluring. However, the same people may not know they are responding to paid for marketing or that the permit has also been ’due’ for many months before now.

I don’t think the underlying position has changed, so am now tentative about buying into a raise before seeing the permit and as we saw last week people selling into the rise on more of a day trading stance.

If it balances back down or stabilises at a new level, may get back in then. I think this is ‘get rich quick’ fizz today but would be great if we see an RNS tomorrow as you say!

I agree Slurms. I still feel it will come through or I would be gone but I am wary and faith doesn’t remove the rational worry of the bad communication.

Hopefully, won’t regret it. The business case is so compelling that it could reasonably fly upon full permitting.

Or with fewer words: “Agreed” ha ha

ESIA assessment completed 5 quarters ago in November 2020.

I think the (retrospective) update that the water authority had raised additional enquiries is only substantive update we’ve received.

Lots of social media updates over the same period. We’ve also been told that Rupert is not on it but not what he is on or why he was hired, with any specificity.

I appreciate the “we haven’t heard any bad news so we just need to patient”. I have also seen almost identical posts preceding a Titanic-like event on other boards.

Other boards have no implication for EML but ill communication is a heuristic; it’s not wrong in my opinion to be circumspect or at least curious about this because its a go / no go for the project.

Asking reasonable questions doesn’t make some one a naysayer or doom monger.

+25% vs. -2% here

Tells you where full funding and permitting would take things. Clearly also implies the market doesn’t take those for granted as automatic here.

Funding case must look very good though if we can get the permit issued!