Member Info for Jiving

"anyone that's dealt with a bank, we don’t want to walk in looking to eager,"

"anyone that's dealt with prison, we don’t want to walk in looking to eager,"

And if anyone wants to go the original source it can be found on P35 of the 2010 prospectus, which also makes clear the disproportionate effect such an ownership concentration can have on corporate votes/decision making. I quote:

"On Admission, Garbet and Guava will own 115,671,186 and 88,730,397 Ordinary Shares, respectively, representing 41.25 and 31.64 per cent. of the Company’s issued Ordinary Shares. As a result of their significant shareholdings, both Garbet and Guava will be able to exercise significant influence over all matters requiring Shareholder approval, including the composition of the Board, approving the timing and amount of dividend payments and approving general corporate transactions. "

If this message is aimed at my Sunday post on the other board, it is completely misunderstanding & misinterpreting that post.

1. There is categorically no implication of criminal behaviour by anyone, exactly the opposite I am sure everything will have been done exactly in line with BVI corporate law & the company's memorandum of association. Clifford Elphick, the ZIOC Board & the 'new' Glencore I am sure will scrupulously follow the law in BVI & everywhere else, with regard to the company & any transactions. I have never seen anything that suggests otherwise, & I would never imply otherwise. Indeed it would not surprise me if all decisions were always taken in conjunction with legal advice from a leading law firm in the BVI or elsewhere, which insulates from potential future legal challenge.

2. It is a matter of historic record that Guava, Garbet & Xstrata/Glencore after the 2010 IPO owned well over 75 % of the Zanaga mine. The actual figures would be :

Xstrata (now Glencore) 50% +1

Garbet owned 41.25% of ZIOC so 20.6% of the Zanaga mine

Guava owned 31.64% of ZIOC so 15.8% of the Zanaga mine

The Big 3 therefore owned 86.4% of the mine, which had Xstrata/Glencore done a share swap as per 2022 would have translated into 86.4% of the voting shares of ZIOC. That is a considerable margin over the critical 75% level, & even allowing for sales after the dissolution of Garbet, & for dilution from placings it makes it likely that around 75% of voting shares could be in the hands of the Elphick/Glencore camp & always have been - particularly if management/Board shares/options count towards 'friendly' holdings. All clear, legitimate & above board.

3. The existence of Elphick/Glencore potential 75% holding/vote is not a threat to minority shareholders but a blessing. It allows them to negotiate a sale or JV with strategic investors on the basis they can deliver 100% of the project unimpeded by potentially blocking shareholders. This is one of their key negotiating strengths in arguing against a ZIOC market cap based sale price and on the basis of essentially a 'private' sale price based around NPV. I expect all 100% of ZIOC shareholders to receive exactly the same price for their shares in the event of a takeover.

4. The whole gist of my post was that I took this to be indicative of the end game. The haggling over price/structure was over & we were moving to the critical (but straightforward) of preparing for an announcement & the critical corporate timetable that would follow on from that.

If you look at the price/trades quoted today, you can see someone has found a way of getting the trades essentially reported twice - a number of them are for same amount at the same time. More of the same nonsense from last week.

FFX. Some 10 years ago I was involved in marketing a tech patent for a friend. We had many meetings with brokers & lawyers. It rapidly became apparent that patents are indeed often used to block competitors, and the Samsung-Apple patent wars are a symptom of that. Do the same tactics prevail in the biotech area - no idea, but it must be a possibility.

Eddsy feel free to give your reasons why?

Join the discussion in the discussion forum......

Of course nothing can happen with Zanaga without Glencore's approval - in fact they have a triple lock - their shareholding; two Board seats & control of 100% of offtake. But equally of course Elphick is aware of that, and will only be looking for a deal that meets their parameters - all can likely agree that an offer around say 2024 FS NPV is a good deal.

The early repayment of the Glencore loan & the raising of a relatively large amount of equity capital upfront, is similarly indicative of the end game. The company’s accounts are being cleansed - loan completely repaid & documented; potentially all outstanding bills will be paid leaving only small amounts owing at the end of each month - exactly what you would do prior to a deal - be it a JV, merger or takeover. Also substantial funds would be needed to pay for Magic Circle lawyers to oversee the crucial sale or JV documentation process - which should take weeks rather than months. If the company went for a mine sale & then a wind up, this process could happen very quickly as its a BVI company, so does not have to comply with the UK Takeover Code - everything is instead subject to Board approval & control. Also any court assents needed are likely to be obtained faster & more efficiently in the BVI courts than in the UK.

The corporate action that might happen in the event of a full sale or buyout of the mine is hinted at in the original prospectus, which on P23 sets out what would happen if Xstrata made an offer for ZIOC:

“In the event that an Xstrata Offer is made to the Company for all of the issued share capital of Jumelles BVI, the Company would, following completion of the Xstrata Offer, seek Shareholder approval for an appropriate course of action, be that a winding up and return of capital to Shareholders or a conversion of status to an investing company. “

Extrader’s detailed arithmetic posts regarding the recent placing set me thinking about what the end game could look like. It was then it struck me that the machinations around the 1 July placing were likely not about financial advantage but corporate arithmetic. IMO Elphick/Glencore potentially used the July placing not simply to raise funds, but to fix the corporate votes relative to the new expanded share capital. Their target I believe is to ensure over 75% of the voting shares are in the Elphick/Glencore camp.

i. The issuance of shares to management/BOD in October 2023 will have put essentially all of those votes into Elphick’s camp. I see from the 2.10.23 RNS that 7.4m options remain - all of which when exercised will presumably be in the Elphick/Glencore camp. “Following the grant of the New Options and the exercise of options described in this announcement, the Company will have 7,403,675 Options outstanding.”;

ii. The Elphick/Glencore share top-up in July 2024 was not to gain financial advantage, but to micro-manage the corporate arithmetic to ensure the Elphick/Glencore camp was clearly over the 75% target;

iii. The 14.4m new shares issued will, as per Extrader’s posts, very likely (in fact IMO definitely) have gone into friendly hands. Possibly to the original JP Morgan/Haworth/Garbet syndicate - which was clearly intended to act in concert with Elphick in the circumstances in which he needed votes. Regardless of whether it is Garbet who took the shares, ‘whoever’ took them would likely be legally ring-fenced to ensure in practice Elphick controls those 14.4m votes. Incidentally P.322 in the listing prospectus shows Elphick’s holding at 88.7m shares & Haworth’s at 115.6m after the IPO.

The key number they would have been aiming for is 75% - which is the figure needed at an EGM to pass a Special Resolution that could agree, say the sale of 100% of a key asset, such as the Zanaga mine. A Chairman who has a ’super majority’ of 75% of the votes & a clear BOD majority can essentially do ‘any’ legal deal, & thus guarantee to a purchaser that all agreed terms & conditions will receive the required shareholder assents.

Otherwise a purchaser would have to potentially undertake an offer to shareholders: that a disgruntled mine purchaser, a hedge fund or ‘anyone’ could potentially block by obtaining around 25% of the voting shares. This happened recently in Aus, where an agreed bid for an Aus lithium mine Liontown, by the US company Albemarle was thwarted after the intervention of billionaire Gina Reinart who bought a 19.9% stake that put her within easy range of the 25% blocking vote.

Good link Mars. What worries me about that article is the potential threat of legal action by Astra & Merck, we want a deal not a lawsuit! Hopefully we are under the radar at the moment on 004, IMO are best exit is likely a deal with Astra/Merck. A comment from a related article, on Astra's recent patent additions & their implications:

"These new patents bolster AstraZeneca and Merck’s ability to protect their intellectual property and the market position of Lynparza. By securing patents that cover both novel treatment methods and formulations, they aim to extend the exclusivity period of Lynparza, which is crucial for their commercial strategy."

https://synapse.patsnap.com/article/astrazeneca-and-merck-sue-to-block-generic-lynparza

This is not the usual half-hearted P&D we have suffered from before. Also no sign (yet) of the Earl & Ria.

It would be odd for something to leak as the management team/BOD is so small & tight.

A deal over the weekend - which weekend, been waiting for that for quite a few weekends now?

This is part of my take on current situ. I have been within the last 6-8 weeks criticised for being both negative/positive & optimistic/pessimistic. In truth I am neither, I am simply a realist seeking reality - & necessarily that involves looking at what is happening in the real world, which typically is a mix of both.

I can genuinely see hope here, Elphick repaying the loan early & clearing the decks can be interpreted as positive & I will post my thoughts on that in the week, after I have re-read the prospectus & articles - I lost my notes on both in an SSD crash so have to re-read. But in the interests of reality I think we need to be aware of the negative clouds overhanging this thing yet again - ie we need a deal at 'whatever' price now:

1. Congo - Extrader has correctly repeatedly pointed out the deteriorating domestic situation. Big Den wants to be succeeded by Little Den - but of course other leadership contenders (tribal, military & others) see otherwise. Succession is a dangerous process - see coups in west/central Africa in last 18 months - the last very very brutal R0C civil war ended as recently as 1999. In a vicious African civil war (Big Den won by bringing in the Angolan military) nobody can do anything let alone ‘develop’ a mine.

2. Iron Ore price - the NPV/IRR is dependent on the long term iron ore price entered into the 2024 FS. But a complete collapse of that price is NOT good for sentiment, we really really need to get a strategic investor before the 62% price falls a lot below $100. Currently the key quotes in Dalian & Singapore are either side of $100.

3. Middle East. My take - which many also adhere to - is that Saudi is quite likely the lynchpin of a consortium offer for Zanaga. But if there is a Israel/US vs Iran war - the Saudi oil/gas facilities & possibly those of the other Gulf States (consortium members?) are immediate targets for Iranian retaliation. This happened as recently as 2019 in the Abqaiq attacks.

4. Congo Govt disillusion. If if it is the case that ZIOC hanging out for a higher price causes the Saudi consortium to withdraw from developing the mine - really who would blame the RoC from taking away the license & awarding it to them?

5. General Stockmarket collapse. Again if we have a 2008 style collapse, all bets are off for marginal projects like this. I note Buffet is selling down his key Apple holding - market top indicator?

Always, thanks a v useful article. Reading that due diligence article it becomes apparent that this is essentially the due diligence a serious prospective buyer would undertake prior to putting in a serious bid for either a buy-in or buyout. The Saudis, China etc have all had many months to hire independent experts to examine absolutely every aspect of the Zanaga mine particularly the critical interpretation of the drilling data - we can reasonably assume they have completed these studies.

So the only due diligence tasks likely to remain are those relating to a potential actual buy-in/buyout - typically undertaken by leading lawyers, this would involve say checking the legality of all Zanaga documents. For example the legal status of licences, permits & the mining convention to confirm they are all legitimate & have been granted by the correct governmental authority in the correct legal fashion according to the relevant Congolese laws.

Like Drago I can also confirm that that is Dan's phone on TG & that he undertook the online discussion earlier in the year. Also City Girl is indeed a female investor who runs an active matching twitter account.

Soup's points are all valid & reflect the company's situation we are simply sitting it out for a licensing deal - or not.

The big name in that meeting with Arthur is Frank Giustra - who is a billionaire & a major fund raiser for the mining industry over the last couple of decades.

"On August 4, 2009, Millholland came from Calgary and attended a meeting in West Vancouver with Frank Guistra, Ron Brimacombe and Rak. After that meeting, there was a verbal agreement that Millholland would become Velo’s president and CEO if the results of Millholland’s due diligence were satisfactory."

I hadn't seen your previous discussion points on price - got a link or a copy/paste? If you don't want to discuss a takeover price, of course thats your call but there are some of us - on a ZIOC discussion board - that do want to discuss/rationalise takeover price possibilities.

Well come on ATG give us your rationale for why it will be higher than 200p (40x current share price). And by the way I dont rule out a higher price, indeed I see it as primarily a function of whether we are in a competitive situation, quote "Our exit price depends on how many serious bidders we have, if its just one then they are in large part price makers not price takers..." Be interested to hear the case for a higher price..........

Two comments on a 200p buyout price. First, the ZIOC share price has already traded above 200p in the period after its IPO in November 2010. The Edision research report gave an all time high of 222p - at which level, with the then FX rate it equated to a 100% mine valuation of $2 billion. More pertinent is the 156p valuation at IPO, which was mainly aimed at institutional investors, a number of whom purchased at IPO price valuing 100% of the mine at $1.4 billion. Remember these valuations were attained prior to the completion of the drilling programme, the completion of the 2014 FS & all the successful mining, licensing & convention negotiations. Also before the emergence of the Saudis/Gulf as serious mining investors & the global move to ‘green steel’ needing high grade ore like Zanaga’s.

Second, there are at least two categories of asset based shares that can produce explosive % gains - mining exploration & biotech companies. Both of these types of company share a common characteristic, they typically produce no income & are reliant on equity placing to survive. Inevitable delays, plus endless placings lead to an ever diminishing share price, that often years after IPO bears no relationship to asset value. Then finally a deal emerges - at or around asset value - and the share price explodes upward. As above, a 200p share price only returns the company to the level we were at shortly after the IPO in November 2010 & here we are nearly 14 years later…..

Something is bubbling here. It is completely correct of MM to point out that the Saudi interest in mining in tropical forests clearly does not apply to domestic production.

Extrader that is a fair & accurate assessment of the company's history & where we now stand. Dilution has been minimal especially considering the length of time we have been essentially dormant. Elphick is an adroit corporate maneuverer but he can only play the (poor) hand he has been dealt.

The Xstrata/Glencore debacle pushed the company back from being a likely near-term developer with a major miner on board, to being yet another small explorer that would have credibility issues presenting itself as anything other than a project generator. The share price reflects that path sophisticated specialist mining funds buying in at the IPO (valuing 100% of the project at $1.4b) but then legging it once the reality of Glencore's greenfield policy became apparent.

Of course if we are realistic all our potential strategic investors can all see the poor position the company is in - they cannot develop the mine from their own resources; Glencore not only does not want to finance Stage 1 but it also does not want to take development/operating responsibility; the Congolese have been patient so far but if they see potential developers (Saudi/UAE) being snubbed that could change; what multiple would you pay a company whose share price is around 5 p - 10x, 20x, 40x?

Your quoted estimate of 200p would IMO represent a good outcome for shareholders - its approx 50% of Stage 1 NPV on the 2024 FS figures. Our exit price depends on how many serious bidders we have, if its just one then they are in large part price makers not price takers, and we should accept whatever is currently on the table. If its 200p thats a good deal (40x share price!!), but 100p is also frankly fine - if we go north of 200p, well hallelujah.