RE: Lack of focus?8 Feb 2022 10:31
Stranger
Good post.
Ariana and Proccea developed W.Turkey together from level ground to a fully repaid, fully operation production facility with net income of (arguably) £25m a year. Ozaltin was allowed to walk in and take 53% of this, including the more than doubling of net income when Tavsan eventually comes on line, for what increasingly appears a low price.
With that history, and with a perfect record with the bank that financed the Kiziltepe plant, plus a fantastic income stream (before it was halved) I question that AAU/Proccea needed anyone to be able to lever capital? It would seem that their CV was impressive enough to stand alone.
From memory, and I may be remembering wrong here, Ariana gets paid 3 times expenditure for any prospects subsequently adopted by the JV. On the face of it that is great. But by my logic AAU is a 23.5% partner in the JV so in fact net receives 2.25 times expenditure (I have rounded there). But of course AAU have already expended the prospecting costs, so their 'profit' is actually down to 1.25 times expenditure. Which is ok until you then question who picks up the tab for any unsuccessful prospecting - by which I mean that the JV turn down, more specifically that Ozaltin turn down as they sit in the driving seat of all development in Turkey with their majority percentage. And the answer to that seems to be that AAU take the full hit for any abandoned prospecting costs, which I find worrying.
To paraphrase Monty Python, what have Ozaltin done for us? On the face of it, so far, very little except run off with the majority of profits.
I believe AAU are excellent at prospecting, but lack business acumen. The latter could be addressed by VanVans call to expand the board of directors maybe? Of course if the agreement to include Ozaltin as the dominant JV partner was political then that puts a different slant on the reasoning, and a worrying one at that.
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