Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
It would have been up to the people exercising their options, and the decision to go cashless or not influenced by their risk appetite, access to cash and tax position. But a benefit of cashless for the company is that total share count will be lower vs a cash exercise, especially if they don't need the funds.
Good point and having looked at the latest presentation again from May 2022 it's not actually $2.5 billion total investment over the life of the project, but total opex over the life of the project. And I think there lies the difference. $2.5 billion opex, funded by $500 million capital investment and $2 billion from project cashflows.
How could investment over the duration of the 19 year mine be $500 million when the 2018 scoping study estimated pre-production capital at $400 million?
Emmerson have consistently stated $2.5 billion in their corporate presentations for total investment over the life of the project.
I don't think that theory holds up as the CLN conditions regarding funding and permits can be waived by the consortium if they so choose:
"A summary of the CLN Subscription Conditions which have to be satisfied by the 30 September 2022 long-stop date (of which (ii) to (vii) below may be waived by GQC and GSM jointly and not severally) are set out below:
(i) the requisite majority of Shareholders approving the Resolutions at the General Meeting (this condition cannot be waived);
(ii) the Company confirming in writing that there are and will be no Events of Default (as that term is defined below) on the proposed date of the drawdown or will result from the proposed drawdown (the "Issuance Date");
(iii) the Company obtaining all requisite Government licences and approvals for the construction of its Khemisset Project and making the requisite announcements on AIM in relation thereto;
(iv) the Company announcing on AIM that it has signed definitive agreements and satisfied all conditions precedent for the draw-down of all project finance (debt, equity and other components) for the funding of the construction of the Khemisset Project ("Project Finance");
(v) the Company not being aware of any pending material adverse event information concerning the Khemisset Project which is inside information required to be disclosed under UK Market Abuse Regulation;
(vi) the Company having prepared a full "Definitive Feasibility Study", acceptable to the banking syndicate providing the Project Finance and providing a copy of such study to each of GQC and GSM; and
(vii) each of GQC and GSM satisfying themselves, in conjunction with the Independent Technical Expert to be appointed by the banking syndicate, of the operating and capital cost assumptions in the Definitive Feasibility Study as referred to in paragraph (vi) above."
Ed always does quite a good job in these interviews selling the fund and putting a positive spin on things.
But…£250k cash in the bank, enough for a few months of opex, no plans for a raise but planning on selling off liquid assets (presumably Portage?) to raise cash.
Leap not listing any time soon and when/if they do, Ed said don’t expect it to be at a premium so there’s room to grow.
So how exactly are they going to end up with £20-30 million cash in the bank?
It is not valued at historical cost less impairment, but at fair value.
From the accounts:
The valuations, when relevant, are based on a mixture of:
• Market approach (utilising EBITDA or Revenue multiples, industry value benchmarks and available market prices approaches);
• Income approach (utilising Discounted Cash Flow, Replacement Cost and Net Asset approaches);
• Price of a recent transaction when transaction price/cost is considered indicative of fair value; and
• Proposed sale price.
Pala €5m EBITDA, not revenue. So cash flow positive.
Big time gaming €33m revenue and $29m EBITDA so probably hugely profitable and cash flow positive.
LEAP still needed funding about 1 year ago, although they may be cash flow positive by now.
Again some actual confirmed figures for LEAP would be very welcome.
I'm a new investor here. Emmerson had been on my radar for a while and I've started a position recently after a conversation with a friend who works in the African mining industry. The two main takeaways from that conversation were that 1. Morocco is an excellent jurisdiction for foreign investment and 2. Despite point no 1, Morocco is notorious for delays where governmental approvals and permits are concerned.
There are no guarantees. But the resource, the location, geopolitics, and overall progress of the project make this a compelling investment in my opinion.
Nothing to fear?
Gaming Technologies was formed from the assets of GameTech UK, which entered insolvency in 2017 (after experiencing 'operating difficulties' and an aborted IPO). Fifteen months later, the assets were sold to the company that would become Gaming Technologies
Also, that company has a completely different business model to LEAP. It leverages its own proprietary software platform by connecting 3rd party developers and operators with brands such as Playboy.
Apples and oranges.
It's definitely possible, but if there was never any intention to IPO then why appoint Ed to the board of LEAP? There is no majority shareholder and I would guess IMG have more influence over board decisions and appointments than SEED.
A counter theory is that IMG are currently simply not interested in buying SEED's stake and are supportive of the IPO. They get the benefits of LEAP without the risks of full ownership. An IPO offers an exit to the other shareholders and an opportunity to raise funds more easily, which LEAP needs to grow its operations. But obviously now is not the right time to IPO. So we're probably in for a bit of a wait.