Member Info for LTbeliever

https://korepotash.com/investors/analyst-research/
"Next update on Kola/DX - May 2023"

The essence is (I can't copy!) -- The Chinese are reviewing the project with a view to further reduce the cost and speed up the construction schedule, discussions ongoing to incorporate these improvements.

ALB,
Kola studies (external review HAS commenced) will come before Q4; remember the magazine article from February? Brad said "we agreed not to disagree" -- this probably means that the review was already in motion; how many more months will it take? 2-3? 4? If by September this is imminent, the Co will still have 4m+ cash, they will wait for the EPC's release, and not rush into a fund raise beforehand; plus, by Sept we will have some news on DX possibly. IMO
So, the risk of both projects has come down substantially IMO after today - and don't forget that the Minister is also personally involved and is putting pressure on all parties (good for us).
GLA.

the big question is how much we can get for DX - USD 50 mln, minimum, for 50%?
Any views?
The Chinese paid USD 180 mln for 50% of the potash mine rights in Ethiopia, a much worse location, distance from sea etc.

0.63-0.69 ALB, I think you are wrong; Co has to monetise DX soon, both for cash and to please the RoC Minister;
EPC is a matter of time, the Chinese have even met the Minister, and have guaranteed financing "within" 6 weeks of the EPC's completion.
Sounds like a done deal, all we need now is the external review for Kola, paid for by the Chinese.

Sol,
We know there is great potential in MSYS; we just need the Results and outlook for 2023 now so that the Mkt will also realise this potential and that the Co has turned a corner; a few more weeks patience IMO

0.60-0.63, you still expect to buy at 0.25?

Fluffy,
"Going concern" has to be stated in the Audited results; hence why the Co mentions that by Q4 funds have to be raised;
If you look at the same statement (going concern) from the Audited FS from last year, the Co said that funds were available until Q1 23; so now the Co expects the same funds to last 6 more months.
In any case, that's the worst case scenario, assuming that neither DX can be monetised by then, nor the EPC/financing will be completed by Oct. 2023.

Mkt is disappointed at the delay but neither dilution nor expropriation (the biggest risks) is happening, and the Chinese are throwing more money for their external review.
Fluffy, the SP will jump when the EPC or DX monetisation happens, IMO.
SP at these levels reflects some people throwing in the towel.

ATG,
People are pessimistic because of all the past delays, problems with the Minister etc, however this update shows that all parties involved are leaving the past behind and focusing on the commencement of both Kola and DX projects; simply because they have no other option and lots of time/money already wasted;
LT interest rates coming down, inflation down, USD down, at least the delay has improved the financial metrics of the project (and DX's attractiveness) making it less risky for the Chinese;
I wonder now if ALB and Flyffy will buy in?

One last thing, important iMO;
"PowerChina HAS engaged..." -- the review is already on the way, the Chinese are paying out of their own pocket so it shows that they are serious about completion and it's just a matter of time (and no extra costs to KP2).

I think the main question now is, will the fund raise come before the EPC completion and/or DX's monetisation?
If yes, how much cash will need to be raised?
Between Q3 and Q4 2022 the Co used USD 1.2mln, out of which 1087k were for DX and Kola studies; the rest for salaries; therefore, how much will need to be spent until Q4 23 (when funds will be raised)? 250k per Quarter? Q1 is gone, Q2 starting tomorrow, so I'd estimate USD 1mln between Jan-Sept 2023? Therefore, the Co has enough cash until the EPC or DX monetisation, IMO so a fund raise will only occur AFTER the EPC is agreed; if DX is sold before then it would negate the need for a fund raise IMO.
So, in conclusion, delay is bad but not the end of the road.

ATG,
Delay is definitely NOT welcome; however, it seems the Co is now moving faster and the main risks have been mitigated:
1. DX -- "The Ministry of Mines is working cooperatively with the Company to fully explore all strategic options. These options may include forming a joint venture for the development of DX with a 3rd party or a sale of the DX project."
2. No risk of license revocation / expropriation -- "The feedback to us from the Ministry is that these visits have been appreciated and are assisting the Ministry to better understand the Kola project and the capability of the Summit consortium members."
3. No imminent risk of dilution, implying that the Co expects the EPC before any fund raising; " The company will be required to raise funds before Q4 2023 in order to meet its current planned activities over the next 12 months. The Directors have considered various mitigating actions,"
4. Financing "within 6 weeks" -- "Summit has advised that the financing proposal for the full construction cost of Kola will be provided to the Company within 6 weeks of EPC terms being finalised." - that's a cast iron guarantee, IMO
5. this is the main negative IMO -- "PowerChina has engaged a number of external experts to support its review of the Kola design and they require completion of this review to support the provision of the required EPC contract guarantees. PowerChina has not yet advised Kore of the timeline to complete its reviews and internal approvals."
Not a perfect update but most of the concerns are being addressed, and now we have the added bonus that DX will progress simultaneously. It seems now that the only delay will be how soon the "external review of Kola's design" will take, before the EPC can conclude; 2-3 months?
We will know in 30 minutes how the Mkt will view this update.

Well, there were 2 RNSs by DVRG, where MSYS is involved in H2 22, and these were for 4+2 million for delivery in H2 22 plus another 6 c/f to H1 23;
On average, MSYS makes a minimum of 5% on these contracts so that's 300k in H2 22 just from the announced deals by DVRG; so this gives 900k + 300k, even ignoring any other MSYS business in H2 22.

Remember that GJB mentioned in the June presentation that the orderbook for H2 22 was already as high as the whole of 2021 Turnover (900k) - so 900k in June, for H2 22.

2mln would be a very good reason for Mgt to be relaxed about waiting for May for news' releases.

NU,
Logic would suggest that, with 500k services' revenue in H1 22, you will have at least 600-700k in H2 22 from the same clients; add more clients and equipment sales via DVRG and what do you get?
1-1.3 mln in H2 22, maybe 2mln for whole of 2022. IMO

NU,
I'm not worried tbh.
There used to be Jan. updates when Glenn was around, last year the results were released on May 30.
N Burton owns 5%, GJB 3%, Helium is out, still plenty of cash.
Why no update? Being biased, I'd say that the Mgt is sticking to making money for them and the big investors (who usually know what's going on), they know the only way is up so they don't waste time in minor updates, they just keep to the bare minimum.
It is my strong opinion that come June, we will not having these discussions.

Equipment sales are lumpy and big ticket so RNSs are needed; whereas recurring service revenues, on the other hand, are ongoing and low value (so no RNSs) but higher margin. Sept 2022's RNS (re Interims) , for example, showed a jump of Services' Income from 60k for whole of 2021 to 500k for H1 2022 (so, 70% of revenues for H1).
Plus, you have contracts announced in 2022 that cover both H2 22 and H1 23 in terms of revenues to be collected (eg Blue Carbon in Georgia US and the 10 mln order of DVRG in Central Asia, 60% of which is due in H1 23).
But above all, I see that whereas before G Brandon would twit about anything (immaterial news), now he sticks to only significant RNSs - that's why I expect the next RNSs to be material. IMO

We will get the 2022 Results in 6-8 weeks; The numbers, margins and outlook will make up for this silence IMO.