Member Info for M20ASH

Hi Rich, really interesting article you posted in the early hours of Saturday morning. As you read around the different threads, there is a lot of supposition about banksters and how they are taking the price of gold down to protect their shorts. First time I’ve read something contrarian that suggests that it is the longs that are bailing out to prevent losses on their leveraged bets. Maybe makes more sense than all the conspiracy theories that abound.
Anyway, I’ve also picked up on a few articles on Basel III and the move for gold towards a tier 1 asset (forgive me if I’ve got that wrong), but my understanding is that when that comes in, there will be a requirement to be able to back trading with 85% cash or assets so these leveraged bets will be forced to decline - I assume you have to be able to buy, if you go long or deliver physical, if you go short? I would love it, if someone could explain to me the implications as I am struggling a bit.
Assuming this is correct, my understanding is that it will not directly impact the price of gold per se, but it will reduce the volatility.
Perhaps then, we might see the true direction gold is heading?
P.S. I could be talking right out of my proverbial so please feel free to shoot me down. Everything helps!
Cheers, Ash

Hi LoB, has to be draught (taken me ages to overcome the spell-checking hobgoblin to get that right!). So, not much ale being consumed right now!
Prefer a slightly sweeter beer and down in the south west, Doombar is readily available plus the odd pint of Tribute (pretty much anything from Cornwall really), but my favourites come from the English-Welsh border - Wye Valley Butty Bach, Uleys Pig’s Ear and a pint of Bass from the Wales & West brewery.
However, as I have to drink from bottles, the ales are out and the fridge is loaded on a daily basis with Bud - Mrs A is almost on first name terms with the recycling guys as she leaves about the time they get here on a Monday. They think there’s about 10 people living here!
Anyway, good luck to the clarets. Their presence in the Premier League reminds me of when I started collecting Soccer Stars all those years ago!
Cheers, Ash

Thank Tones, very helpful

Things starting to perk up a bit this afternoon. Maybe some news in the morning? If there is, I hope it gives a positive outlook. 2021 promises so much potential.
Cheers, Ash

Hi Willowman, thanks for confirming my thoughts. Clearly some things should be taken with a pinch of salt.
Cheers, Ash

And there was me thinking that when sea water, or any other water for that matter, evaporates, any salt is left behind in the water and the vapour that forms clouds and leads to rainfall contains no salt. You live and learn....
Cheers, Ash

Hi Paul, only a short ferry ride up the Bosporus from Istanbul and you hit the Black Sea - it’s big!
Cheers, Ash

Hi John, I suspect the dividend payment will be in the next tax year at the earliest. I looked back at the 7th December RNS, which refers to the process e.g. a capital re-organisation, which I take to mean a reduction in the share premium account, which would be transferred to profit and loss reserves, enabling dividends to be distributed. Of course, any dividends remitted back from subsidiaries to provide the funds for the special dividend, would constitute income, which would reduce the profit and loss deficit, but I don't imagine they would want to achieve the required result just this way.
My understanding of the process is that a general meeting needs to be convened first to pass a special resolution requiring 75% shareholder approval. The company then need to apply to the court to approve the special resolution.
I am aware Hummingbird Resources went through this process in 2018. The companies house filings reveal that the special resolution was passed on 13 December 2017 and the court approval was received on 25 September 2018. The court that normally hears this type of petition is the Insolvencies and Companies List, formerly the Companies Court, which is currently sitting by way of remote Microsoft Teams Meetings.
Seems as though it may take a while yet, which is disappointing as the process could be further down the line by now...
Cheers, Ash

Hi John, another one worth looking at is Phoenix Copper (PXC). Possibly sat on a large porphyry deposit in Idaho, USA. Low market CAP currently, relatively small free float, safe jurisdiction, PEA due shortly. Has copper, gold, silver, cobalt and maybe a few other pm’s across the prospect. I think quite a few of the BoD have sound credentials, having been involved with mining for a number of years. Looking to start with gold/silver, but now copper is improving, who knows...
Been invested for a little while now, not a great amount, but adds to the interest. Doesn’t have the in-crowd, but some knowledgeable contributors on the LSE board and when it moves, it does quite quickly - sp base seems to have been established around 37-38p so maybe wait to see if it drops back after the PEA.
Apologies for off-topic. Just thought it worth sharing.
Cheers, Ash

Hi John, yes good to have some common points of interest. I was tempted to join in the other day when a few more familiar posters appeared, but not having much to say at the time I refrained. Sometimes things said on here a somewhat bizarre, even for my sense of humour!
I have no idea on where things are heading, but would be happy if pm prices stay where they are for 6-12 months. I only mentioned gold and silver as they are relevant to Ariana and it is interesting that they are looking to additional CU/AU opportunities - diversification can only help. I have a mixture in my portfolio that includes copper, lithium and cobalt besides gold and silver so opportunities abound!
I have also picked up on new rules being brought in through Basel III that will have implications for paper gold vis-a-vis ability to deliver physical gold. If that is the case, and it is due to be brought in at the end of June 21, might that give the gold price a significant boost? I expect there are many who know the inside outs of this so it would be interesting to hear any feedback.
Cheers, Ash

Hi John
I think the proposed increase in production in H2 21 will give a much needed boost - I note that gold sold in Q4 20 dropped to just over 3,700 oz and turnover, which exceeded $37m for the year is back in line with 2018 and a considerable drop from the $45m in 2019. It will be interesting to see whether the production guidance for 2021 factors in expectations from increased output in H2.
On a more positive note, further increases in gold and silver prices will help and further news on finalisation of the JV and dividend news must be in the near-term pipeline. I think there will be a movement upwards pending the dividend payment, but how much will of course depend on the amount and then a drop following the ex-dividend date. Not sure how I might play it - all tax-free for me as everything is in an ISA or SIPP, but others will have to weigh up the different tax implications for their own holdings. All good fun!
Cheers, Ash

Hi John, thinking about this a little more, if there is a restriction on the distribution of funds subject to the reduced tax rate, it may be they choose not to take advantage of the relief and pay the full rate in order to release the funds.
Again, purely conjecture and no guarantee that what I read is correct! After all, I thought that Turkish mining law required a further EIA before an increase in production capacity would be permitted, but the company have not disclosed anything regarding this.
On the subject of future reporting, it remains to be seen whether they continue to account for the joint venture using the equity method. Normally, this is used where the companies have significant or equal control, but I believe that the new JV agreement only requires a 75% majority in certain decision-making, which can be achieved by Ozaltin plus one other party being in agreement. If that is the case, then by definition, the third party is unable to exercise control and it may be more appropriate to account for the share as an investment at fair value.
Maybe someone else can shed some light? It’s a long time since I had to think about any of this - never did relish the more technical stuff!
Cheers, Ash

Hi John, virtually impossible to give an answer without being an international tax expert, especially as different rules and rates of tax will apply on individual parts of the transaction depending on who owns the shares in each company where the shares are being transferred.
For example, shares in Zenit, which are owned by Galata so this transaction will be subject to Turkish corporation tax rules as applied to Turkish companies. The basic rate of tax on the profit is 20%, which is sale proceeds less costs, which can be the price paid to acquire the asset, but in this case would only be the costs associated with incorporating the business. Further costs, including legal costs can be offset against the profit so these would have to be apportioned. There is then, however, a relief of 75% because Galata has owned the shares in Zenit for more than 2 years so the result is 20% CT is payable on 25% of the profit i.e. a net 5%, if my understanding is correct.
However, there is a catch in that from what I’ve read, the exempt element of the profit has to be credited to a reserve in the accounts and can only be distributed as a dividend after 5 years...
Could be that what I read was a load of tosh though!
I am also unsure how to interpret what the company are stating will be distributed. It may well be a completely different calculation to that used to calculate the tax as the costs in the balance sheet that will be written down upon disposal will relate to the carrying value of the asset and not just the original set up costs used in the tax calculation.
Cheers, Ash

Hargreaves Asset Management Limited is the parent company of Hargreaves Lansdown (Nominees) Limited, which holds the PI shareholdings, I believe.
Cheees, Ash

Hi all, a few thoughts:

If Ozaltin are paying $5m for it's initial 17% of Pontid, which is owned by GPE BV and Proccea are paying $5.75m for it's 23.5%, how does the money from GPE to Ariana rise to $16.5m? Answer, Galata, which is 100% owned by Ariana purchases 23.5% of Pontid, which is also 100% owned by Ariana through GPE, which is explained in Part 2 item 1 Summary of transactions and item 2 Flow-sheet diagram. It might seem weird, but it sorts out the shareholdings. It is stated that the Directors believe this money will not be subject to tax.

Question - the payment from Galata to GPE, whilst it nets down the payment received by Galata from $25m to $19.25m, I would have thought the purchase by Ozaltin of 26.5% of Zenit from Galata for $25m would be treated as a separate transaction and subject to local corporation tax on the gain at 20% prior to Galata making the payment of $5.75m to GPE for 23.5% of Pontid out of the net gain. The latter would not normally be considered an allowable deduction in relation to the former transaction.

The wording implies that only $19.25m will be subject to local corporation tax. This may need some clarification as to which is correct, although the difference is only $1.15m - small potatoes you might say.

I also think for a few, the details in note 5 Net Asset Statement might also raise a few questions. A couple are as follows:

1) if the existing JV agreement and the proposed JV agreement allow Ariana to sell satellite assets into the JV at 3x exploration cost, why is the cash received of £1.624m less than 3x the cost write off of the satellite assets of £0.891m? It may be that the cost written off is stated at historical cost, but not reflective of it's current cost using current exchange rates and the underlying devaluation of the asset, but why no explanation;

2) there has been a lot of talk as to the incremental value of the deal and how Ariana is undervalued given they will be receiving $37.75m in cash and also how much is 50% of the net proceeds after costs and tax. The net asset position per note 5 indicates an increase of £11.5m after costs and tax. Is the dividend going to be 50% of this amount or the total proceeds less lawyers fees, etc and tax as quite a few seem to think? 50% of this would probably exceed the net asset increase, hence my question, especially as the BoD were originally talking of something equivalent to the $5m payable by Ozaltin for their initial stake in Salinbas - why the big jump?

I also thought there would be more information regarding the JV agreements. If the terms of the JV and protection of minority interests are only governed by the Turkish Commercial Code are we expected to source and read this? Is there anything else going to be distributed before we vote?

Sorry, may seem a bit rambling, but perhaps worth bring to investors attention.

Cheers, Ash

Don’t worry. Same thing happened to me, which is why I knew the problem!
Cheers, Ash

Hi VanVan, I don't think the structure has changed, it's just there are 2 options - message view or thread view that you can switch between by selecting the green button to the right above the messages. I always use message view so I can see everything. Unless there's something else that I haven't noticed?
Cheers, Ash

Proccea are paying Ariana $5.75m for their 23.5% stake in Salinbas.

Hi CK, fairly sure the plan will be to finance activities and mine construction out of a combination of JV cash flow or debt, which should largely be external, but may include repayable loans from Ozaltin.
My reasoning is that if Ozaltin were obliged to front up further costs to acquire their 53% stake, it would be within the terms already disclosed.
Cheers, Ash

It’s funny John to think back to a time when the majority of RNS releases were very to the point and often criticised for not really selling the story.
Now I find myself thinking what are they not saying here or why do they continue to talk about revenue, including silver sales and at the same time quote cash costs with a note in the small print that these also include the silver credit. Investors are taking one away from the other and coming up with a nonsense profit number. Why was there no disclosure around the increase in the LOM base for the annual mine amortisation that kicked in extra profit in last year’s accounts? Wasn’t handy having a new auditor happy to sign that off...
All these things make me doubt the trust I had a while back. The longer term potential is undoubtedly there, but investors would be wise to read between the lines a little more.
Cheers, Ash