Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Have a fab week-end all.. Dom hen did a 0.05p.. entry,...but I was losing the will to live and let it go,... apologies Daffy... but I have a life!
1.75p Dom hen
2.0p StephenFryUp
2.2p Trout1
2.6p linton
2.7p Aiming High
3.1p HotairHopefully-HAH
3.3p NicetoMichu
3.5p DaffyPicker..
3.7p HoofHeartedAgain-HHA
4.0p MikeGP
4.0p Lowrisktrader-PS
4.1p MasterBaker
4.2p Ian.B
4.3p Malcolm
2.0p StephenFryUp
2.2p Trout1
2.7p Aiming High
3.1p HotairHopefully-HAH
3.3p NicetoMichu
3.5p DaffyPicker..
3.7p HoofHeartedAgain-HHA
4.0p MikeGP
4.0p Lowrisktrader-PS
4.1p MasterBaker
4.2p Ian.B
4.3p Malcolm
Should have said.. close of play Friday to get involved..?
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Closing price ( Mid).. on Friday 31st May. No prizes,.. no charity donations,.. just 'bragging' rights for then next month. If you fancy having a go, add your punt,..(say 0.1 incrementations to keep it sensible)... cut and re-paste for the next guy/gal.
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4.0p MikeGP
4.1p MasterBaker
4.2p Ian.B
4.3p Malcolm
... is still miserable. Anybody fancy some silly fun?
Closing price ( Mid).. on Friday 31st May. No prizes,.. no charity donations,.. just 'bragging' rights for then next month. If you fancy having a go, add your punt,..(say 0.1 incrementations to keep it sensible)... cut and re-paste for the next guy/gal.
4.0p MikeGP
NtM,
Every day that goes by is a day closer to July and DRC revenue. 8 -10 weeks?.... 40-45 trading days. Bring it on.
2 weeks from the broker presentations, on which a few of us LTH's sat in...---from the conversations with PF and MH, I got the impression that finance decision would be about 3/4 weeks away.... so by my reckoning... that is now in the next couple of weeks.
Goin got be very interesting few weeks. SL going well.... new airlines with additional flights and we haven['t even started at DRC and we have airlines introducing and/or increasing flights. ( Ethiopian and Qatar Airways).
Looking forward to seeing the sp at the end of the year.
It would appear that DRC's Congo Airlines have had a difficult time of it over the past years however they are looking to acquiring three A320's to reopen five African regional routes.
"Congo Airways (8Z, Kinshasa N'Djili) is aiming for significant recovery and expansion in 2024, including rebuilding its fleet with one B777 for intercontinental flights to the United Arab Emirates and Europe and acquiring three A320s to reopen five African regional routes, according to CEO José Lueya Dubier.
During a news conference on March 7 carried by Congo Emergent TV, Dubier disclosed that the national carrier was negotiating for a B777 for the long-haul flights and three A320-200s. These acquisitions would be financed through an unnamed Congolese bank."
"Meanwhile, Dubier said that targeted regional destinations for expansion include Douala (Cameroon), Lagos (Nigeria), Dakar Blaise Diagne International (Senegal), Bamako (Mali), and South Africa. Intercontinentally, the focus is on Dubai International.
Negotiations are also underway with the European Union Aviation Safety Agency (EASA) to obtain necessary Third Country Operator (TCO) authorisation by mid-2024, he said. "Why not make the inaugural flight to Brussels on June 30, 2024," he suggested. The European Commission continues to ban all carriers certified by the DRC's civil aviation authority (Autorité de l'aviation civile - AAC) for allegedly failing to adhere to the applicable international safety standards.
And we know that part of the WG remit is to help/training and infrastructure to deal with this...
However, Dubier appeared optimistic about Congo Airways' prospects after it achieved more than 65% compliance with International Civil Aviation Organisation (ICAO) standards during a Universal Safety Oversight Audit Programme (USOAP) Continuous Monitoring Approach (CMA) conducted in mid-2023. He added that Congo Airways had also passed the IATA Operational Safety Audit (IOSA) in the last three years."
https://www.ch-aviation.com/news/138487-drcs-congo-airways-eyes-fleet-route-growth-ceo
Addis Ababa, February 23, 2024
Ethiopian Airlines, the largest network operator in Africa, is pleased to announce a launch of a thrice weekly passenger services to Freetown, Sierra Leone via Ouagadougou, Burkina Faso starting from 31st of May 2024. This new route marks yet another milestone in the airline's extensive network expansion endeavor, connecting more African countries and providing travelers with convenient and efficient travel options.
The new thrice weekly services to Freetown will be operated using the most modern and eco-friendly Boeing 787-800 aircraft, offering passengers a comfortable and enjoyable flight experience. The B787 is equipped with state-of-the-art amenities, including spacious seats, personal entertainment systems, and onboard Wi-Fi, ensuring a pleasant journey for all passengers.
https://corporate.ethiopianairlines.com/Press-release-open-page/ethiopian-airlines-to-launch-passenger-services-to-freetown-discover-freetown-with-ethiopian-new-service-via-ouagadougou#:~:text=Ethiopian%20Airlines%2C%20the%20largest%20network,31st%20of%20May%202024.
3no x week= say 150flights annum x say 100 passenger/flight (?)--- at $40/pass= $0.6M revenue
Ian.
Agreed. The sentiment behind Rifle's pots is understood,... we LTH's have been here before.
BUT,.. we know the SL airport model works, it's attractive for the in-country Govt/Authorities,... as they have to little money,.. it's good for us as we get paid by the air carriers, in $'s, via IATA.
WSG have made the contract very tight covering off a number of 'difficul situation' scenarios. ie the early termination penalty, the third party out of country try arbitration, the return of kit etc., all good, solid moves.
As to funding. PF confirmed that initial funding would be from cash at hand,.. he stressed that they had a number of debt finance offers on the table already and he confirmed that the roll out of the five airports will take 18-24months,. so part of the funding will come from cashflow from the DRC contract, which will commence in July and will be circa a$10M in the first year regardless on the speed of roll-out.
As to the SP..... patience.
Some one on another board has just pointed out that we are paid in $'s the airlines,.. hence why would inflation in DRC affect our sales revenue. Which is a fair point.,..... and could be right.
However... whilst we are being paid in US $'s... we will be paying for services and staff in local currency?-- 400 odd staff across the five airports? Could EWSG have linked the costs associated with these elements of the contract to local inflation in DRC?... it would make sense to do that, especially when inflation is so high over a sustained period?
I guess time will tell.
DrM...
Not necessarily,... as I understand it from the Investor cal it grows in line with inflation, reviewed annually. Perhaps someone else on the call9s0 can confirm if I have got that right. I certainly asked the question about whether there was a review period within the contract to renegotiate the fees, and PF replied, there was an annual review. My recollection is that he said words to the effect that worst case situation it would rise with inflation. But I didn't record the call so I can't double check.
So if I have it right, the rate of increase will depend upon what the inflation figure is. The government target is 7%, refer to link below.
The average inflation over the past 10years to 2022 was 10%. It is forecast to fall to 6.4% in 2024.
It just shows how the contract could grow substantially, just on the inflation fluctuations.
The government target is 7%.
https://www.afdb.org/en/countries-central-africa-democratic-republic-congo/democratic-republic-congo-economic-outlook
https://ycharts.com/indicators/democratic_republic_of_the_congo_inflation_rate_outlook_end_of_period_consumer_prices
Dr M,...
Inflation linked revenues....
Yes... security fees will reviewed annually,.. and lowest rate of increase will be in line with inflation.
Q: Anyone hazard to guess average inflation rate in DRC over past 10 years?---
A= 10%
So, if inflation cine on that trajectory, and you compound that up,. the contract near double to $20M/annum ( paid in US dollars via IATA.) in circa 6-7yrs. That is if we do noting!--- no growth in passenger numbers,... no additional domestic passengers, no freight, no extension of the contract to include additional airports.... etc., ( they have over 30-ish)
Note: --- I'm sure PF said the return or payment for the kit we install, which will be owned by WSG,... happens if the contract is terminated at the ned of the first 10yr contract period,..ie making it highly Riley that they will extend to the 15yrs...
You mean the Ferry that never carried one fee paying customer,.... in theory great idea,.. in practice a disaster.
Please don't remind us of that... I was having a happy Thursday,.. sun shining,.... work sorted,... and heading out for a beer with my brother,.... now I'm thinking Sierra Queen!
Likewise, the domestic passenger traffic, which is circa 2, 3 x the international travel. The domestic airport that WSG will operate, is the domestic airport that the DRC president uses.
The tax that WSG will collect will be circa $25/pax and will be made up of a part share of an existing tax, and a new tax of circa $12/pax.
The $10M revenue quoted is not reliant upon the passenger figures and the speed of the roll-out.
Air Quarter have just announced an increase in their provision from 1 to 4 flights a week.
PF believes that Air France are looking to increase the frequency of their flights to the DRC.
The British Government are also looking for a British Carrier to commence direct flights to DRC. However, for this to happen the security structures in place need to be improved. The Statutory body responsible for assessing airports make annual inspections. The next inspect in the DRC is November of this year. It is possible that the initial enabling works that WSG will have carried out by then would allow progress to be made on this.
MH confirmed that the operational set-up costs are inclined to be fixed costs and an y increase in pax traffic goes to the bottom line in terms of profit. It was clear from the discussions that the management believe there is the scope to considerably increase the contract value over the next few years.
This is MY take on that discussion, but I would suggest that a natural growth in international traffic, the add-on of freight traffic scanning and picking up a proportion of the domestic traffic, then $20M could be on the cards in 4 or 5 years.
Given enough time, PF may look to do several interviews over the coming weeks.
WSG have a conservative 10p/share value against the DRC contract based upon the existing contract structure.
Hope this helps.
DRC Contract
Previously announced in 2021 as being 20yrs. However, in-country PPP laws allow for an initial contract of 10yrs. We have 10yrs with a potential 5 years extension. Note, WSG will own all kit installed. If the contract is terminated after 10yrs with no extension the DRC must pay for or return all kit. This disruption and cost would suggest that the 5yr extension is most likely to be extended.
Should the contract be terminated early, WSG will receive 5 x annual contract value, so circa $50M min.
Should there be a dispute in the T&C’s, the arbitration body that will oversee any negotiations will be an International third party, outside of any in-house political influence.
The revenue due to WSG will be paid by the individual airline carriers in US$ to WSG. The monies do not come from a DRC source of African banks etc.,
The initial funding will come from cash at hand. The remainder of the funding will come from revenue generated by the security fees, as income starts in July 2024, and most likely debt funding.
PF clearly, would not take a ‘Placing’ off the table but it was made clear that is not his preferred route. PF confirmed that the company already had several debt-based funding offers on the table. Some with attractive T&C’s and others with less attractive.
The company has time in which to engage with the various lenders with a view to getting the best deal for the company. Given they have cash at hand, I got the impression that this process will stretch in to the ‘weeks’ rather than ‘days’ timescale. When decided, it will be announced to the market.
The roll out of the works/training for the 5 airports will be an 18-24month process, but the implementation has already started with staff in country. PF will be back in the DRC within the next few weeks and MH will most likely be in country towards the of May.
The current contract is for embarking international passengers only. The company are using historic date which suggests 400k pax/annum. WSG believe this may be lower than the current pax, however, want to commence operations on the ground before they comment further. For this reason, it will most likely be 3 or 4 months before any Brokers issue any new notes on the company as there forward-looking analysis will be based upon these numbers. They will also have the debt funding structure to hand by then.
The in-country company employing local labour will be 100% owned by WSG. They will be paid by WSG, and when all airports are operational, they estimate 400 employees.
The contract does not include freight scanning and monitoring. The DRC are desperate for this become in-country as this is, at present, sent outside of country for scanning, processing, and monitoring. It is likely that existing contract will be developed to include freight handling, however, PF stated that WSG must, in the short term, concentrate on deliver the international passenger contract.
.... very interesting the Port expansion works....
https://splash247.com/ad-ports-moves-to-develop-congolese-port/
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and more on the airport...
https://constructionreviewonline.com/construction-news/expansion-of-kinshasa-ndjili-airport-in-drc-to-resume-after-3-years-stoppage/
Almost certainly one of the 5.. it's the Kinshasa International Airport.
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Dr Mac...FYI. ..the departure tax is $55/pax.. not $60.
Departure tax
Departure tax
You need to pay a departure tax of 55 US dollars on international flights and 10 US dollars on domestic flights. You pay these fees when you check in for your departure. Get an official receipt and a copy for each fee. Hand the originals on request to immigration and at boarding and keep the copies.