RE: Corporate Structure5 Jan 2025 15:02
Hi Feeks - I'm glad you find my ramblings useful. Glencore - I'll try and unpick a tangled web:
1. Historically Glencore have said that they weren't (perhaps also 'aren't under new boss Gary Nagel) interested in greenfield development. Their business model is securing off-take from developed mines (sometimes part-financing that themselves) and trading physical resources around the globe. That's what they do.
> Developing themselves a project of the size and complexity of Zanaga is not what they do, for 100s of practical reasons.
2. Leaving aside Glencore's antipathy to 'greenfield development' (as above), specifically with Zanaga, or Jumelles as the JV with ZIOC and since Xstrata days, the project was always been valued at NPV. If Glencore wished to buy-out ZIOC they would have to do so at the NPV, and the updated NPV was only produced at the end of April just gone.
Then Glencore would have to secure 75% of the issued shares. Problematic. Furthermore Glencore are the ultimate insiders and there would have to be full disclosure of everything that they were party to. Given the sensitive nature of Strategic relationships (and there are eye-wateringly tight bilateral and multilateral confidentiality agreements in place), as well as Congolese sensitivities, then full disclosure was never an option. Therefore nor was a Glencore buyout.
Thus from historical greenfield antipathy, NPV methodology, and current sensitivities I do not think Glencore taking 100% control has even been on the cards.
Going forward from here there is one factor that has not been discussed at all - except in some December posts which I had pulled out of an abundance of discretion. Glencore have 'previous' with Brazzaville. Think 'loans-for-oil'. I'm certainly not going into detail here but Google if you must. The upshot of that is that all stakeholders (current and future) very likely see the advantages of Glencore retreating from the front line of the project and, in doing so, allowing in globally significant Strategic Interests as new cornerstone investors to actually develop Zanaga. This new arrangement would remove reputational and legacy risks - of great importance to huge, image-conscious listed companies. Glencore get their LoM off take or whatever they negotiate with our Strategics, plus an equity stake, but they no longer have their brass nameplate on Zanaga's front door.
So, by my playbook, our incoming Strategics will be buying-out Glencore at NPV - which means under' tag along rights' the same offer will be made to us ZIOC PIs. Hence the company 'briefing' us at the investors' day this coming 11th Feb..
Great, isn't it?!
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