Member Info for moneyhawk

Rosewall, interesting question, but don't think there's been enough detail disclosed to really answer. Many different scenarios involved, but that kind of thing could come down to the contract clauses between JLP and BMR, which I would guess will be treated as confidential. One of the main points in all the possible scenarios is that we have to get back our total investment into the project plus 20% before any royalty would be payable on profits generated by kabwe operations.

In terms of getting a return on our investment plus 20%, it may not matter where the material has come from, and so wouldn't affect the time scale for BMR to be entitled to a royalty on future profits. But bearing in mind Borelli's business acumen and ability to get get a good deal, that may not be the case. And then after that it depends on whether BMRs royalty applies only to profits made from Kabwe's tailings, or profits from all material processed through Sable regardless of source

I think that's a bit of an unknown Rosewall. It depends on where the ownership of Sable sits (solely with JLP or with Kabwe Opperations - the JV company), how the entire operation with Kabwe and Sable is structured, and who makes the deal with GLR (again solely JLP or Kabwe Operations).

The BMR royalty is only applicable to profits made at Kabwe Operations.

lol minorminer,

You do know that if we do take ore from star zinc we'll be requiring more than just one boreholes worth?

This is where average grades become more important to consider than what was in just one of many holes.

Maybe we'll agree a deal with GLR to take the star zinc ore when they manage to get to the funding and licence sorted out to do it. But I've no idea how 'we' know GLR will be generating cash this year, or that CB won't get distracted chasing rainbows with a pot of rare earth at the end.

Best case scenario is that kabwe will be operational by the end of the year, just in time for the Christmas shutdown. And according to CB he expects kabwe to be up and running before Star Zinc is ready to dig up the ore. This time scale is more likely to slip than speed up imo. So its unlikely kabwe will be generating positive earnings before the end of the year, and when GLR would get paid depends on the deal. Will we be buying the ore from them, or entering a profit share agreement on whats produced from the ore they supply?

As for the grades at star zinc, GLR say average grades of 10-12%, with a small part at grades of 20%+, so saying 46% seems a bit misleading to me.

Not saying it won't happen, or won't be a good deal for both companies, but a bit of realism never hurt anyone.

Hi JofH, I think it really is as simple as that, the formula looks more complicated than it is when its written down as in the notice. Treat it as any other equation, and its actually very simple.

I'm not complaining about it by the way. I think its a good method of determining the level of award, and far better than having an arbitrary award of options given out when the company hasn't achieved anything (as often seems to happen at junior companies). Its clearly designed as an incentive for achieving certain things that are important to share holders and will lead to greater value of our assets. i.e. Sustained higher share price, getting our prospects proved up, and going into production.

And really its not an excessive award. I'm more than happy to see DW get 4m shares this year if the SP stays at 9c or above, considering its currently around 1.7

JofH,

I believe the start date for the performance rights is the date of the meeting, and to be tested on the yearly anniversary of that date to determine if DW gets his bonus.

For DW to get the full allocation the SP needs to rise by 200% from the starting price of 3c, and its on a sliding scale where he would get 25% of the performance rights if the SP increases 50% above 3c.

The formula (and % of performance rights for this part of the bonus scheme) gives:
200% rise = 9c (Award of 4,380,000 shares)
50% rise = 4.5c (Award of 1,095,000 shares)

So DW needs the SP to rise to at least 4.5c averaged over 60 days prior to 15th Oct 2019 to get anything, and 9c to get the full amount for this years SP performance part of the scheme. I think its safe to say we can rule out the proven reserves and production target performance rights for this years award.

very true brom :)

Its pretty clear that we can run Kabwe/Sable without additional ore, and it has been said by CB that he expects Kabwe to be up and running before start zinc is ready. The additional ore, from Star Zinc or elsewhere, just serves to improve the overall project.

Also relevant to remember that GLR haven't even applied for a mining licence yet, and CB has a bit of a track record here for being overly optimistic with the length of time licence applications take to get approved.

Anyway, the reason for JLPs last RNS referring to 'various potential suppliers' with no mention of GLR could be in GLRs RNS this morning. Looks like CB is going to jump on the rare earth band wagon over there, so the funds raised from the last placing for working capital and licence applications may have been diverted.

Been covered many times already, but just a reminder that DW does not have a target/bonus at a share price of 3p. They're an Australian company and work in Aus dollars, not British pounds.

DWs bonus is also a conditional scheme, for him to get the full amount of the SP component we need to see an average SP of increase of 200% from the starting price for 60 days, which was set at 3c, meaning the target for the full bonus is 9c, or approx 5p.

To get other components of the bonus scheme, we have to see growth in proven reserves and production of oil.

The details are in the notices issued last year:

http://clients3.weblink.com.au/pdf/88E/02028031.pdf
http://clients3.weblink.com.au/pdf/88E/02022312.pdf

topshare, in a nutshell, its to our advantage to source additional material for Kabwe, it prolongs the life of the project and means we're not confined only to what material is already there at surface, which has varying grades with the different stockpiles. There's also a suggestion that adding ore with high zinc grades will improve efficiency.

GLR aren't the only company we're talking to either. The last RNS referred to various potential suppliers.

I don't think there's anything more complicated going on than traders selling after a decent rise since the end of May. Always happens, active traders will lock in profits pre news just in case the news isn't good as their trading strategy. They are missing a potentially much bigger rise, but anyone who bought a few weeks ago is now on a 20%+ profit, which some are more than happy with for a few weeks and no risk that their profit will disappear overnight.

It wouldn't really be that unusual to see multiple majors joining up together to each take a slice. You only have to look down the road to Prudhoe Bay to see an example. BP are the operator, but Exxon and Conoco in fact have larger WI shares than BP.

I think most serious investors that have done their research accept that the farmout isn't definite, even DW advised its not done until its done. But it seems more likely than not that we will get news about it during June having been told that the final decision and documentation of the agreement is scheduled to happen in June, and there's just 13 trading days left. Also reasonable to assume that the preferred bidder is very serious about it, having now spent months in negotiations, and prior to that a significant length of time going over our data and preparing a bid.

So 3 possible scenarios:
1. Farmout announced in June
2. Scheduled date for the decision has been postponed, or
3. We're going back to other bidders to seek an offer from someone else

Take your pick for what you think is most likely in the circumstances.

There are very few days where this has gone above 4p. I can't see on my tracker the trade prices on each day for all trades, but have found 8 trading days where the price at some point went above 4p, only 2 days where it closed above 4p (12th and 16th June 2017), and all 8 days had trades below 4p at some point in the day. So its doubtful that there's many current holders who bought at 4p+, and even more doubtful that those people didn't buy also buy at lower prices either before or after.

I think this is probably just picking up from the RNS last week, which said the technical committee of the Zambian competition commission had recommended approval of our Sable purchase.

But positive that its starting to be covered in the press.

I wish they'd stop issuing RNS's for price monitoring extensions. A brief moment of excitement seeing 2 RNS's showing, quickly followed by confusion and uncertainty looking at the SP, and then disappointment clicking the tab to see its just price monitoring notifications.

Hope so too! 2nd week of June now, all depends on just when the decision is/was scheduled to be made, but the possible date for the news is getting closer all the time. As DW said:

“Final decision on approval for the conventional farm-out is now scheduled for June 2019 and we remain optimistic of a favourable outcome for our shareholders in the very near term."

Sound reasonable guesses, generally we're looking at a steep upwards trajectory in earnings even if you're a little more pessimistic with forecasts.

Going back to DW's comment where he said at this stage it 'usually' takes weeks not months to close a deal, I think its fair to say we're now into months not weeks by most peoples definition, probably around the 3 month mark when we do get the news.

So a thought occurred to me, that either we're dealing with unusually slow negotiation and due diligence teams, or the size of the deal and work involved is greater than is usually seen on a farm out deal.

Hoping its a case of the later.

Then again, maybe DW does view 12 weeks as weeks not months. We shall find out soon.

10.59 - I'm not sure it really matters what market has the announcement first. Take BP and Shell for example, both listed in London and New York, but I've never heard anyone suggest that they can't update in London when New York isn't trading. In a 24h economy and companies listed on markets across the world, an announcement has to be made somewhere first.

A problem would be if an announcement was made on one market but not another relevant market which was trading at the same time.