Member Info for OofyProsser

Whoever’s in charge at Angus needs to get a grip. As a schoolboy, if I couldn’t finish my work by the time I left in the afternoon, I was required to take it home and bring it in, finished, the next day. If they really haven’t got time to answer investor questions, these debt negotiations must be going right down to the wire. That doesn’t presage an advantageous deal for Angus, does it?

If Vast do succeed in getting the parcel out of the RBZ (a big if), I doubt it will contain the diamonds that Vast deposited all those years ago.

Oh well, that’s all right then.they should be able to get cheap bank finance for that. Odd that they haven’t thought of it.

Ralladw2: attempting to profit from trading shares in an AIM-listed company which is unable to raise more equity capital and whose debt is due to be repaid in full within 4 weeks from the proceeds of probably non-existent diamonds is not a very sensible strategy, whatever profits the practitioner may have made in the past.

It’s not just the debt, is it? It’s the liability and the potential further liability to Romanian taxation. Even if the diamonds were to materialise, their value would struggle to meet a combination of the repayment of outstanding debt and these sums. Without the diamonds, investors here are going to have a very nervous February. With the share price at the nominal price, placings are out of the question, unless p&ds can be managed. The company’s brokers may jib at that. Vast are in a deep hole and, from these figures, carrying on digging is making things worse.

Ocelot: “meandering in these low zones” is one way of putting it. Falling consistently day after day, month after month, is another, more accurate, way. As to all the possible bad news being discounted in the current share price, that remains to be seen, doesn’t it? If Angus fail to get the re-financing completed, all bets are off and the spectre of a very low priced bid may become reality. If the terms of a re-financing are as onerous, or more so, as the current loan terms, the share price still has scope to fall a lot further. This is a heavily depleted field, the costs of getting the gas out go up marginally every day while the gas remaining and its pressure decline. A huge rise in the gas price would help but it’s not doing much currently, is it, and investors will soon be looking towards gas prices in the Spring and Summer? The management are keeping their collective heads down. Mr. Herbert’s physical resemblance to a Trappist monk is being borne out in his verbal reticence.

There’s always the possibility that the existing bridging loan may be converted to shares but that will require a bid - in which event the price won’t be generous. Between Trafigura and Mercuria, Angus appears to be between a rock and a hard place. These are not charities.

He probably thinks if it goes up 94% from here he’s in profit.

Bubblepoint: yes, and as the CPRs tell us, gas flow is expected to decline by 10% p.a from 18 months in. And the 8% royalty will absorb some of the income from the depleting flow.

This acquisition puts one in mind rather of Paul Forrest’s purchase of shares in AAOG a while ago, a year or so before AAOG achieved the status of a cash shell.

Ocelot: an amusing post. So they’re borrowing £20mm. To pay off debts of £17mm. and make Angus debr-free.. that’s all right then

Angus got so lucky with gas prices, they should be debt free now and paying substantial dividends to their shareholders. Inexperienced management taking poor decisions and even more dilatory action has led them to their present perilous position.

Recurring revenues should have led them to pay their loyal shareholders, not to gear up.

Asimpleinvestor: under the Companies Act, no company is allowed to issue new shares at a discount to the nominal price of the shares. Unless there’s some special provision re this for AIM companies that I don’t know about, this will preclude further issues below 0.10p. In practical terms, it’s going to be very difficult for them to find people to support a new issue at 0.10p while the market price stands at close to a nil premium to 0.10p, isn’t it? Even a pump and dump in advance of a placing represents a risk to supporters of such an issue as it will seem pretty obvious even to the most naive small investor. Vast need the diamonds. Anyone got a phone no. for the Mugabe house in Dubai?

Bubblepoint: I don’t see it as a game changer either, just another issue that will have to be ironed out by the parties to the refinancing, at a cost that will be borne ultimately by Angus shareholders. To repeat, Shell buys all the refined gas from Angus, which is carried to its plant by NG, and mixed with gas from other sources and sold on to Shell’s customers. If the contract is for all the gas and suddenly Angus wants all the gas to be sold to Trafigura, a price will have to be paid. It’s just business.

Bubblepoint: the pipeline is the NG pipeline, which is paid for separately, as I understand it. The gas is delivered by this pipeline to Shell’s facilities. Shell has agreed to take all the Saltfleetby gas. They have a contract. I don’t know the terms of that contract but “all the gas” seems to me to suggest that the contract may have to be adjusted if Angus wants it all to be sold on to Trafigura.

The hedge contracts are with Mercuria and have nothing to do with the offtake agreement.

My point is that there may well be another cost in relation to this if the Trafigura deal is to go through. This potential cost has not been raised before on here. Unsurprisingly, there hasn’t been an investor question on it.,

..start, not stater.

Bubblepoint: what have the hedges got to do with it?

The Earl of Lucan’s statement was that all the gas was being sold to Shell. In the absence of anything to the contrary, I prefer to rely on this. Yes, if they drop Shell, there’s likely to be a quid pro quo. If you add this to the compensation that will be due to Mercuria for the premature settlement of their forward (hedge, swap) contracts, and the 8% of revenue royalty that will stater to be paid to Mercuria as soon as the proposed Trafigura deal goes through, the latter are going to be somewhat out of pocket. I should imagine these factors are featuring in the endless negotiations between all the parties to the proposed Global Re-financing.

Well Buublepoint, that’s not what the Investopedia and many other definitions of “offtake agreement” say. They all say it’s a commitment to sell a commodity, including oil or gas, to the party of the second part. In this case, ALL the gas. The agreement can be renegotiated/cancelled, but there is usually a fee paid to the party of the second part - in this case, Shell.

HITS: are you sure about the proposed fixed offtake agreement? This is from the announcement in August 2020:

“We are pleased to have signed this agreement with Shell Energy which will cover all of the gas produced from Saltfleetby,” said managing director George Lucan.”

“All of the gas” suggests all of the gas. In other words, Shell would have to be consulted, at least. Whether they will have to be compensated depends on the wording of the contract.

I agree that the quantity and price of the fixed price contract are going to be very important. Assuming the Global Re-financing takes place at all. It’s quite possible it will offer Angus shareholders an even worse deal than the existing forward (hedge) contracts. Mercuria will want generous compensation for giving up their lucrative existing contracts.

Sandy: you’re missing the point, but I’ll take the trouble to answer these remarks one more time:

What difference does it make whether the real estate asset was put up by a Vast shareholder?

As far as I’m aware, the offtake agreement with Mercuria ended in April 2022. These are two recent RNS’s that apply:

“US$3,546,600 (2022: US$4,975,129) secured offtake finance from Mercuria Energy Trading SA. The loan is secured by a charge on the assets held by Sinarom Mining Group SRL which is the holder of the rights to the Manaila Mine and by a pledge on the shares of Vast Resources PLC 100% holding. The loan bore floating rate interest during the period of 10.7%. The repayment of the loan is to be made from surplus cashflows generated from BPPM.”

“The group said the off-take agreement will be effective until April 2022.”

In one of the recent RNS releases outlining details of the loan extensions, $50,000 is to be paid thenceforth to Mercuria from concentrate sales. If that’s what you’re referring to, no, I have no idea whether Vast has met this requirement. I’ve no reason to believe they haven’t. It’s de minimis though in the context of Vast’s financial state.

The fact is, Mercuria has not received the cash it was owed in May 2022 and therefore is able to enforce its covenants. The parcel of diamonds has been expected to enable these payments to be made. There’s not much comment on that recently. Vast’s obligations to Mercuria have been fairly consistently missed for at least eight months.

It’s also worth remembering that the Alpha loan is a bullet loan - capital and interest payable after 12 months (from 15 May 2022). So that’s a further £1.4mm by 29 February, on top of the capital sum, isn’t it? And the shares are now priced very close to their nominal value. Further equity raises would be highly dilutive and raise insufficient cash to deal with the debt service and cash flow issues here.

I’ll leave you to it now and wait until the next debt update. I’ve no desire to see the company fail and wish you success with it. Thumbing one’s nose at people who’ve lost money on a thing like this is unpleasant. You may in any case take the view prevalent on these AIM chat boards that you haven’t got a loss until you sell your shares.

Sandy: you’re pretty rude, you need to read what I write.

I’ve just outlined the position of the loan guarantor. You’ve come back to say I’ve got it wrong and then repeated what I said. Mercuria's security is over a different mining property. Their lien on Baita Plai is a third lien, not second. And the “payment plan” appears to have been missed so far. They’re going to want another sweetener. I’m not going to keep answering these unpleasant posts of yours, just wait and see. You’ve only got just over five weeks to wait.

Sandy: thanks for this. I have actually seen this before. Someone has put up a valuable real estate asset as security for the 20% (interest) asset-backed facility that Vast secured in May 2022, for full (bullet) repayment in May 2023. This person has a first lien on Baita Plai as security for this real estate asset being used in this way. The deal was arranged in this way because Alpha is generally a real estate lender and understands that form of lending and security. I’m not sure that this structure would give me much more confidence than a more straightforward loan.

Re the procedures to be followed in an event of default, it’s all there in the charges on the Companies House site. Any value remaining after the senior creditors have been paid out goes to the other creditors whose claims will depend on the seniority of their loans/goods and services supplied, and to the staff etc. That will take ages, during which the shares would be suspended.

These people at Mercuria are very smart. It might be an idea to have a gander at Angus Energy next month, when the deadline arrives for their re-financing.