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The point about the diamonds is that they’re the only asset that Vast own (but don’t possess) that could have got them out of the debt soup they’ve thrown themselves into, and for which the renegotiation deadline is 29 September. The comment on this that should have been a part of this RNS is notable by its absence. They’re consequently over a barrel, hands and feet secured.

You have to ask why they have made such an announcement at this juncture. Their advisers may have have told them it was required before any share issue could be made. But they can’t raise enough money in the equity market to get themselves out of their debt position.

Balancedviewer: you are just plain rude. I’m not interested in whether you’re interested in me or not. What interests me are the facts of Angus’s position and rational analysis based on those facts and on past experience.

There’s nothing else for it - in the bin you go.

Balancedviewer: your response to SillyButtons’s post re the hedges is rude and unhelpful. It seems to me that Angus are merely taking another bet on the future price of gas and, as SillyButtons correctly observes, Mercuria are more likely than Angus to be the beneficiaries of the changes in the terms. What is your understanding of how the new terms will work?

Meanwhile, there’s no mention of the permanent flowline, nor of the progress of the proposed long term Global Re-Financing. The existing loan terms are usurious. The terms of the proposed replacement, allowing for the royalty, are more so.

It’s no good representing the views of other posters as insincere or irrelevant unless you address the issues they raise with a better analysis than they have come up with. Name calling doesn’t do it.

Balancedviewer: if you insist on insulting other posters, would you mind getting simple facts right? Lord Lucan’s resignation was the subject of an RNS on 15 August.

Asimpleinvestor: what is a credit swap? How does it work in a company like Vast?

There’s no knowing at what point negotiations stand between Mercuria and Vast. However, the terms of the loan(s) give Mercuria the whip hand. It would be unusual if Vast were not keeping Mercuria very fully informed of their ongoing status.

If the diamonds don’t turn up in immediately saleable form very soon, Mercuria will be able to impose virtually whatever terms it wants to renew its loan(s). They’d most likely prefer Vast to carry on running the assets but Mercuria’s share of any future revenues/profits will in all likelihood be much higher, reflecting their risks in continuing to leave their financing in place. I doubt alternative financing could be arranged on better terms. This is why the diamonds have become the principal topic of posts on this site. Under the loan terms, no significant assets may be sold by Vast without Mercuria’s approval.

HITS: you will remember that the CPR has this already depleted field depleting further, by c.10% p.a. after year 1. But the figures in the CPR table of annual predicted output has production falling off a cliff from 2026. With a fourth compressor being installed early next year for the purposes of regulating/optimising production, I should imagine that this field is going to need very careful management virtually from the date the forward contracts expire. There’s a reason why Mercuria set up these debts, hedges and royalty the way they did.

Kever: you prove my point. Naīve to the point of highly gullible. Did you know that “gullible” is not in the dictionary?

Further to the parcel: if Vast can’t repay their loans this month and their creditors play hardball, Vast will soon be forgotten. Investors have short memories. If Vast continue in business, it will be because their lenders agree to a re-structuring. They won’t do this for the sake of Vast’s Zimbabwe properties. And the terms of a restructuring will be in favour of the lenders, not Vast’s shareholders. There’s often a relief rally that can last quite a while in these very small stocks when a restructuring happens and the company is kept in business. It’s perfectly possible that will happen here. I think it will depend on Mercuria’s level of confidence in Vast’s other assets.

Asimpleinvestor: you are clearly correct about this. It’s naïve of your detractors to place reliance, or even hope, in the goodwill or good sense of these people in senior positions in Zimbabwe. They’re generally ex-freedom fighters (or, more likely, the people who sent people out to fight) and, theoretically, Marxists. They detest ex-colonialists. The more Vast investors feed their vanity, the worse will be the outcome.

In real terms, it will make very little difference to the parcel of diamonds, which appears to have gone. But why do small investors here want to embarrass themselves in this way?

Asimpleinvestor: if, as seems very likely, Vast can’t meet the terms of the debt as to repayment this month, I think you may expect their lenders to require a quid pro quo. This may take the form of extremely onerous royalties on Vast’s future production (of anything). Vast appear to me to be over a barrel. They may end up pedalling very hard to stand still, leaving very little for shareholders. It’s happened before elsewhere.

Ralladw2: have you considered the possibility that the late-September deadline was imposed by the lenders and that they may want their money back one day. Or assets in lieu (and I don’t mean diamonds in an RBZ vault).

Daffypicker: which update was that?

And as for “process”, a High Court order duly presented by a senior officer of the Court trumps “process”.

Spratt1982: well if they exist, why does the RBZ refuse to comply with a High Court order and hand them over to their rightful owners? If you were to divulge your expensive information in a telegram group, perhaps their begging letters and cringing emails to the RBS might swing it in Vast’s favour?

,,, and as for insurance, no international insurance company would cover a risk like this. In the unlikely event that a Zimbabwe insurance company has insured them, first, the combined annual premiums over 13 years would exceed the present market value of the diamonds; second, the fact that the diamonds don’t exist in fact, but do IN LAW, means that Vast wouldn’t have a legal case for claiming on the policy.

There’s going to have to be an alternative source of finance to replace Vast’s borrowings. With the share price continuing to fall, the chances of raising enough money through the equity market have receded.

Kever: well that’s rude. What exactly can Vast do if the diamonds are absent? And I can think of a number of simple explanations why Vast have not RNS’d it.

Hectorlongprongs: what’s a chutney ferret?

asimpleinvestor: I agree with you. It seems to me that a lot of investors here are in denial. The diamonds are most likely long gone. If they’re not, they’re unlikely to be returned to Vast and there‘s absolutely nothing that Vast shareholders can do about it.

Asimpleinvestor: I agree with your summary.

Re the diamonds themselves, are contributors here aware that Grace Mugabe, the second wife, and widow, of Robert Mugabe, has for many years, certainly since before the diamonds were lodged with the RBZ, owned a diamond cutting and trading company in Hong Kong? She liked diamonds, was alleged to have stolen lots of them when she was First Lady. I should think you are right, the recipients of any letters pleading for the diamonds’ return will be greeted with the horse laugh.

Ocelot: hardly re-risked, surely? They were talking just to Aleph and its co-investors a couple of months ago. Now they’re talking to a number of potential lenders, implying not just Aleph etc. I can only assume that this is due to one or a combination of:

1.Aleph don’t fancy lending the whole £20mm.

2.Angus have found they need more than the £20mm.

3.Angus have just realised that the proposed Global Re-financing will cost them more than their existing facilities

4.the depletion rate in the 3 wells is already kicking in

Are Mike Wells and Jonathan Tidswell-Pretorius involved in the debt negotiations? If not, what are they doing?

HITS: I take your point re gross turnover and the hedge contracts. Have you made allowance in your post-royalty revenue expectations for the 10% downtime for regular maintenance and the 10-15% p.a. depletion rate after year 1? If you allow for these, for interest, for tax, for opex, for the third compressor and for further drilling, they’ll be struggling to show a profit. Further wells and a third compressor may enable them to keep meeting the hedge requirements etc but will accelerate the depletion factor. They need a sustained, large rise in the gas price.

HITS: I keep saying this, but the short term Aleph loan at an effective 20% interest is much more expensive than this. If you annualise the 3% 3-monthly arrangement fee and rollover fee (if they roll it over), the cost is much higher. Similarly, the interest at 15% on the proposed Global Re-financing is actually more costly than the interest it replaces, isn’t it? £20mm at 15%= annual interest of £3mm. £7mm.left on the Mercuria loan at interest of 17%= £ 1.2mm. £9mm on the combined Aleph loans at 20%= £1.8mm, plus roughly £0.3mm in fees. So c. £3.3mm. On the existing loans.,But the 8% of turnover royalty kicks in immediately, so assuming annual gross turnover of about £18mm, that’s an additional cost of £1.44mm to add to the £3mm in interest. So about a million more than they’re currently paying.

The quantums above may be out of date but you can see what I’m saying, can’t you? However you cut it, it’s a fair bit more expensive. What am I missing?

ocelot: the issue with dilution, which merely means that there are more shares in issue, is that if the company ever manages to pay a dividend, it is increasingly thinly spread. the value of a company, as expressed in the share price, used to be defined as the discounted value of expected future dividends.

re the issue raised by another poster who asks for the date by which the debt will have been repaid by earnings from saltfleetby, this is bound to be merely a *** packet calculation in the absence of any data on opex and on the status of the global re-financing negotiations, as well as on the medium term performance of the existing wells etc.

i’m trying to make up my mind as to whether lucan’s policy of intermittent interviews and his answers to investor questions, in which he established a pattern of consistently misleading investors, was preferable to mr. herbert’s policy of keeping the owners of the business which he is running largely in the dark. i’m sure that the lenders have far better and more up to date information than do the shareholders. so does mr. forrest. in view of the fact that much of the debt in the hands of aleph and their connections is in effect convertible to equity, it doesn’t seem right to me that other shareholders are at such a disadvantage.