Member Info for OofyProsser

Yes, Ocelot, but while Tim Kaye, the Director (non-Board) of UK Operations is supervising work at Saltfleetby, how is Mike Wells, the Director (non-Board) of UK Operations filling his day? And what is Jonathan TIdswell-Pretorius doing? And is Andrew Hollis still among those present at Chiswick?

HITS: I don’t think I’ve seen a reference in any of the recent posts here to the 10% annual decline in production from Saltfleetby after 12-15 months, nor to the 10% annual loss of production due to necessary routine maintenance. These figures are in the Wingas report and the 2021 CPR. The downtime estimate makes no allowance for non-routine events.

Is the permanent flowline behind schedule?

RE the royalty, it’s 8% of turnover, but all the gas is contracted for sale to Shell, so it should appear as turnover in Angus’s p&l account. The gross sum will then be payable to Mercuria. It would seem odd if the same sum of turnover were taxed twice, but whether tax will be payable on it by Angus or Mercuria, or both, it would be interesting to know.

Spratt1982: what makes you think a court cannot rule in a case like this without seeing the object of the litigation?

If the diamonds are there in the RBZ vault, why will the RBZ not release them to Vast? No one is questioning their ownership, or Vast’s right to them. In whose interest is it to refuse the court order and the sheriff’s right to enforce it on Vast’s behalf? If they’ve been mislaid, the RBZ has had a good long while to find them. The RBZ has nothing to gain from refusing to release them, other than to delay the embarrassment of having to admit that they’re absent. Zimbabwe is an extremely corrupt kleptocracy with nasty, greedy people at the top. I’ve said it before, but I think Vast will be lucky ever to see these diamonds. I think they’re long gone.

Asimpleinvestor: I wasn’t trying to patronise you and apologise if it seemed I was. What do you see as viable solutions in the absence of the parcel of diamonds? I can only see difficult discussions with their lenders and/or share placings on a large scale.

“The inactive investor who takes up an obstinate attitude about his holdings and refuses to change his opinion merely because facts and circumstances have changed is the one who in the long run comes to grievous loss.”. J. M. Keynes,

Asimpleinvestor: Vast hasn’t got years, has it? It needs the money from the sale of the diamonds to repay loans, doesn’t it? The loan repayments are already late. Vast won’t be get getting cash flow for the foreseeable future sufficient to replace this money, so they will shortly be in the hands of their bankers. Any bail-out will be on terms that are ungenerous to shareholders.

Asimpleinvestor: I’m not talking about the legal system, I’m talking about whether the diamonds are there and if they are, why the RBZ won’t hand them over. If you’re saying that they are there but won’t be handed over to Vast without the payment of a bribe, that’s a valid viewpoint but you’d have to have a view as to how big that bribe would need to be, as well as whether the MD of a UK-listed company would recommend to his Board that a bribe should be paid. I think Vast are in a cleft stick. They could end up paying a bribe, in the highly unlikely event that they took such a course, and still didn’t get the missing diamonds back. In which case, I don’t know what the auditors would say about the money lost in such a way.

Asimpleinvestor: well, in my view the only thing that matters is whether the diamonds are still there and whether Vast can get them out. The rest is sophistry. Vast’s successful court cases and the visit to the RBZ with the deputy sheriff clutching the court order in Vast’s favour have come and gone. The Reserve Bank says they’re working on developing a protocol for the release of the diamonds. How about, as I’ve suggested before, the Governor signing a chit authorising their immediate release to Vast’s representative and instructing the clerk in charge to go into the vault, find the diamonds and hand them over? It’s not really very complicated, is it?

Xcoder: checked what, and how?

Asimpleinvestor: whether the parcel of diamonds exists and is in the RBZ vault is not irrelevant - it’s the whole point. If it’s not there, it’s the legal case that’s irrelevant.

Ocelot: so, the Board now has 5 members: the Earl of Clanwilliam (the hero of NMC) as non-exec. Chairman; Mr. Herbert, CEO; Carlos Fernandes, Finance Director, Mr. Zielicki, non-exec. Director and Paul Forrest, non-exec. Director.

That’s two executive Directors. One non- exec. Chairman with a patchy past record on company Boards, and a major shareholder who appears to be constantly feeding out his massive shareholding into the market.

Below these, there appear to be four non-Board Directors: the recently-demoted Andrew Hollis; the somewhat less recently demoted Jonathan Tidswell-Pretorius; and the two Directors of UK Operations - the newly-appointed Tim Kaye and Mike Wells.

Is this your understanding of the position? Two executive Directors. One somewhat discredited and therefore weak non-exec Chairman and four non-Board Directors who seem to have a lot of scope for treading on one another’s toes. I can see what the CEO and Finance Director must be doing with their time (though the former’s other Directorships must be taking up a considerable amount of his working day) but have no idea what’s going on at the level below. Any ideas, anyone? It’s looking a bit like the Marie Celeste at Board level.

Ocelot: yes, but what’s happened to Mike Wells? Is he still there? And if he’s not, is the newly-demoted Andrew Hollis still there?

Yes, Ocelot, but what is Mike Wells doing now?

Yes, Ocelot, but what about Mike Wells?

Ocelot: do you know what’s happened to Mike Wells, who was appointed non-Board Director of UK operations in 2019? I seem to have missed the update on him. They haven’t got two chaps with the same title/job description, have they?

Pactrol: I should have added in my earlier post that Angus’s 2021 revised CPR predicted 10% annual downtime at the Saltfleetby plant for maintenance. I don’t think the optimists here have factored that into their calculations either. So with the 8% royalty, that’s 18% of annual production lost p.a on top of the expected 10% annual decline in production after year one (ending at the end of August). If you look at the CPR, it predicts quite a large fall-off in gas production from the end of 2025, soon after the original hedge contracts finish.

Pactrol: the Angus management under-estimated the costs in the first place, then they wasted 18 months in arranging finance, which in turn proved grossly insufficient, owing to the fact that costs rose at a furious place and the second-hand plant they had planned to build was not allowed under the prevailing regulations. Then Covid didn’t help and every subsequent stage, first of the building of the pipeline, then the plant, then the sidetrack, progressed at a snail’s pace. In the end, they failed to get the plant operating before the end of August last year, which left them owing many millions to the hedge “providers”. And then the sidetrack, which they estimated at 48 days work (maximum) and £2.8mm cost, took six months and required a long series of expensive expedients to get if to flow gas, eventually costing Angus well over £10mm and counting. All the while the debt which they’ve been unable to afford to repay, and the hedge payments which they couldn’t afford to pay, have mounted up. And the ongoing operating costs of Saltfleetby have gone through the roof.

Add to the above, that as soon as their “global re-financing” is signed, Mercuria take 8% of their turnover in royalty payments. And that after 12-15 months, the gas flow is forecast to fall, by 10% or so per annum. The back-of-envelope calculations in which some posters here like to indulge over-simplify the financial position. The basic financial position is that this is a gamble on a large, sustained rise in the gas price, without which it may still go up the Swanee.

Donek: apologies for my repetition of part of your post from yesterday. My old IPad doesn’t like this site much any more, I have to write messages in Notes and copy/paste them, and often miss earlier posts.