Member Info for Poppyseed

It's a couple of months since the last presentation following results and it's now possible to request a so called Demand Driven Meeting on Investor Meet Company. I've just done it, it would help if more of us did the same

https://www.investormeetcompany.com/investor/companies

If you haven't done so already, register on their website, add Kazera to "My Companies", click on the downward arrow, then click on "Drive Demand, Request DDM Now"

The Tweet isn't confirmation of anything new harvd, it's merely a reference to a page of the last presentation used back in April for Investor Meet Company and unaltered on the website ever since. I'd expect to see something like a trading update soon.

Https://twitter.com/KazeraGlobalInv/status/1666028414657069058?t=wr6ieOdrR_aWcp2vgZA5dQ&s=19

Re Pathfinder/DE, I'd say flop of a company only in the sense that they had their very valuable HMS licence unlawfully transferred by the Mozambique Government to another company. That was in 2011 and they were left with no other trading entity so I would say it is of great credit that they have survived the last 12 years under various managements with one single purpose - to achieve the return of the licences under lawful process or to be compensated for their misappropriation.

DE joined as Chairman relatively late in the proceedings and his Southern African lawyer background has presumably played a part in finalising (confirmation imminent) what appears to be a tantalising and potentially highly lucrative solution for existing shareholders.

I've watched for years from a distance but I'm now in to see where the initial $2m payment for IMM takes them via a reverse takeover but more especially because of the numbers attached to the potential settlement with Mozambique in due course - and, interestingly, if I'm reading their Circular correctly, things are set to be structured so that the right to any settlement will be preserved only for the benefit of Shareholders who are recorded on the Company’s shareholder register before a reverse takeover, should it occur, takes place.

As we know, Align is being wound up anyway during the course of 2023 so will gradually cease to be any influence anywhere. I think there's already enough evidence on their website to suggest that new research notes have ceased and now seems to boil down to RJ occasionally retweeting previous scribblings, perhaps also adding a few comments on matters arising.

In which context, he tweeted last week that the keenly-awaited 2nd tranche of their AMS deal is imminent. Keenly-awaited because, once confirmed, AMS will have acquired the voting rights to the whole 280m shares to be transferred to them @ 1.5p during 2023. Clearly, this would spell the end of any Align influence and, importantly, provide AMS with the security of knowing that their expected influence and introductions will be backed by near 30% of voting rights. Given the substantial premium they have agreed to pay to get that influence here, we can only suppose they have at least one cunning plan to go alongside the additional value they must already see.

Https://twitter.com/AlignResearch/status/1661983775981436929?t=zqPZlhgxbCxOCFksJh4MKA&s=19

Https://twitter.com/KazeraGlobalInv/status/1661687500350291968?t=ppVT4xn30O7xudaQBPOhaA&s=19

The Circular also contains this interesting few paras:

Similarly, having taken such Shareholders’ views into account, assuming a reverse takeover occurs, the Board will seek to preserve the right to the Deferred Consideration for the benefit of Shareholders who are recorded on the Company’s shareholder register before a reverse takeover, should it occur, takes place.

Whilst the Board considers it unlikely, in the event that the Deferred Consideration is received before a reverse takeover is concluded, it may be that the reverse takeover is not progressed and the entire proceeds (together with carried forward working capital) may be distributed to the Shareholders on the Company’s register at the time.

The Company continues to work through the structuring mechanics required to implement the above strategy with respect to the Deferred Consideration.

So it seems to me, if you're not a shareholder on the Register before any early settlement or the more likely scenario of before any Reverse Takeover, you ain't going to be sharing the eventual spoils from any of this! The Deferred Consideration, if and when received, looks set to be ring-fenced only for those shareholders on this side of of NewCo - and it looks set to be a cash distribution! That could be some distribution given the upward settlement possibilities!

Meanwhile the main benefit for both current and new shareholders in the NewCo following a RTO would appear to be the substantial c. £18m tax losses available.

It's not a cash shell yet but will be regarded as such from the date of disposal if the transaction completes which still remains to be confirmed, albeit that it was expected to complete on 15th.

Regarding the BIT, I don't think it's dead and may well be the chosen course for AAG/DLA Piper. However, the SPA is non-specific on the method, only that there is "...a binding commitment by AAG to commence legal proceedings against the Government of Mozambique in respect of the Claim within three months of Completion"

So, as I read it, the door would appear to be open for a negotiated settlement for up to a further 3 months, following which formal legal proceedings must be instigated by AAG by whatever chosen means but it would surprise me if the Bilateral Investment Treaty route were not to be taken at this point, given its impartial standing for arbitration in such cases.

The SPA is legally binding. What PFP will receive is spelt out in detail and will be $24m or 20% of the settlement, less reasonable costs, whichever is the greater. In other words $24m minimum. I note that Peter Taylor (PFP CEO) cannot be removed from the Board of IMM and if not settled within 5 years from the disposal date, PFP gets IMM back.

It's also important to note how clearly it is stated that PFP is entitled to receive its deferred consideration within 10 working days of even just the "determination" of the claim rather than after actual receipt of settlement monies by AAG. This would appear to protect PFP from any potential of a long drawn out battle by AAG to get the actual settlement payment. In the definitions of the Circular, it says this about "Deferred Consideration":

"the greater of US$24m or 20% of the aggregate amount (including all deferred or conditional payments) payable on settlement or determination of the Claim less all reasonable costs and expenses properly incurred in respect of the Claim

payable by AAG to the Company within 10 business days of the Claim being settled or determined as set out in paragraph

3(a) of Part I of this document"

He's begun the process of hanging up his boots and wrapping up Align's operations as outlined here:

http://www.alignresearch.co.uk/align-research/align-research-top-conviction-calls-for-2023/

I assume his research team has moved on but he still keeps tabs on his holdings, offering occasional updates on Twitter which has included the progress of the PFP situation this year, a recent example being:

https://twitter.com/AlignResearch/status/1656919289679544320?s=20

Looks clear enough to me, 4m total, 3m Wilson, 1m for other staff.

Wouldn't pretend to understand the technicalities of it, but I'd say all but a measly 1.55m (later RNS 0.55m) of the Spreadex involvement appears to be intrinsically linked to the Align holding. Take a look at Para B1 here:

https://www.lse.co.uk/rns/KZG/holdings-in-company-kjkkij2gbhu6vnm.html

Then the Spreadex announcement here:

https://www.lse.co.uk/rns/KZG/holdings-in-company-w0rc9iedujb56at.html

A reduction of 30m, with voting rights attached, previously the same 6.94% as Align show as being held in financial instruments via a long spread bet. Strangely enough, 30m is also the number of shares then transferred to AMS in the first tranche:

https://www.lse.co.uk/rns/KZG/holdings-in-company-4kee9cpe6dhbxod.html

In later RNSs, Spreadex reduced by exactly 10m and now have increased by exactly 5m, which I'd say are almost certainly linked to Align because the respective movements are shown to concern shares with voting rights attached as distinct from the additional 550k which appears to be an additional standard spreadbet.

So perhaps we are moving closer to the important second tranche being transferred to AMS, the one with voting rights attached. Align confirmed on Twitter recently that all was on track:

https://twitter.com/steddieddie/status/1654081396695023616

Also confirmed in the conversation that this is far from a flimsy arrangement - Align hold the Put Option placing an obligation on AMS to buy - as one of the Holding RNSs puts it "Transfer of 30m shares to African Mineral Sands Pte at 1.5 pence per share from Catalyse Capital Ltd (formerly Align Research Investments Ltd). Obligation pursuant to a certain Put option to acquire a further 250m shares at 1.5pence per share. Transfer of voting rights over the 250m shares passing on next option tranche completion"

Acquiring the voting rights over the full 280m shares with the transfer of the next tranche looks very important for AMS to then influence the future investments for KZG. DE referred to this during his recent IMC Q&A and Align also mention in the above Twitter chat "I also dont think they care in the immed term ref the 'paper' loss. Much bigger game here for AMS." and, finally, "The key is that Hebei are VERY unlikely to walk now & so by Dec end the stock price should be backed by approx 1.15p of cash. That means HMS presently less than free. "Mr Market" will wake up soon."

He probably gave us the situation re diamonds and HMS as best he could within the disclosure rules and the politics surrounding Alexkor management. I agree it left a bit to be desired but it is worth noting that he put himself out there to face direct shareholder questions when many others do not.

To be fair, re diamonds, he said they believe all previous issues have now been overcome via new plant allowing them to bring production under their own control and he indicated news of sales during May/June so let's see.

Re HMS, indeed they are still stockpiling and he explained at length what they first needed to achieve in order to demonstrate all sorts of precise aspects of their HMS content ahead of securing any offtake agreement. On this, he indicated limited production/sales from around June, rising significantly from c. end-Sep via the new larger plant currently on order.

Re payments for Namibia, at $3.5m so far, they are pretty much on schedule but, of course, there will still be some concern that Hebei continues with the other $9.5m during the rest of 2023. On the other hand, interest @ 8% is payable on the outstanding amount and KZG take TVI back and keep the money paid so far if Hebei default. Beyond these strong reasons for confidence, he pointed towards a deepening commitment by Hebei to other projects in the vicinity as further reasons. I've been looking at this.

At least one of these commitments is out there in the public domain. It concerns Arcadia Minerals' Swansong Project where Hebei have already made moves to get involved:

https://themarketherald.com.au/arcadia-minerals-asxam7-and-hebei-xinjian-construction-set-to-tie-the-knot-in-namibia-2023-01-18/

This proposed deal is absolutely relevant to Hebei's purchase from KZG as can be seen from the aerial photo on Arcadia's website:

https://www.arcadiaminerals.global/project/swanson-tantalite-project/

Arcadia also appear to have sorted out a solution for water supply:

https://www.arcadiaminerals.global/wp-content/uploads/2022/09/61111971.pdf

Given the relative proximities, I could easily see potential for a combined operation of both licences. Overall, not at all hard to believe what we're being told and get some further comfort re Hebei's commitment to completing the payments.

Re the new investor, CEO also indicated a further tranche being transferred between the parties in the next week or two so again, let's see. He made the point this next tranche is the crucial one whereby the voting rights over the whole 280m shares will transfer to AMS which he saw as being the catalyst for AMS to be more secure in bringing forth opportunities to KZG. For sure, he knew more than he could say here, in my opinion.

So, clearly, still much be to seen and not heard. Equally, much is set to emerge in the relatively near-term. Further judgements can and will be made if not. I agree it's why we are where we are but it's not my own idea of nothing.

I agree a bit blustery when it came to sale of diamonds to this point but somewhat offset by near-term diamond sales expected now that they're producing and sorting entirely separately from Alexkor's perpetually troubled Muisvlak plant. Still need to pass our diamond product to Alexkor for actual sale though (under their rules of permit) so that might have fed into his lack of certainty.

I'm not sure I agree re permission to mine. To me, such permission is clear for both diamonds and most recently for HMS (but with certain adjustments to the mining area co-ordinates, now resolved). I know what you mean though but my own interpretation is that he was trying to explain that no-one can mine HMS without first being awarded a permit to mine diamonds. He was then later quite guarded about giving too much away about new areas they're interested in (given their unique current licence position for both commodities) lest it might be of advantage to other parties.

Rather than being in the hands of the interviewer, an opportunity for us to ask questions.

Yes, if only a well-connected, strategic, African mineral sands investor would come in for 29.9% of the Company at 50% above the current market price, that really would do wonders for the SP :-)

I'd also add that there's a positive side to the May (and Oct) warrants i.e. that they will bring yet another c. £1.5m into the KZG coffers this year (if all exercised, of course).

The other question is if the SP continues to languish at current levels, whether AMS will move into the market on the back of the enlarged share capital in order to keep their stake at an undiluted c. 29.9%.

Broadly agree Agricore, but that 157m May warrants stated in the Interims is incorrect and I've told the Company. It's c. 116m as quoted in the finals and as stated in the May 22 placing RNS.

At 2.5% royalties from Namibia for the life of the mine, both tantalum and to a lesser extent lithium will hopefully be a tidy little bit of income at no cost but it is no longer a core consideration as to Kazera's future revenues, merely a side issue now.

I think they will and I also think we might get the chance to submit questions shortly. If so, I hope everyone will take up the opportunity.