Member Info for Professor1

https://www.bloomberg.com/news/articles/2022-04-25/russia-s-no-2-gold-miner-shuns-local-sales-in-favor-of-exports

looks like people moving funds in shares like POG or POLY.

RNS here could land any time now.

Isn't it the case that after Covid19, some sort of new Insolvency legislation was introduced to prevent companies taken to cleaners - i.e. a new moratorium procedures for companies which needed a breathing space from any creditor action. I think this moratorium can last for a long period of time and, can be for indefinite period, if permitted by the Courts. Anyone with the Law background can advise.

Also, is this situation not the result of a technical default resulting from the sanctions rather than the company not wanting to pay its dues. What does the Insolvency Law say about this aspect? - I may be wrong but I do not believe Insolvency action can be brought under the current circumstances.

fp1989

RE: YOUR STATEMENT EARLIER:

"@Nathan - only when the debt load is manageable and you can service the interest effectively. In such a situation it is a good idea to increase debt to finance activities. This requires the cost of debt to be lower than the expected return on equity.

This does not apply to Petropavlovsk since their debt load is very large and their interest payments are actually quite expensive (wipes out half their operating profit!)"

POG has a debt of some $500m and at the interest rate of 8.5.%, it should have interest cost of some $42.5m - and indeed its true finance cost is $42.5m. [By the way Newcrest Mining has $1.5 Billion debt in its books and at the rate of 8.5% it has $126m interest recorded in its consolidated financial statements].

So, why has POG additional interest (so called and quite rightly lumped with interest)charge of some $80m. This in fact in NOT TRUE interest but fair value movement on its derivatives contracts. This figures comprises:

(a) $43m loss on the re-measurement of the conversion Option to fair value (most likely required by the IAS39 / now IFRS9 if POG is following the International Accounting Standards).

(b) $10m loss as a result of Bonds being converted and settled in shares at the carrying value of the Convertible Bonds

(c) $11m loss on the fair value of the Call Options over non-controlling interests

(d) $7m loss as a result of a fair valuing the gold Option Contract

Options are derivatives and are required to be Fair Valued at each balance sheet date. Eventually, these fair value adjustments will come out in the wash. The Tax Consequences of these depend on various Regulations which are quite complex.

Newcrest also has Fair value movement but in their case they have a FV gain of $124m but this is irrelevant as another year could be a fair value loss . They show this as "Other income".

In summary - POG do not have any higher finance cost compared to say Newcrest Mining.

On the subject of costs / expenses - one interesting observation, POG employs 8,889 people with staff costs totalling $88m, significantly higher than Newcrest.

Fantastic RNS. This company is now going one way only and that's to the moon.

The licence to export will come pretty fast AND they are probably already be talking to the interested parties.

More to be revealed in due course on how AlixPartners are helping the Group.

GLA

I am going to repeat again that, human brains are wired in a manner that we would in most circumstances only think negatively [RINGS BELL ????].

Here are my thoughts (and I may turn out to be completely wro):

1)Any company who wants to be in some way connected to POG, I believe, will want POG's presence on the LSE. It would be hard to imagine to take off POG off the LSE only to find that, in a month's time, everything has settled, the peace agreement entered into, the sanctions lifted etc. [By the way, just by this war for the past few months, it's been predicted that 1/2 billion people will struggle for food due to inability to export fertilisers out of Russia and the resulting impact on the food production and price increases in various parts of the world].

2) As regards ability to service debt and sell gold, POG has been unable to do as a result of the Regulations. It is a condition of the RCFs and the Term Loan that GPB acts as an off-taker of 100% of the Group's gold production. If this is successfully replicated with UMMC, and I cannot imagine why it can't, I think that the waiver will come from GPB. Once normality is restored and we could even see the re-assignment of the loan back to the Bank as UMMC may not wish to be a party to the loan for longer than necessary which leads me to my next point.

3) I was wondering why the waiver was not announced at the same time as the assignment of the loans. Perhaps, when the normality is restored, the loan gets re-assigned back to the Bank but UMMC wants to keep the gold part of the contract so they are probably working out how the Bank stays protected if the loans are re-assigned back to them in future.

4) IF the above is part of of the plan then I can't see any sort of messing around company structures being devised. UMMC takes the role of being a funder (al-beit for a short term only|) who gets paid under the off take Agreement. Since UMMC would want to buy gold on the cheap, POG could negotiate to PAY NOT WITH THE PROCESSED GOLD BUT THE RAW MATERIAL PRODUCED - UMMC can do its own processing.

5) I can't imagine UMMC was the only party in the talks before being selected.

Is to have an exclusive offtake Agreement with POG just like Wheaton Plc has with major mining companies. See below about Wheaton Plc:

The company generates its revenue primarily from the sale of precious metals by entering into agreements to purchase all, or a portion, of the precious metals produced from mines for an upfront payment and an additional payment upon the metals’ delivery.

Currently, Wheaton has purchase agreements with 17 mining companies, including Barrick Gold (TSX: ABX; NYSE: GOLD), Vale (NYSE: VALE), and Glencore, relating to 20 producing mines, and nine which are at various stages of development, located across 11 countries.

....might be one of the first ones possibly to get a leg in here on hint of any good news

No stopping now

GLA

Shareholders
Name Equities %
Ugold Ltd. 1,155,169,303 29.2%
Prosperity Capital Management Ltd. (Russia) 392,792,259 9.92%
Banque SYZ SA 212,017,537 5.36%
Hargreaves Lansdown Stockbrokers Ltd. 178,267,000 4.50%
D. E. Shaw & Co. LP 165,179,494 4.17%
VTB Bank (public joint-stock company) 162,995,362 4.12%
Norges Bank Investment Management 148,049,862 3.74%
Roman Avdeev 129,623,222 3.27%
Bonum Capital (Cyprus) Ltd. 114,814,815 2.90%
Van Eck Associates Corp. 114,741,338 2.90%

Lohen

I should have added that, in substance, there would be two distinct transactions taking place and recorded I believe.

Lohen

I would have thought the off take agreement would be exactly that - you pay the dues in gold.

There are however other large companies ( an American one - can't remember the name) whereby they simply have off take agreements with mining companies to buy what is being produced (PGMs) and sell at profit - its a listed company

Kheldar

It is indeed looking very promising.

Good luck to all who are invested.

UMMC's shareholders are Cyprus-based Talberg Investments Limited (7.5%), Bergen Investments Limited (7.5%) and Selmareco Limited (85%).

An "AGENT" and a "PRINCIPAL"

The Company has also received a notice from Joint Stock Company UMMC-INVEST ("UMMC"), as successor agent under the Term Loan, that GPB has assigned all its rights under the Term Loan and related finance documents to UMMC.

UMMC IS NOT SUBJECT TO SANCTIONS

MAKE NOTE OF THE WORDS " AS SUCCESSOR AGENT"

Alternatively, wake up to a very early Christmas present.

GLA

Jayzaround
Agree.

https://www.proactiveinvestors.co.uk/companies/amp/news/979812

Overdue cracking RNS. Most have taken their positions.