Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
3rd of 3, I think.
IMO:
(1)
There is a defined understanding of what needs to be decided procedurally for return of the 'historic parcel' but there is not a defined timeline.
The fact that the election stalled things means that RBZ has considered that its written statement of process needs political oversight.
RBZ and the Deputy Sheriff agreed that RBZ would "confirm, in writing, the procedure for the orderly and secure hand over the parcel to the Company, which includes the procedure for valuation for royalty purposes, export permits and Kimberly Process Certification". Evidently, this has a political dimension that RBZ does not feel confident to decide on internally, and hence the need to revert back to ZimGov after the election. It's unclear what timeframe ZimGov will operate on with this issue but evidently Vast, with pressure from its creditors, is taking a legal enforcement route and (IMO) could also potentially escalate politically via the Embassy etc.
(2)
The sequence of short-term extensions confirms in my own mind the view I set out earlier this year that Alpha, at the very least, would be happy to play hardball. Some were assuming a rollover of the debt would be easy. My view was that Mercuria would probably be okay with it but possibly not Alpha. Lo and behold, the extensions are being done on very tightly controlled timelines in lockstep with Vast's handling of ZimGov and RBZ. I still believe the pressure here largely comes from Alpha: their $4.8m loan settlement is secured by an over €9m real estate asset in the rising property market in Bucharest, and they are real estate specialists. Their only motive (IMO) for giving Vast the rope to play with is that it would probably take about two years in the Romanian courts (IMO) ever to get hold of that real estate asset.
(3)
I also still believe that Vast always knew this would probably take plenty of time but that playing for time was always absolutely key.
In the meantime, since the debts fell initially due in May, they have:
(a) hit breakeven at BPPM in June;
(b) confirmed first Takob shipment in October (delayed from May);
(c) confirmed start of lead/zinc concentrate production at BPPM in October;
(d) raised equity in October for a period of further solvency.
I made the point months ago that the first and most important task this year for Vast was to avoid going to the wall, and that the prime function of the 'historic parcel' in the first instance was to put an asset on the balance sheet in case either creditor decided to play hardball.
IMO, that core strategy has worked but only just: the extensions are piecemeal and tightly controlled. In the meantime, I think the project economics at BPPM and now Takob (Vast does not operate the latter) are key. If the return of the 'historic parcel' is further delayed, the creditors will want to see an alternative, and any potentially free cash from BPPM and/or Takob can potentially form the basis of a payment p
2nd of 3, I think.
SITUATION WITH HISTORIC PARCEL
RNS 4 July:
"... the Deputy Sheriff was again instructed to uplift the parcel on 29th June 2023. Also in attendance were the Company’s lawyers.
Upon attendance at the RBZ, and in consultation with the bank’s internal legal counsel, the Deputy Sheriff agreed that the RBZ would confirm, in writing, the process that would define the procedure for the orderly and secure hand over the parcel to the Company, which includes the procedure for valuation for royalty purposes, export permits and Kimberly Process Certification.
Thereafter, the Company and RBZ will put in place logistics for the removal of the parcel attached by the Deputy Sheriff under the writ of execution.
The Company notes that until the process has been finalised and implemented there is no certainty as to the precise timing for the recovery of the parcel and will update the market as soon as there is a material development in this respect."
***
RNS 18 September
"Due to the recent election process over the course of the past month, the Company has been unable to progress the settlement of the historic parcel as it had expected, however, the Company remains confident of finalising the process".
1st of 3, I think. Just recapping for my own clarity, really. Perhaps of use to others.
SITUATION WITH CREDITORS
Extension 1
30 June
RNS 21 June to say documentation finalized.
Extension 2
29 September
RNS 1 September to say documentation finalized.
Extension 3 (current)
30 November
RNS 4 October to say agreed in principle, with legal documentation pending.
CDF1: yes, AP also manages to live well without Vast. That wasn't the point I intended to make but make of that fact what you will. If he can, certainly anyone else should, now that you raise it
I'm happy today. Absolutely nothing to do with Vast. Just chatting here today as I'm being super-lazy and have other reasons to be happy that have nothing to do with shares.
I hope everyone remembers that upwards of 90% of AIM trading has nothing to do with BB chatter. So I hope we all know that the ya-boo that can happen on these BBs is pointless.
Just live well. Love those you love. Avoid people who are bad for you. Don't get wound up in knots in places like this.
IMO.
ASI: good stuff. Happy to resume later.
ASI: be that as it may, I was just trying to follow your point. It ended in a "lol" but I wasn't sure what the actual point was.
ASI: oh, just backtracked and saw. You said DON'T forget. So I'm not sure I follow you.
No worries, ASI 😉 Who on earth can keep up with everything here?
Buda_: yes, the problem with Occam's razor is that it has a wonderful tendency to go where its wielder already wants it to. No great surprise that, handy as it can still be in the right hands, logic has moved on as a discipline in the last 700 years.
ASI: you forget that they also hold directly at the same time.
ASI: regulations that are also at times flouted and hard to enforce in New York by a UK entity. But sooner or later, the company website will fill in the reporting gap.
Buda_: there's already evidence to suggest that that might be so. Glad you added "discuss" because of course it might not be. But you will upset the ramping brigade and one or two bystanders, for some of whom "discuss" means douse in petrol and throw on a match.
Nevergonnaretire: thanks for your kind remark back on Sunday 8th. Yes, I agree that we want to be able to have a cash value understanding of what we and the creditors are looking at. Some work to be done.
ASI: fortunately, context supplied the necessary letters. But yes, automated censoring can produce absurd results. Especially given what else gets posted 🤯
I briefly mentioned in a post on 20 April (09:57) that "Plan B might well - perhaps by force - be to funnel the Tajikistan 'participation' into a staged settlement with creditors."
Thinking about this from the point of view of the creditors, I believe they might well now turn their attention to the 12.25% 'participation' that Vast has in the Takob project, now that the first commercial shipment is upon this month, having been delayed from May. Obviously, if ZimGov delivers the 'historic parcel', that's well and good. But in the meantime, achievement of breakeven at BPPM in June plus the latest raise *ought* (in theory) to mean that the Tajikistan revenue, when it lands, is available. While the company would no doubt dearly love the freedom to recycle that money into the budget, the creditors might take a different view.
We know from experience that a mid-October shipment would probably be cash settled in early November, and the current debt extension runs to 30 November. Coincidence? I'm not so sure.
We know very little indeed about the Tajikistan financials, including very little indeed about the royalty terms (gross? net? threshold-based? Trafigura terms? payment timelines?). But *if* each commercial shipment translates to a timely payout of a shipment-by-shipment royalty, then the company *ought* to be in a position to navigate a payment plan with creditors. Even if the royalty payments are differently structured, e.g. aggregated quarterly and starting, say, in January, the very fact that commercial shipping from the Takob project is at last beginning allows Vast to table an alternative solution for the creditors. And in fact, although the windfall of the 'historic parcel' would be nice, a solution based on revenue from a known and quantifiable ongoing project is generally a good option for a creditor if the numbers are meaningful enough.
IMO.
Fantasy: "Sandy - as always good post... hope you are well.. are you stilling holding vast? :) GL"
Thank you. Hope you're well too. As always, I'm realistic about Vast and keep myself well insulated :-)
ASI: 'The only thing that bags me about this company is the distinct lack of financials in the reports to quantify the production figures.'
I'm glad you said that. I first met AP in 2016 when he was head of the Romanian subsidiary, not CEO and Board Member of the Plc. In those days, Roy Pitchford was the CEO. I seem to remember AP - who was, I recall, freer to talk in those days - slating Pitchford for producing quarterly production reports at other mines without financials. (I'd have to check, but they had Pickstone Peerless Gold Mine going in Zimbabwe then, and Manaila in Romania.) I seem to recall AP saying production figures without financials were really just a ruse to hide the fact that the company was f*ed financially.
Fast forward. AP now produces quarterly production reports without financial figures. Hey ho. What goes around comes around. AP learned the same trick that he used to denigrate. He just didn't expect people like me to stick around long enough to call him out.
ASI: "This could of course fall flat on its face but the likelihood of that occurring is reducing as each day passes."
Q3 Report will illuminate whether that's a correct observation or not, IMO. I think there's a fair chance the figures at BPPM will be up, otherwise I doubt the creditors would keep being so indulgent. But as yet, not a single poster on this trivial BB has engaged with my (pretty elementary) point that break-even might be a moving frontier, not a fixed point. So even if Q3 numbers are up, that might still leave the Vast Group, and even the Romanian subsidiary, well away from having a profit centre (let alone a Plc profit!).
Implementing a lead/zinc concentrate (not molybdenum yet...) brings its own costs and IMO a copper surplus at the mine will be deployed, in the first instance, to cover that. Copper took 3 years to break even. How long lead/zinc?
But it's nice that they raised meanwhile to cover the Board salaries (and other bits). I'm sure that will cheer them up and keep the home fires burning. Remind me: is there a shareholder representative? Is his name Ben Dover? Or did he die, un-replaced. I forget.
ASI: yes. I don't think they've been in any position to get going with molybdenum while copper was operating at a loss. They might decide to cross-finance so that an internal surplus on copper is used to bring on the start up of molybdenum production. This is the type of scenario I have in mind where the breakeven figure rises because the budget goes up, and they cover it as the copper output scales up.