Member Info for SloppyG

Very difficult to attribute fair value (as of today) if a claim of that magnitude is submitted but here goes based on €2 BN (all IMHO of course):

- In reported success cases apparently can expect a payout award of c.30% of claim value: $600m

- c.40% of payout returned to SHs (after fees to litigation funders, directors, sundries etc): $240m

- Prob of success (PoS) 50% (so 50% x €0 + 50% x $240m): $120m

- £ conversion: £95m

- SP: 7.3p

- After Contingency (for future dilution etc): 5-7p

Lots of guesstimates/assumptions obviously but the market will have to try and attribute a value in the interim period (after claim submitted but before any settlement). Some have also commented on relatively high success rates for the calibre of litigation partners we are working with so PoS can be flexed accordingly.

Based on the above assumptions ($2BN claim) we are currently valued today at 5-10% PoS (v50% above); so it would be fascinating to see how the market reacts to claim of that magnitude (if indeed there is one).

Out of interest does anyone more familiar with this arbitration space know how the market cap of other cases reacted relative to the value of their submitted claim ?

Indeed. It really is an interesting proposition this one as it appears likely that a very substantial claim will be submitted in due course. Consequently, even if one resides in the camp that considers a successful outcome to be unlikely, there is still a real possibility of a decent uplift when that claim itself is submitted (given its magnitude and the reputation/success rate of litigation partners).

It has already 4 bagged from the recent lows so it goes to show the potential returns if get the timing right; ironic really given nothing happened here for 5 years!

I remain of the review that the chances of Emmerson walking away with absolutely nothing are slim given that their fallback position is Morocco cannot unreasonably deny Emmerson the opportunity to submit a fresh EIA application to address any perceived issues; that's even if Morocco can argue that EIA rejection reasons were fair and reasonable in the first instance.

Anyway time will tell but positions are clearly being taken in advance of what should be a very interesting period.

$1.5m left to receive from DFC split in tranches of 500k and 1m.

In Nov capital raise RNS they said 500k due shortly and 1m due in 2025. I recall subsequently MR said in an interview the 500k was due in Jan.

It is possible that this is now temporarily held up with the Trump 90 day executive order. DFC apparently stated that they are seeking clarification re. existing contractual commitments (like Bres'); that's the issue with a blanket order that has multiple touch points.

Either way sure it lands soon as this project is too valuable for interested parties.

KS, interested to know the basis for your $50m CoS.

H1 24: Total CoS was $21.8m on gold sales of 17.2k oz. Hence effectively an AISC (incl. depn and provisions) of c.$1,275. /oz.

Extrapolating to 52k oz gives CoS of $66m. Naturally expect the AISC to come down with increased production but need to balance this somewhat with inflationary pressures.

Is it safer therefore to use production cost of $1,250/oz again for FY25 rather than $1,000 ? Admittedly splitting hairs somewhat as still a big number and massively undervalued either way; nevertheless my experience is profit forecasts always disappoint to the low side !

It will be interesting to see how the role of the DFC changes if indeed it does at all.

My view is the Trump administration will want to see real tangible (contractual) benefits for the US before signing off large cheques to fund projects such as Blencowe. At the moment it feels a bit "loose" in terms of those benefits and I am sure this will get tightened up.

I was not aware that the DFC is also up for "reauthorising" by June'25 and there is chat about it operating more like a sovereign wealth fund. To be fair the 90 day embargo and the reauthorising timeframe fits in quite nicely with Bres' timeframes re.DFS.

The good news is the DFC was Trump's Baby introduced during his last term so there is potential for this to work in our favour; if it does I suspect our project becomes increasingly US centric ?

https://www.devex.com/news/devex-invested-what-us-foreign-aid-chaos-means-for-dfc-109180

They have been disclosed 99 but those funds are going towards the DFS and therefore cannot be used for general working capital

All the Auditors are saying is that the company does not have enough funds (working capital) to see it through to Jan 2026 (12 months); hence there is a going concern risk as the fund raise addressed the DFS shortfall and was not sufficient to provide a full 12 months working capital.

This is standard and to be expected as the company would address any shortfall after the DFS.

Personally I think this comes to a head very soon now.

The recently raised Net 2.5m runs out in March by my estimations. Therefore DP would normally be sharpening his pencil on the next round of confetti; however this time he has backed himself into a corner with the nominal price. Debt funding is also completely off the table.

The absence of any options package for PDMRs or Director buying tells its own story I am afraid; something has to give here and I suspect it will not be long until we discover exactly what form that takes. I know what my money is on !

Okay just for clarity Note 2.3 is saying further funds will be required during the GC period (which is 12 months from the date the accounts are signed - to Jan 2026 therefore).

It is admittedly worded poorly but what they are trying to say is that although funds were raised subsequently to the Year End, these funds cannot be used for working capital as they would be required to meet the DFS shortfall that existed @Sep 24 - hence there is a going concern risk for the rest of the year. If the DFS had been fully funded @Sep24 then the funds would have been used for working capital hence there would not have been a going concern risk

In summary DFS is absolutely fully funded; just that the note needs to be read carefully as poorly written !

Also exercised 1m options in Dec so must now be at 4.2m owned shares plus at least the same again in options.

Either way plenty of skin in the game.

Understand you cannot discuss everything on here Aghmir; however, out of interest, what are your instincts as to how Morocco will play this: issue apology in conjunction with ESIA; take chances with arbitration; settlement up front or something else........?

Regarding the ESIA, rightly or wrongly I am working on the assumption that horse has already bolted given Emmerson would likely deem relations are irreconciliable; also BOD (6%) and litigation funders (~30-40%) only get their big pay day with a damages claim so the ESIA is probably is the last thing either party wants at this juncture.

Unsure however as to the impact on a pending damages claim in the event that the ESIA suddenly landed tomorrow. Presumably all the arbitration case examples referenced to data have resulted in a case of cash award or not; as opposed to the asset/license being returned/issued to the claimant.

Presumably once arbitration commences a financial settlement/award OR not is the only outcome. EIA issuance and Emmerson mining (proceed to build) is off the table; otherwise how to litigation funders get paid and determine value etc.

Trust is broken and they are seeking damages just that. Zero interest in obtaining permits now is my presumption ?

Very difficult to ascertain ultimate value here for us SHs given confidential nature of litigation terms and unknown potential damages

If we assume in line with other such cases then litigation funders will expect to receive higher of c.6 x drawdown or 30-40% of final settlement.

Instincts are £100m or less settlement will result in fairly minimal returns to SHs. If we start talking about a £200-250m settlement then I think most would be in the money.

Have to also agree 6% for Management + warrants + equity + salary also (given the 11m covers working capital) feels somewhat generous. However the flip side is if they do well we should recover most our capital.

The market still seems to be pricing in minimal SH returns; time will tell if this is wrong. Interesting to see what Morocco's next move is if indeed they even have one. Given Emmerson still have the ML, then they cannot award to anyone else until this is resolved one way or another (if they do will be the final nail in the coffin for their arbitration case).

The simple reality, no matter how one views it, is that they require c15m of annual Revenue to b/e. This is a fact based on the 30% GM the company have communicated.

FY24 Rev c3m so the gap is massive.

By my estimates, at current cash burn, they will be completely out of cash Feb/Mar next year so will need to start putting in place contingency funding measures in Jan imo.

There is very good reason why we are not seeing a juicy options package issued to PDMRs or indeed any Director buying at this apparent low SP AND it has absolutely nothing to do with closed periods.......join the dots.

Seems set to get spicy this one then.

If I were Morocco, I would wait to see if litigation funding is forthcoming before coming to the table; just in case it naturally disappears. They may have to offer a bit more at that juncture to make it go away so perhaps this is in our best interests. Going to get a lot of public interest this one so they risk doing irreversible reputational damage if it drags on.

Normally a bit sceptical when Emmerson start chucking out words like strong case/confident etc but in this case no reason to doubt imo. Directors stumping up 200k is not an insignificant amount and they would not be doing this unless they believed their own rhetoric.

I still feel Morocco have tied themselves in knots with this case. Why did National not just kill the project upon Appeal if the plan was always to redirect the mine to OCP. Even if they can prove Water is the issue, it is a "reasonable decision", no discrimination, no process breaches etc then they still cannot remove the right of Emmerson to submit a fresh EIA application to fully address any o/s issues (imo)

Anyway lets see. First step ticked off today in obtaining an fighting fund. Next step hopefully litigation funding on a NWNF basis to confirm the "strength" of the case. Strap in.

There he is. Reel the Wolfman in !

49 posts to go. Have a cracking weekend of posting and best of luck getting that GEX avge down from your 20s entry point. Catching a falling knife springs to mind. Chart looks dreadful but of course I and the market could be wrong. GL

Wow touched a nerve LW, easy wolfy !

Clearly one of life's sad individuals that has nothing better to do than spend hours on BBs regurgitating the same utter drivel. Plans for the weekend .....50 posts ?!

How's the timing of your entry point serving you on GEX in this "bull market" ? Market suggest a lot don't agree with your endless gap up predictions; only time will tell if they are right or wrong. Nevertheless wishing you good luck with your investment.

@LW - placing to cornerstone investor and senior mgt. Zero drag.

You are spot on it's all about timing ones entry. On that subject how's your timing working out in the "bull market" that is GEX where you incessantly and irresponsibly ramp on a near daily basis ? 4-6 month chart looks sick as a dog where everyone, incl your good self, is down 50% and no doubt throwing good money after bad. Interesting to note you accuse any poster of not ramping it to the hilt, like yourself, of spreading FUD and looking to get in cheaper.

Hmm all about timing and not spreading FUD. Perhaps you need to take a leaf out of your own book. Nothing against contrarian views whatsoever but hypocrisy and simply being dull, well that's a different matter. LW wrote of GEX ( which is now at 8.5p bid and looking like it will go lower imo):

RE: Late reported2 Aug 2024 13:23

"Just gapped up. Getting in sub 20p is going to be like getting in at 10p at HEX. Think 20p will be support very shortly."

Yeah I think the H1 24 Gross Margin of >50% is likely to be an outlier given the company themselves quote 30% going forward. Personally, to cover 4-4.5m of annual opex in FY25, I m working on the assumption they will need at least 12m of Revenue to b/e before even considering making a profit and repaying any debt when it starts to fall due.

The safest play in these markets is wait and see I would say. My money is still on a funding gap to be addressed in Q1 25 and I really want to see insiders have some skin in the game to align our interests.

Possibly IPA lets see. Firstly they need the orders and then have to collect the cash. I doubt very much Idex will be making payments up front given EQT financial position.

If the tide is genuinely about to turn then insiders should be loading up/ granting options at these prices.

You are worrying me now Simms and it might explain your apparent bullish position and the mistaken belief that they are close to b/e.

The 4m annual costs is opex/overhead and nothing to do with cost of sales.

So the 3m Rev you need to apply the gross margin of 30% to get 0.9m gross profit

You then take off the 4m opex to get to an FY 24 operating loss projection of 3.1m which should be pretty close.

That is why I say they need 12m annual Rev to b/e at a 30% gross margin.

It sounds like you are confusing opex with cost of sales