Member Info for StarBright

@Hurst10 - in no sense is Affyxell a zero-cost holding. The substance of the arrangement is that AVCT are providing both cash and services to the Affyxell JV. The JV is loss-making (and accounted for as an associate, because AVCT has “significant influence”) so AVCT is required to write down the value of its carrying amount to zero. As AVCT puts in more cash, it’s % holding increases.

Yes, at some point the JV may become profitable or it may be sold off. Either could cause Avacta to recognise gains. But to describe it today as “zero-cost” is either a complete failure of understanding, or a deliberate misrepresentation.

@beinthelead - AVCT didn’t have a choice regarding the oversubscribed issue. They raised (exactly!) the maximum amount permitted under the prospectus exemption they relied upon. The locally popular notion that they could have “taken £14m more” is mistaken, despite its repetition here.

Perhaps - with hindsight - they and their advisers should have chosen a different route. Had they elected to produce a full prospectus (a major exercise/hassle/expense because of disclosure and verification requirements) they may have been able to raise more.

If you like source documents, see Regulation 2(2) here:

https://www.legislation.gov.uk/uksi/2018/786/pdfs/uksi_20180786_en.pdf

@Bamps21 said “he wants the 100% and he said 2 or 3 times we can afford it…”

Was this statement caveated in some way with respect to uncertainties about the potential price or sources of funding? As reported here (not just by @Bamps21) it is an extraordinary statement for the CEO of a quoted company to make.

@Zoros - some thoughts on your questions…

- Is SD building a reserve ($220m (banks), $50m (Wyloo)) to provide "equity" for a loan?

No, the existing loan facilities - specifically the bank consortium one - will be released for pre-agreed purposes only. In this case funding the CapEx and WC for the initial mining works. Anything else (like purchasing the 70%) will need a different/new arrangement.

Loans can’t be used as “equity” for other loans, you’d need actual equity for that! Plenty of it if it is to secure additional borrowing in the manner you suggest. Remember that taking on the 70% would also mean taking on an additional 70% of remaining CapEx and WC requirements. These (my view only) are likely to have increased materially from those in the PFS because of (i)changes in the mining/development plan and (ii) experienced inflation.

- Is he deferring the ASX listing because there could be a sale?

I doubt it. More likely that the top-hat restruc was/is important and he didn’t want to have to go to shareholders at this point to get that through. Also the Wyloo facility (a surprise to me, and a very good move) meant that he perhaps didn’t need to raise equity just yet whilst funding the 30% is the base case. My guess is that in early 2023 he realised he’d need extra funding so embarked on the ASX listing with a raise in mind. With the sp in the doldrums and some signs of shareholder concern being expressed, the Wyloo facility has removed some of the pressures he was looking to reconcile. Good work by SD.

- All the workers contracts end in June 2024. Why is that?

I think that is just about far enough past the April “sunset” date that it’s not an immediate worry. Probably something of a backstop/negotiating point for the majority partner. Perhaps this was internally important within NCM at some point?

- The FS is being pushed back?

I think the FS has just become entangled in the NEM/NCM transaction. This entanglement won’t disappear overnight on Oct 13th as some posters have proposed. GGP’s original hopes of a CapEx-lite initial development phase such that early revenues will fund mid-term development may not be particularly important to their relatively cash-rich majority JV partner, who may prefer to spend up-front to maximise LT value. This could yet create a funding squeeze for GGP.

- NEM aren't pushing out an MRE(2)?

Also caught up in the NEM/NCM transaction. I’m not persuaded by the notion proposed frequently here that such data is being withheld to support the position of the majority partner. Any material transaction eg sale of the 70% could only be effected with full disclosure; potential buyers would insist on this!

Havieron remains a fascinating project. I fully expect it will be mined, and only over time will the full extent (is it 20Moz+ as some have hypothesised?) be revealed. Whether existing GGP equity holders will capture 30% of that value is a different que

I agree that SD has achieved a lot from a poor starting position. As @MH01 points out the company was an underfunded minority partner in a flawed JV with no credible path/plan until it was “saved” by SD. Of course anyone with the temerity to point out any potential issues or concerns back in 2021 (when the sp was multiples of what it is today!) was quickly dismissed as a fudster/troll/trader/shorter by this board’s self-appointed experts…

The “SD won the 5%” history re-write is complete nonsense though. A price for the 5% was determined in accordance with the JV terms, and the majority partner decided not to buy. It is wishful thinking only to try to credit SD with some sort of win - the outcome was determined solely by NCM.

Not sure the JV terms allow them to do that @loftmonkey57…

@Culpepper, you are correct. Something called the “class tests” are applied to determine whether shareholder approval is required. In the case of an offer for Hav (prior to any other major finds!) I would fully expect approval to be needed.

@Aquakidd - try saying “divest” with an Aussie accent….

@Antigua18: “Interesting that Shaun said he had to be careful what he said about who could be responsible for the share price manipulation (or words to that effect). He obviously knows or at least has an idea.”

This is nonsense - SD said nothing of the sort. Take a listen for yourselves at 55:25 in the YT link. In answer to a question (actually two questions) on share price he says “Look… I’m somewhat restricted around what I can practically say around share price, or future direction of share price”

He says this because CEO comments on share price are considered to be material non-public information, so must be released to all investors at the same time. Because the Town Hall is an event with a selective audience, he’s basically not allowed to say whether he considers the shares to be fairly-/over-/under- valued. This restriction applies to all companies and their senior teams at events like the Town Hall. Of course it is also convenient cover on what might otherwise be a tricky topic, so instead he sets off on an extended ramble regarding the decline, the water-bearing rock etc. This is normal/learned behaviour for CEO’s..!

SD wasn’t asked (sadly) about share price manipulation. His answer made no reference to share price manipulation. I know it’s a popular hobby-horse for many posters on this forum, but @Antigua18 is completely wrong to mis-report and mis-characterise SD’s response as he has here.

@firstmodern - I hope someone does ask SD whether he thinks the share price has been artificially suppressed, and if so - by who. I’d expect him to dismiss the notion as he has done previously.

On incentives, I see nothing here that is different from how other companies work. This in terms of timing, quantum, mechanics etc. GGP has all the hallmarks of a well governed company, and their approach to incentivisation is consistent with this. Hate the game, not the players as they say ;>

Having said that. If you think that the SP has been artificially suppressed by dark actors (and that such suppression will eventually be swept away by cash generation on production) then surely there’s no need for incentives to be re-marked? Why they should management get a cheeky re-mark when loyal shareholders are stuck with their 20p+ in-prices?

Well.... It's easy to forget that there are some large spoons in the soup.

AISC are expressed BEFORE tax and financing costs, which can have a huge impact on what is left for shareholders.

Of @MH01's illustrative AUD180m:

- about AUD30m would circulate in the direction of the lenders

- about AUD50m would circulate in the direction of the Aussie Tax Office

And financing costs (interest on the debt)...

@SpadesAspade, Your explanation of Van Eck’s objectives and actions here is deeply flawed. I know you are trying to help readers understand what they can see, but your underlying premise that they (VanEck/GDXJ) are “…interested in that the overall fund makes money” just isn’t right. It’s also highly inaccurate to characterise them as disinterested because they money isn’t theirs. In simple terms, their fiduciary obligations require them to treat investors money as their own.

GDXJ is an index fund, where someone else (MVIS?) runs the underlying index. VE’s only concern as managers is to replicate for fund investors the daily index returns series after costs. VE are entirely disinterested in whether the GDXJ fund as a whole is making money for its investors. As long as GGP is a material index component, GDXJ will have a holding. The managers don’t care about buying low and selling high. That’s not their job. They don’t “stick at” anything in the way you propose. They aren’t patient/diligent/long-term, they are transactional and disinterested in anything beyond index replication. They don’t care that they could have paid less on Friday by avoiding the auction. Buying in the auction gave them 100% certainty that their purchase was conducted at the closing price used for the day thus minimised their ex ante tracking error.

Cap-weighted index ETF’s are tricky passengers for companies like GGP, where an individual index fund may be among the largest holders and in size outside of typical traded volume. When they transact they can drag market pricing around as you correctly point out. But such distortions are only the transient outcomes of their execution model and imperatives.

@Rotherby1 - I’ve been thinking about this point too. If the JV contract is watertight then Newmont aren’t at liberty to bundle their 70% of Hav with Telfer whilst GGP’s RoLR applies. Their only route to disposing a Telfer+Havieron package would be to buy GGP’s 30% first.

Is GGP’s RoLR time limited in any way?

Yes - I think a coup for SD. The signs that additional funding is needed have been there for a while. The bank consortium were never going to step up without additional equity capital being raised. Extra debt funding from Wyloo (who are interested in the SP) is a neat way out of a tight corner.

Another PM crackpot for your entertainment…

https://www.clivemaund.com/gmu.php?art_id=68&date=2023-09-10

“2023 has been a year of hiatus (or pause) in the implementation of The Great Reset, at least from the standpoint of the masses who have been able (temporarily) to return to their usual pursuits such as going to sporting events, visiting bars and restaurants and travelling and all without having to wear their “slave masks”. Meanwhile, however, the NWO (New World Order) have been pressing ahead in the background with their agenda, a core element of which is the implementation of the CBDC (Central Bank Digital Currency) system that will see the elimination of cash and as a result all personal freedoms as the control grid now in operation in China will then be rolled out worldwide. They have also given us a dramatic demonstration of how they intend to encourage people to leave their homes in the country and flock to the new “Smart Cities”. They don’t need to bother with a lengthy process of buying people out or offering other costly inducements, they simply burn their houses down in the middle of the night with DEWs (directed energy weapons) as has happened in Lahaina, Hawaii and across large tracts of Canada. While this action might technically be illegal of course, it won’t stop because they control the justice system and have all the judges in their pockets – there is no law, except the law that serves them…”

@Freddie2 - it's unlikely that is possible. To set up a new company is a different process to cross-listing an existing one. An empty container as you propose wouldn't have any assets, and it's not possible (certainly not straightforward!) to just transfer assets in later whilst retaining shareholder equity. There can't be a "takeover" of GGP as it stands as that would likely have complex tax consequences - not least for existing shareholders for whom it would be a realisation event. The listed corporate world just doesn't work in the manner you propose.

@Culpepper - the simplest path (at a time of great complexity!) is to cross-list the existing quoted vehicle, and return to the re-org at a later date. The purpose of top-hat company listing is generally to make asset disposals easier. To the extent that GGP has multi-asset ambitions, it is probably a sensible step. But not on the critical path for now.

@Sojourner - yes, I should have defined better what I meant by "vote". The scheme of arrangement that has been outlined would require a court application and a meeting at which creditors and members would vote. A capital raise outside existing permissions would also require a specific vote. Either of these would see a full-court-press from SD as he'd need the active support of existing shareholders. Consolidations though are typically just included in AGM as ordinary resolutions as they are generally non-contentious - but this is technically a vote too, so I agree with your observation.

The underlying point is that there have been many posts on this board recently suggesting SD will have to come to "cap in hand" to existing investors for permission to cross-list / raise / consolidate etc. Some have conflated the potential scheme of arrangement vote with the cross-listing itself. Others have proposed that any raise would require a vote. The reality is that SD can likely achieve most of what he has laid out without risking votes. The exception is the re-org via scheme of arrangement, which I suspect he'll set aside for now.

A few points on votes etc:

- an ASX listing doesn’t (of itself) need a shareholder vote

- the scheme of arrangement re-org mooted earlier in the year would require a court application and a vote*

- any consolidation likely won’t require a vote

- capital raising probably won’t require a vote as SD is holding dry powder from the AGM last year which gave him approval to issue somewhere near 1.9bn new shares. Some of these (430m?) have gone to Wyloo, and some (350m-ish) will be being held for Wyloo to exercise their 10p warrants against. If the remaining 1bn or so shares have not yet been allotted, they could be used for a raise of up to £60m or so at today’s SP. TLDR; it is likely no vote needed for a further raise up to £60m (for example if additional capex needed) but a vote would be required for raising more than this (for example to buy Telfer/remaining 70%/whatever)

So:

- the cross-listing, a consolidation, and a modest raise all look achievable without going to existing shareholders

- the “top-hat” company or a major raise would need shareholder approval

My guess is that he’ll do all he can to avoid the risk of any vote whilst GGP has such a large PI register%. Votes are easily misunderstood and can end up being seen as referendums on mgmt & their plans generally. My guess is that he’ll steer well clear as a result.

* A majority vote here means both a majority by headcount of the shareholders voting at a meeting, and that the shareholders voting in favour of the scheme hold at least 75% in the value of the shares represented at that meeting.