Can you elaborate on this one? How do we come close to a 40% of the resource in share capital?
AVZ Discussion 2022
- Thread starter GazDix
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Can you elaborate on this one? How do we come close to a 40% of the resource in share capital?
Carlos Danger
Top 20
The applicant is Dathcom. Dathcom own 100% of the resource. This isn't difficult.
cruiser51
Top 20
The Exploitation License was waiting for Surface Rights to be calculated
Share capital is not money in the bank.
Market Capitalisation AUS$ 2.75 Billion before going into suspension.
DFS was based on then known resource and market price.
cruiser51
Top 20
So going into suspension was also to maintain market cap.
It is obvious Zijin has been trying to erode that and attempting to continue with that with the help of CKK and JFM.
One of the clowns has been removed, hopefully next one will jump from the top of Cong's hotel.
But the resource in the ground is worth like $50bil according to the DFS? Is the mining code saying we need 40% of that. Obviously I'm wrong somewhere here.
cruiser51
Top 20
Can you please show me where it states $50 Billion in the DFS?
Carlos Danger
Top 20
Dathcom is worth 1b USD which is how much is shown in the DFS. This has nothing to do with AVZ's market capitalisation on the ASX.
Azzler
Top 20
Just using logic and not the code, no that can't be and doesn't make sense.
Firstly because we already passed all code to get the decree, only stopped because of corruption.
But we do have 40% of it, under our feet, Dathcom owns 100% of it.
To say we need 40% of that value again in cash would be perplexing.
We're there to convert the value of the rock into cash, not to already have the cash that it's worth.
Only funds we need to prove is to operate, and we've done that.
cruiser51
Top 20
And AVZ owns 75% of Dathcom of which 15% is under dispute.
However taking the damages claim of Zijin and Cominiere in consideration, for their so-called 25%, of US$1.3 billion, it would make AVZ's 75% share of Dathcom worth US$5.2 Billion.
But the original DFS was based on a net SC6 price of US$673.70/t and AVZ owning 60% of Dathcom (which was true at the time of DFS publication), but those prices and that situation can not be compared with today's prices and situation.
You have to compare apples with apples.
AIMO
Carlos Danger
Top 20
AVZ market capitalisation has nothing to do with anything in the DRC mining code. The applicant is Dathcom and the line in the mining code about ownership of 'said resources' refers to ownership rights of the tenement being applied for. We already got CAMI approval and a ministerial decree confirming that we passed every requirement.
Yeah obviously I agree it's worth a fuck tonne more or I would have sold around 0.35 but the question was in relation to the valuation in the DFS. I'm looking forward to the highly anticipated updated DFS or BFS being released with a current valuation but understand the reasons for it being delayed.
Winenut
GO AVZ!!!!
I think everyone is reading that 40% of resources incorrectly
It states prior you must identify the “Financial Resources” to undertake and complete the project.
The entity undertaking the project must then have a share capital of more than 40% of the indicated "financial" resource required .
Have a re-read of those first four dot points under the heading Exploitation Permit
It states prior you must identify the “Financial Resources” to undertake and complete the project.
The entity undertaking the project must then have a share capital of more than 40% of the indicated "financial" resource required .
Have a re-read of those first four dot points under the heading Exploitation Permit
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Carlos Danger
Top 20
Yeah you're right. It is a requirement under 71 (b). But it is for the applicant so the valuation is of Dathcom not AVZ. So 40% of 1b USD is 400m USD which is what we are getting from CATH (240m equity and 160m in development costs).
I was thinking of section 71 (e) because it was separated into two dot points on the original post but that requirement is for 51% ownership for the applicant. Here's the relevant section of the mining code:
Just a rough estimation. Based on rock in the ground times a rough price. Again just an estimate, but not sure how else to arrive at 40% of resource value.
Winenut
GO AVZ!!!!
As identified in the DFS the Capex for the project (read financial resources required) is US$545.5 million
From what I understand from the clause Dathcom therefore simply requires a share capital greater than 40% of the indicated financial resources to meet the criteria to satisy the clause and undertake the project
Therefore share capital of Dathcom to meet the requirement must be more than 40% x US$545.5 million or US$218.2 million
Dathcom easily met that share capital requirement hence it satisfied all the criteria for the decree to be signed
Just waiting for those surface rights to be calculated now......
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Carlos Danger
Top 20
40% of the resource value is 400m USD
cruiser51
Top 20
So not based on current DFS, but based on calcs on toilet paper.
That explains.
You had me worried, I thought I started to suffer from amnesia.
So all good, nothing to worry.
Carlos Danger
Top 20
Mining code says of 'said resources' but you're way makes more sense from an operational perspective
Either way were all good
Yep i get it now.
Winenut
GO AVZ!!!!
71(b) clearly and distinctly talks to financial resources and nothing else so yeah I think it's pretty clear
Cheers!
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