Hi Fellas, I am Whiddon3 over on the chopper - these are my views I posted over there. Obviously we all only know what was in the announcement but my take is as follows.
Happy New Year SH's. Great way to kick off 2025 with some positive developments..
AVZ has proven that as the lead in the project they were not able to progress forward, this was due to all the detractors and all the roadblocks which popped up at every single turn. We were never going to move this forward as the lead, China was always going to obtain the control, no matter how long it took. The reason this has stalled is because until now China had not gained the control.
This deal gives Pei control of the project. Through this transaction he is getting 30.5% of the project (of which we owned 60% undisputed). So effectively AVZ has sold more than 50% of their share in the project. The 15% with Cong/Dathomir still needs to be resolved, plus the 15% first right of refusal is still arguably on the table somewhere.
The .5% is very interesting and where the clues lie as to how this ends up...
On completion of the TIA (and prior to the resolution of Dathomir + First right of refusal) AVZ will own 29.5% of the project. Pei will own 30.5%
Pei is now going to negotiate the ML and resolve the outstanding issues. So what will Pei get in addition to his 30.5%? Well he clearly wants control, and probably only has a mandate to negotiate on the basis that he does has the control over the project. So will he go after our 15% from Dathomir? Nigel must stay strong on this. That is ours, AVZ did a capital raise in Australia for that, we paid the transaction fees in accordance with the law and the deal terms. The we had the money returned, only to then be stolen from our farking bank account. That 15% is OURS, don't bend the knee on that Nigel.
If Pei needs control, give him the first right of refusal on the other 15%.
Then we have 44.5%, Pei has 45% and the DRC 10%.
I do believe the deal at present is good for us. It de-risks us big time, sure we lose some equity, but let's face it, we had nothing, we were on the canvas. The count was at 9.... Locke Funding was brutal, and meant court cases for years. Nightmare... At least here we have optionality. We can fund our share of development with with the $259m, or we can borrow from Pei at 9.00% and repay via profits, or we can raise money and fund via alternative means.
The key here is that the project gets fast tracked by Pei. Let's face it, we would take years and years to move it along. No ASX company can honestly be listed on the ASX and run a project in DRC. Too may anti corruption and bribery rules need to be broken just to operate in country.
In my opinion, even if Pei resolves the Dathomir issue, Nigel should NOT give up that 15%. A final standing of 29.5% would be a pretty big pummeling for the board. Let's hope we can get the extra 15% or at least 10% of that 15%, so we end up at 39.5% - 44.5%. Let's then sit back and let China do all the work and collect some divies in a few years.
Don't be mistaken people, we don't have control of the project anymore, but given the way this has played out to date I don't think that that is a bad thing. Let's get this thing going...
