|At the time of that announcement the share price was not much over 1p...options more than three times that price...
According to TDDI, the current broker's forecast is for 0.64p EPS next year...based on outdated copper prices and taking account of the hedging...
The company statement says:
"it is unlikely that the Company...will generate sufficient surplus cash to meet all loan repayments when due...."
That doesn't mean they can't repay the lot further down the line, especially after the hedges unwind...in fact they could enter into new hedges now if needed, at prices that would be far more attractive and profitable than the old hedges...
While the net operational cashflow was minus $3.452m for the half year, WTI is generating net positive cashflow right now. Prospectively this will increase significantly after May...
While the Group had $8.7m cash at 31 December, its Net Current Assets, including the Orion Working Capital Loan, but not including the Orion major debt were in excess of $12m...
But that includes inventories of $12.9m, valued at cost, i.e. $4307/tonne whereas even at the hedging price of $5,000, this adds a further $2m or more to NCA, taking them to c $14.5m...
I imagine the loan extensions to April 2017 are to allow both parties to take stock of the copper price, in advance of the hedges unwinding, so as to most objectively reset the Loan Repayments, especially as surely WTI will be in a position to start repaying before the end of June...?
Finally, unless I've missed something, none of Orion's loans are convertible into equity; in any case they wouldn't want to be in a position where they have to consider taking over WTI...if the call in the loans WTI is bust and what good does that do?
Orion has been very supportive.
They have very attractive off take agreements.
They are making a fortune on the loans as long as the company remains in business.
If copper prices remain here or, as many expect, go even higher, rising and staying above $3, Orion has a near 25% stake in a company that could be debt free within 2 years, generating substantial cashflow and paying meaningful dividends while exploiting its other assets....or...
Orion could broker a takeover by another company but surely nowhere near enough to pay off its $100m+ debt...
In fact, as others have said, basically this is a leveraged copper play, so I've just talked myself into doubling my holding....
AIMHO as usual and GLA...|
|I think he should be holding more shares right now today - As of today the CEO only owns 0.46% of company's share capital..
Even with all those options, assuming the company manages to get to the prices at the times concerned, the new CEO will own around 10million shares and get him up to 1% of market capital.
To put into perspective the old CEO who is nowhere to be seen owns 28million shares. So in essence Rod Webster gains more from future share price increases than the current CEO for the mess which he created.|
|Craig Thomas has been appointed as Chief Executive Officer and has joined the Board of Directors of Weatherly.
Mr Thomas holds 4,842,105 ordinary shares in Weatherly representing approximately 0.5 per cent. of the Company's issued share capital. In addition, Mr Thomas holds 4.8 million options of which 2.0 million are fully vested and exercisable at a price of 3.2p until August 2020, and 2.8 million vest over a 3 year period on meeting certain performance criteria and will be exercisable at a price of 3.38p until October 2024.
Do you not think that those options with strike prices which are multiples of the current share price provide sufficient incentive?|
|What your view on the modest little shares the directors hold compared to other companies? CFO not on list of major holders and CEO only owns 0.46%?
They should hold more... greater incentive to run the business to best of ability.|
|I think it is being prudent with investors too.
There are glimmers in the half year RNS which give a bit of hope. Talk of re-opening mines shuttered when copper prices fell and the prospect of a JV to explore another copper prospect, suggest that the CEO is not just sitting on his hands praying for a continuation of the industrial action in Chile.
The last five years has seen ALL commodities roiled. Who knows what happens next?
If we did we would all be multi millionaires.|
|I'm sure in time the new CEO would be better, lets face it, it won't be that difficult.
The CEO only holds 0.46% of total shares, some PI's of have 4-5times that amount - how about a show of confidence and up his holding?|
|To be fair Leedskier I do empathise with your point of view and clearly the company in November was between a rock and a hard place but what I dont get is why with copper at its present price the company are still not confident that they can manage this debt??
from latest RNS on top of the non payment of Namibia VAT of $7M
''Weatherly has previously advised that if copper prices remain at current levels it is unlikely that the Company and its subsidiaries will generate sufficient surplus cash to meet all loan repayments when due. This remains the case and the Company continues to positively engage with Orion on the subject.''
That for me is what confused me|
|I am not a 'fan boy' of the previous management.
The decision by the previous management to blow $80 million plus on a copper mine likely to produce 16K MT a year, without further CAPEX to increase that to 20K MT a year, whilst running an expensive office in London and not doubt other non-essential costs, belonged to the pre Lehman era. Add to which those decisions were made when copper was trading at a much higher price.
However to criticise the present CEO for any of that or for taking the prudent step to hedge part of the production, is I think unfair on him.|
|MM's have their own Agenda just like the forecasts provided by ABN AMRO, Macquarie
Commerzbank etc... so they are only interested in themselves
The facts are everyone knew up front a large proportion of mining labour contracts are due for renewal this year, copper supply is heavily disrupted in Indonesia & Chile.. the issues with Indonesian government have been known for years - Given the probability why hedge? and why hedge such a big proportion of production? why hedge and not include a buy-back option?
I get that it's easy to look back, of course it is but other small mining companies haven't hedged, ATYM haven't hedged, the big companies also haven't hedged who are at greater risk, BHP & Freeport make more copper each (when they are producing) in a week than WTI does in one year, they are at a bigger risk with copper prices and haven't hedged. The saving grace is WTI haven't hedged more and it runs out soon so have a chance of a much better Q2 now....
Management is key! copper price will take care of itself ........ get nameplate prod at low cost, sort out water management (think they have) & start paying back Orion.|
|MM are not bothered what the share price is, providing they can make trades at that price and more importantly close the day with a flat book. MM make their money on the spreads.|
|Either you do not know how MM work or you are just pretending you do not.
Meanwhile here are the IB forecasts current in Mid December 2016 for 2017 Copper Prices.
ABN AMRO – $5,600
Macquarie – $5,350
Commerzbank – $5,200
JPMorgan – $4,900
BMO Capital Markets – $4,630
Deutsche Bank – $4,400
Society Generale – $4,200
which all goes to show that if seven of the world's largest investment banks cannot agree or indeed none of them can get it, how is a small mining company to be criticised for taking a hedge at $5k on part of its production.|
|Filling their boots - yet the share price is down? explain that one......
More buys than sells and the share price is down 15% - what does the market tell you....... market says not happy with results!! could be so much better, given price of copper - all other copper miners have risen in past 2 months. Still a lot more to do and the BoD need to step up and deliver, fed up of all the excuses!|
|It was not so long ago when copper was $4600 MT the company posted that Orion had the option to buy at $5k. Those who always know better, but probably have never even been to Africa let alone a copper mine, were posting that the option to buy would not help WTI because Orion would not buy with such low copper prices.
Now copper has spiked because of industrial action at BHP's Chile copper mine -- the World's largest -- the keyboard warriors are posting that hedging at $5k was a mistake!
Meanwhile those with deeper pockets are filling their boots today.|
|Easy to be wise........ well its hardly rocket science to perform a calculation on hedging your prime asset at a price which even if you manufacture product to nameplate levels would still result in defaulting on debt repayments.... Tell me which other copper producer has hedged at $5k/ton in the world - you would be pressed to find one.
Why not say it how it is instead of defending the directors?? the one thing in their control is hedging and they messed up!|
|The MM set the price.
10:28:04 0.6750 575,910 O 0.6500 0.7000 Buy 3,716,719 1,098,297
10:25:59 0.6750 200,000 O 0.6500 0.7000 Buy 3,140,809 1,098,297
10:03:08 0.6750 17,721 O 0.6500 0.7000 Buy 2,940,809 1,098,297
09:39:54 0.6945 250,000 O 0.6500 0.7000 Buy 2,923,088 1,098,297
09:37:59 0.6660 100,000 O 0.6500 0.7000 Sell 2,673,088 1,098,297
09:24:08 0.7000 400,000 O 0.6500 0.7000 Buy 2,673,088 998,297
09:16:15 0.7000 250,000 O 0.6500 0.7000 Buy 2,273,088 998,297
09:15:16 0.7000 100,000 O 0.6500 0.7000 Buy 2,023,088 998,297
09:13:16 0.7000 150,000 O 0.6500 0.7000 Buy 1,923,088 998,297
09:00:28 0.7000 140,000 O 0.6500 0.7000 Buy 1,773,088 998,297
08:28:44 0.7000 250,000 O 0.6000 0.7000 Buy 1,633,088 998,297
08:27:27 0.7000 75,000 O 0.6500 0.7000 Buy 1,383,088 998,297
08:26:15 0.7000 142,007 O 0.6000 0.7000 Buy 1,308,088 998,297
08:24:58 0.7000 300,000 O 0.6000 0.7000 Buy 1,166,081 998,297
08:24:35 0.7000 100,000 O 0.6500 0.7000 Buy 866,081 998,297
08:22:32 0.7000 156,578 O 0.6500 0.7000 Buy 766,081 998,297
08:19:25 0.7000 250,000 O 0.6500 0.7000 Buy 609,503 998,297
08:12:31 0.6890 288,825 O 0.6500 0.7000 Buy 359,503 998,297
08:11:39 0.6550 200,000 O 0.6500 0.7000 Sell 70,678 998,297
08:11:05 0.7000 70,678 O 0.6500 0.7000 Buy 70,678 798,297
08:09:46 0.7010 27,818 O 0.7000 0.7500 Sell 0 798,297
08:09:25 0.7000 100,000 O 0.7000 0.7500 Sell 0 770,479
08:09:11 0.7000 100,000 O 0.7000 0.7500 Sell 0 670,479
08:06:47 0.6000 104,038 O 0.7000 0.8000 Sell 0 570,479
08:03:28 0.7500 100,000 O 0.7000 0.8000 ? 0 466,441
08:02:20 0.6141 164,408 O 0.7500 0.8500 Sell 0 466,441
08:02:11 0.7150 302,033 O 0.7500 0.8500 Sell 0 302,033|
|SP not reacted well today to that RNS and still the company are saying that the current price of copper is not high enough!!!! How high do they need it to be? I am saying no more but not in a hurry to increase my holding GLAHs|
|It is easy to be wise after the event with copper price hedging. Who knows JP Morgan's prediction for a sub $5K MT copper price this year, could still be proved correct.|
|With you on the good management Leeds,
So far they haven't filled me with any confidence ...
1. Hedged Copper when they should have left well alone and actually hedged the currency.
2. Not recovered the overdue VAT
3. Keep deferring loan repayments and agreeing offtake agreements such that Orion make more cash than WTI.
Good management and this company would have made in the region of an extra $1.3k/ton for the past 4 months..... no more mistakes!!!|
|Orion are mine financiers not mine operators, so of course it is in their best interests to support the company in trading out of the current situation.
The RNS shows that despite increased working capital (and a problematic first 3 months) that the cash balance moved positively.
The surprise is that no further hedging was announced, as a condition of the loan being rolled over.|
|Of course it is in the best interests of Orion to support WTI as a producing mining company.
The survival and recovery of this company depends on three factors.
1. The price of copper.
2. Good management.
3. Orion recognising -- which seemingly they do -- that their interests are best served by supporting the current management.|
|I hadn't looked at this share for years but found some time last week to do some investigating. My conclusion (happy to provide the spreadsheet) is that this is option money on the price of copper being about $6500+/tonne. The reason is, Orion have got them by the balls. They're currently paying around 10% on those loans, and as we know, they're about to default. Not only are they paying them 10% they (Orion) also have the option to buy a significant amount of this years production at well below market price (and let's not even mention the hedging...) I'll assume that Orion take that option (why wouldn't they) and, as they need to do some renegotiation of the loans (with weatherly being in default) they'll charge them another fee and/or even harsher payment terms (why wouldn't they).
As I see it management have two options 1) declare bankruptcy if they can't come to agreement with Orion on reasonable terms (weatherly is after all run for the benefit of the shareholders not Orion) which will, with a fair wind, give shareholders a reasonable chance of making some return, or 2) find another lender/supplier of capital who will clear the Orion loans and charge weatherly a more reasonable rate of interest, with a more sensible pay down period.
So if you Orion, what would you do? I would keep the company on life support, by extorting the company for every penny without pushing it over the edge.
For anyone thinking that Orion are shareholders too (and thus need to be charitable)you only need to look at the market cap ($8.5m) vs. The company's debt ($105m, from the investor presentation in November)to realise that Orion have less than $2m worth of shares but are owed the full debt.
Best of luck to all holders|
|I agree leedskier, I think Craig's doing a pretty good job all things considered.We can all criticise with the benefit of hindsight.|
|I rather thought it was being very well managed. But you and I disagree over the hedging issue.
which may explain why you sold down and I held.|
|Only a matter of time before WTI picks up again. The copper spike has sent KAZ flying, and smaller copper producers like under-the-radar Rambler (RMM) are experiencing a big uptick and re-rating too.|