Wti Oil Etc Discussion Threads

[charlieeee] 27/1/2017 11:46

SBT

You seem to be taking my post on the ATYM board making comparisons with WTI, if the Astor case is lost, very personally?

I mention ATYM as the 2 companies have more similarities than you accept and the greatest difference is in how they have been financed.

One has gone the 100% debt route (one of the last to get such financing) and the other went 100% the equity route. Far from saving WTI, Orion are trying to save themselves. They are "hedgies" and will always therefore to try and lay off risk: it is the nature of the beast and can be seen in that abysmal hedging.

It would be good to see management trying to find alternative solutions and a placing, even if highly dilutive, could cut the Gordian knot.

In their shoes, JDwag, I would be trying to pay the first installment of the big loan and either rollover or placing (or any of the other means of finding finance, such as pipeline finance, negotiating better terms with contractors etc)on the smaller loans, since that should be less punitive in respect of fees?

Maybe, as SBT says, they will just roll over as necessary and that is not such a bad outcome either: it does remind me of a favorite business saying,

"owe a £100 to your bank manager and he tells you what to do: owe your bank manager £1 million and you tell him what to do"

[jdwag] 27/1/2017 11:08

Considering the $5.7m on cash as of 30 June, outstanding VAT Payments of $6.1m as of 30 June, the $1.5m or so they lost in the last Quarter (July to Sept 2016) that is a guess on my part, the $3.5m-$4m they made in profit announced yesterday in the Oct-Dec 2016 Quarter (another complete guess) and the 2 months of income to come (Jan and Feb 2017) before they have the Tranches B, C and D to pay on 28 Feb I think it is conceivable they will have somewhere in the region of $16m on the books, looks likely that either Tranches C and D will be paid (maybe both) and Tranche B (the largest issue) will be deferred again in another deal (might have to extend or revise the Offtake agreement / $5k fix, but maybe not).

Even though it is painfully slow, Tranches C and D being paid in Feb would be a major sign of progress in my eyes. And would set this up well for late in 2017 when the Fix and Hedging has gone.

JD

[someuwin] 27/1/2017 11:04

Ambrian raises target price from 1.20 to 1.30

[leedskier] 27/1/2017 10:56

The key word in the C&P from the RNS is in bold in the extract below. As I suggested a few days in a post I c&p yesterday, it would be unlikely that 'all' sums due at end February could be paid. The question we do not know the answer to, is what proportion of it will be paid.


to meet all loan repayments when due

[sh1984] 27/1/2017 09:59

A share placing would be a better way of generating funds compared with going to Orion.

[superbobtaylor] 27/1/2017 09:31

Bill,

I don't see any chance of any repayment being made in Feb. This statement in the RNS spells it out

"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."

I think the best that can be hoped for is a simple roll over of the debt with repayment starting in the next quarter. This would be fair and is what I expect. Orion would still benefit as 9% interest is pretty good these days! There are some worse scenarios like Orion deciding they want to convert debt for equity or Orion demanding another discounted offtake deal. We will soon find out.

I should disclose I don't own WTI although I have in the distant past when Rod was running the show....

SBT

[dixi] 27/1/2017 09:30

At the time it would have been deemed reasonable and was over the then price of CU. It was also part of the lifeline for WTI.

[billthebank] 27/1/2017 09:19

Superbobtaylor Great assessment!! As long as copper stays at this level or higher all will be well. Wonder if that o/s VAT bill has been paid. That and the surplus we have in cash may see the the first payment being made in February? Why oh why they hedged their stock @ $5000 is beyond me but as I mentioned before hindsight is a wonderful thing.

[dixi] 27/1/2017 09:13

Put another way, now is the time to buy WTI if you think price of CU is likely to rise. Courage of convictions and all that etc.. ....

[superbobtaylor] 27/1/2017 08:57

charlieeee do you know the history of WTI? Orion saved the company from certain bankruptcy and have kept them on life support ever since. No one else was going to step in. The new management here are not complacent, they have done a very good job since taking over from the old failed management team. (failed is the nicest word I can use!) Orion are running the show and can pull the plug at any point.

There will be no "cunning plan" for debt repayment. It will all be rolled over at 9% interest and I would not be surprised to see another "offtake" agreement for Orion thrown in as well.

AYTM (which you like to mention with every post!) is a different kettle of fish. No one of the 3 main shareholders has a controlling interest so they cannot get away with he kind of stunts Orion are pulling in an effort to get some of their money back.

Also (have I mentioned this before?) AYTM produce about twice as much Cu and will do so for about twice as long so the same level of debt (if it comes about) is much easier to repay. This is, of course, reflected in the price of both companies. I would estimate Cu @3.25 or above and WTI will really be off to the races. At the current price I don't think there is anything left for the shareholders after Orion take when they want.

SBT

[charlieeee] 26/1/2017 19:15

On ATYM the offtake was grabbed by the 3 big shareholders, the Chinese, Trafigura and Orion Mine finance.

In September 2016, ATYM, also with negative net current assets (who will be as indebted as WTI if they lose the Astor case) tried to repair their Balance Sheet by completing a US$14m copper concentrate prepayment funding agreement with Transamine Trading SA. Obviously, the "big three" were prepared to forgo part of their (free) offtake rights in Transamine's favor, rather than put their hands in their own pockets and stump up more working capital.

As Orion were part of that deal for ATYM, one has to wonder if they would look favorably on such an option for WTI and it is within the bounds of possibility that they would be pleased to pass the burden of some of the liability to another and someone such as Transamine would be interested once WTI have rolled for a few months with reasonably consistent production.

Management should not be putting all their eggs in the Orion basket: when you talk to ATYM CEO, Alberto Lavendeira, and understand the multiple ways that he has managed to keep ATYM financed for the build and expansion, WTI management have had it easy and have become complacently reliant on Orion.

[jdwag] 26/1/2017 16:48

Leedskier,

Agreed. I very much doubt they have a real grasp on the eventual C1 Costs until they have their finalised water management design in place (which the RNS makes clear will lead to lower costs) I have taken the C1 Costs today with a pinch of salt.

The eventual C1 Costs will come out in the wash after two or three quarters running at nameplate and above with no extra measures needed above and beyond what is expected. It is clear to me the water management exercise has thrown these numbers all over the place.

JD

[leedskier] 26/1/2017 16:19

Add to which in 2015 the Company was talking about $4K C1 costs when the NMD was trading at a far higher exchange rate against the USD. In the years before it was trading even higher. As for the costs of the London office, which will be priced in £s, they should be 20% cheaper when converted to US$ .. I think this prediction of US$4600 a MT C1 costs is fluff.

[billthebank] 26/1/2017 16:02

charlieeee not sure I understand the piece 0n ATYM etc? Sorry Could you spell it out in words of one syllable? Cheers Personally not sure Orion will be all that fussed really as I believe they are probably pulling the strings presently? Also 700 tonnes X $800 ie $500K every month till July is a nice earner. They also own over 20% of the company so have a vested interest in WTI performing

[charlieeee] 26/1/2017 14:10

I am with you on the exchange rate, leedskier.

I can see how it produced the really low C1 costs for Q/E Mar 16, in comparison with the Q/E Dec 16.

What I cannot see is how something which has not yet happened ie Feb to June 2017 could be predicted as it certainly has not rocketed out of the Oct -Dec 16 range in Jan 2017?

The hedging was clearly in place at the time of the last RNS on the Orion postponement and it was absolutely germane to projections being made.

The only conclusion to draw is that they have some other "cunning plan" to deal with the end of Feb repayments: on ATYM Orion would have been party to the sacrifice of some of its offtake to get the Transmine Trading SA US$ 14m prepayment funding in place. Will the Orion board representation on WTI be rooting for an arrangement of that ilk, just to reduce exposure?

[reallyrich] 26/1/2017 12:56

But since we are a London listed company why can't they take payment (OR PART PAYMENT)in uk pounds in London against USD.

[mattjos] 26/1/2017 12:53

Guys .. this is Weatherly. Get used to it

[reallyrich] 26/1/2017 12:41

But if you look at the one year chart it has got stronger by about 20% from this time last year

[sh1984] 26/1/2017 12:32

Sorry Matjjos, not being in control of its destiny is not a good enough excuse in my opinion. WTI needs to get it's act together, just lost $3.5-$4million in potential revenue due to hedging - the update could have been so much better. That could have a massive impact on loan repayment and releasing itself from Orion.

[leedskier] 26/1/2017 12:03

The comment about the Namibia Dollar rising against the USD seems bizarre when one looks at this two year chart.

Edit

As far as I can see it has fallen & recovered in line with CU prices.





The Stock brokers have an input into the drafting these RNS, I wonder if the kitchen sink has been thrown at this one?

[mattjos] 26/1/2017 11:59

you need to understand that the company is not in control of its own destiny at this time. They have to do pretty much what Orion tell them to do in order to survive.

The debt repayments will need rescheduling once again with Orion to give them more breathing space this year.

This is Weatherly where nothing is ever as the management would have you believe.
The CEO needs to ruthlessly take the pruning shears to the old duffers still on the Board, shut down the UK office and run it even leaner than now.
I think it can be done.

[sh1984] 26/1/2017 11:52

My point exactly Bill - Why hedge at $5K? doesn't make any sense and then why state loans are due to be repaid end Feb, knowing full well you've hedge 4000 tonnes at $5K and have no chance to pay.

CEO needs his head examining IMO, that's a massive amount of hedging when the price of cooper is $6k/ton. Not a happy shareholder, when is the next AGM?

[billthebank] 26/1/2017 11:41

So the next two quarters we will receive (all things remaining equal!) $8M and the next six months $18M And we will pay Orion $12.4M leaving us $5M to cover everything else Very tight with interest of 7% above LIBOR which will absorb all our profit and more!!!? Has anyone else looked at the numbers? This still cannot be right. Who in their right mind would hedge at $5000 on their prime asset when it would not provide enough revenue to cover the company's costs

[billthebank] 26/1/2017 11:29

Thanks guys Was really scratching my head there