Kazera Global Share Discussion Threads

[outspan] 21/12/2021 20:41

al101uk, never mind the water pipeline or solid production forecasts in the absence of it, this news still to be announced will be transformational:

As per earlier posts, as a regular watcher, I can say that the previous date on the application (top line on first link) was last week, Dec 15. I believe today at 09.45 will prove to have been a truly pivotal moment for this Company!

Clicking on the actual application, I can say that the status of the case has today changed from "Submitted" to "Closed (Approved)".





Ahead of the Company on this one, albeit they’ve already broadcast its imminence. They hoped for it before the end of the year end but most recently steered us to early New Year. Seems they were overly pessimistic! RNS incoming any time now I would expect....

Go Dennis go......

[al101uk] 17/12/2021 09:13

Mostly agreed,

I didn't rate Larry from his first interview onwards, but I guess he didn't bankrupt the company ;-)

Obviously the share price has to rise for warrants at 2p to be exercised and if there are a large number of warrants you could find you have a short term cap on the share price at some point. It's funny, because you see a positive from the warrants and in this case I completely get that, but normally I wouldn't look at them that way. Hard to turn a concept on it's head.

Your new guy seems to be working miracles if everything he says goes to plan. I'm not as up to speed on all the comings and goings etc as I should/will be if I invest, so can't comment on all of that.

I thought the water pipeline was essential, it's what I based my entire thesis on, the latest RNS seems to suggest that it's not and that news is transformational.

[outspan] 17/12/2021 01:53

Hi al101uk, agree it remains a bit misty. Sounds like the major shareholder has insight into burgeoning earnings through 2022 and is pushing for the slightly longer game but with a whole lot less dilution.

I say "slightly" longer because I don't believe either the SA diamond or the recently approved HMS operations (subject to any appeals by 25 Jan 22), need any further funding worth mentioning. It's all a question of whether the earnings of those 2 ops, 3 if you also include KZG's lion's share of the new JV, can fund the development needs of the Namibian tant ops.

Some believe a water pipeline is essential but any water pipeline would cost $4-5m and be expected to take 18 months to construct and yet the company is on the threshold of soon-to-be-profitable tant production, apparently through careful management of water from boreholes. Production which, implicitly by this means alone, is seen to be capable of reaching 10000kgs by the end of 2022, obviously adding even more and more profits to the mix as the year progresses if their forecasts are correct.

The other factor here that few consider is the number of outstanding warrants still to be converted within 2 years at 1p, 2p and even 2.7p. I'm carrying out a personal study on what these will raise when exercised and, while I have not had the time to reach a conclusion, I already know it amounts to a substantial sum, possibly exceeding £1m to add to those expected burgeoning earnings in 2022 and beyond.

All in all, I think the new broom CEO is a very different kettle of fish and I expect the company and its shareholders to quickly feel the refreshing energy of his presence and drive.

He and major shareholder Align have links going back to before Kazera and, following the departure of LJ, I have no doubt they are crafting a cunning plan together that will quickly leave the somewhat lethargic, hamstrung years of LJ behind.

To be fair to LJ, he only had a shoestring budget and he did what he could within that and keep KZG afloat and on track. He didn't have the luxury of burgeoning income from diamonds and near-term prospective income from HMS or the diamond JV.

Thing is, that's where the Richard Jennings/Align/Tectonic/Dennis Edmonds links come into play. They knew they had a prize but they needed a vehicle to realise the potential. KZG became that vehicle and the main players have since established effective control in the boardroom too. I expect a completely new impetus to emerge in the coming period.

I have even wondered to myself at times whether KZG bolted on diamonds and HMS or whether RJ et al bolted on tantalum! Either way, the promise is enormous. It just needs belief to become established and that will probably take a little time and a flow of evidence rather than words.

[mdchand] 16/12/2021 11:14

Muted response to today's announcement. TZM production was meant to have started earlier this month so it looks like they had a few operational delays in getting it up and running. Various trigger points in the next few weeks

* Confirmation of diamond sales
* Confirmation of heavy Sands permit
* Confirmation of TZM production / sales expectation

Perhaps biggest trigger will be the licensing of the adjacent Heavy sands prospect.

Happy to hold.

[jackruss2] 16/12/2021 07:11

All looking good. No mention of the investment package from the two potential companies. Will this just fade away as if it was never even an option.Some good research by poppyseed finding documentation demonstrating progress on the mining permit.Perhaps 2022 will finally be our year. It certainly has been a long wait.

[saint in exile] 16/12/2021 07:10

RNS out.The future looks good at last!!

[outspan] 16/12/2021 00:15

Thanks to Poppyseed on another site's board:

Regarding earlier statements from our new full CEO hoping for HMS licence approval by the end of the year, I noted a step forward was taken today. In the link below it can be seen that the latest action is noted today at 08.12am.

As a regular watcher, I can say that the previous date on the application was in early Aug. Also, clicking on the application, I can say that the status of the case has changed from "Studies Pending" as recently as yesterday to "Submitted".



I'll post any further observations of note as things move along. As I recall, CEO expects to have meaningful/profitable production of this lucrative asset within 6 months of approval.

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Don't think this can be read any other way and probably gave rise to the change of status today that I flagged up earlier. Looks like it's granted to me! Around 6 months from now then....



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I think this link confirms approval pretty clearly albeit that there's a formal appeals procedure that will need to run its course before absolute confirmation, ends 25 Jan 22 though! Close enough to taste!

[sabre6] 25/11/2021 13:07

Hopefully all done and dusted by the end of the year
Some large buys gone through this morning

[al101uk] 17/11/2021 02:11

I don't think they hit the production goal without the financing, that appears to be where we differ in our interpretation. Hopefully we'll never find out who's right and financing will be secured soon. Hope it works out for you either way.

[outspan] 16/11/2021 15:30

For sure, the long-heralded financing deal, apparently still on the cards @ around 2.7p would have a substantial impact on the share price and any alternative without such funding would be likely to be more of a building blocks thing and typically less impactful in the "early one morning" sense but, importantly, without the circa 30% dilution of the major funding. For me, either of these scenarios would be great and actually, on this one, I really hope I never wake up one morning with all I suggest already in the price. That would leave me no room for the 3-7 year major growth story I believe this is set to become and which I want ride.

That said, as indicated by the Company, the principal purpose of such major funding should it be completed is for the water pipeline to significantly boost the production process and also to provide for a Phase 3 drilling campaign for the TVI operation.

It is notably not seen to be necessary to further the burgeoning scale of the SA operations from diamonds to JV to HMS. That'll do for me, given the anticipated earnings forecasts over the relatively near-term from here alone while DJ Drilling moves ahead doing all that's possible at TVI. With or without the water pipeline, whether day-to-day churn or something developmentally more than that, the production aim by the end of 2022 is nevertheless very tasty and far exceeds your suggestion of them running the mine at breakeven or a small profit.

ATB

[al101uk] 16/11/2021 13:42

outspan,

I think the DJ Drilling deal is primarily operational, they've made some improvements, but generally they are there to run the mine on a day to day basis and cover day to day costs. I think DJ Drilling probably believe they can run the mine as it stands at break even/a small profit. As part of that deal they also get the contract to develop the mine if/when financing becomes available. I guess it makes sense for them to make improvements where there is a very short time to payback hence the road improvements etc, but they are not financing the development of the mine. The deal makes sense for both sides:

Kazera reduce their Operational Spend, a requirement in their current financial position.

DJ Drilling make use of infrastructure that they may have laying idle and give themselves a guatantee of a share in any future profits and the construction contract if/when the development of the mine happens.

Again, my opinion is backed up by what Larry said when the deal was concluded:

"Johnson added that, rather than continue to wait, the board has elected to move forward, albeit on a smaller scale, with a view to accelerating operations at the mine once the investments come through and in a manner that is nondilutive to existing shareholders."

For me it's all about risk/reward. A financing deal could double (or more) the share price in short order, but the rest of your story (which I have no problem with) will play out in the share price over the months/years following. Certainly I won't wake up one morning to find the business with all of what you suggest priced in.

Right now I see Kazera equity as an option on whether they can get a financing deal. That's very high risk/reward. I'd rather wait for the business to develop further and buy in higher if it manages to do so. Even then, I will take a very small position and increase as my confidence in the business increases and they make their way to profitability.

Sitting and waiting.

[outspan] 15/11/2021 23:19

Credit to you Al for a good bit of crunching insofar as it's possible from so little information.

The numbers game is not helped by the recently bolted-on but apparently fast-track diamond processing JV whereby the front-end expense is/was entirely down to KZG but the forecast income from which is entirely separate from, and in addition to, the DBM diamond operation which itself was significantly hamstrung by the inefficiency and ineffectiveness of the previously state-run processing plant.

Should be win win whichever way you look at it and, with so much DBM sand already stockpiled for processing because of the previous operator's failings, the speed of ramp up, and therefore income flow to both DBM and the new JV, could be quite surprising.

Meanwhile on the tantalum side, we are given to believe that the front-end start-up costs are being borne by DJ Drilling at their risk only to be charged to KZG out of the subsequent tant income under the offtake agreement. Which surely points very strongly to DJ being supremely confident not only of recouping their outlay in the near-term but also of doing very nicely going forward on their mining contract into 2022 and beyond. For sure, the 10000 Kgs of tant production being targeted by the end of next year puts some scale both to the speed of anticipated build up and also to the pace of income growth assuming they pull it off.

Add HMS to this in 2022, subject to licence approval plus just 6 months thereafter to get things going, and the forward income here is seen to not only outshine the diamonds operation by a considerable margin but also to positively impact on the quality of the diamond operation production.

"...The grant of the Mining Permit for HMS is also now expected before the end of the calendar year. The Company has recently been asked to provide an environmental rehabilitation guarantee, which is apparently one of the last steps prior to the Permit being granted. With the Permit in hand, the Company, as previously announced, expects within 6 months, to begin generating additional profits of up to $300,000 per month. These numbers will be improved even further by introducing a third party to build and operate a separation plant for which discussions are already underway. Simultaneously, the Company is pursuing an application for a Prospecting Right over an area which is approximately 34 times larger than the current site.

Diamond production will also increase as Heavy Mineral Sands are mined, with an estimated increase in diamond production of an additional 300ct per month and with an enhanced value of approximately $750 per carat anticipated..."

Overall, if things come together as anticipated, crunching the numbers in 2022 could very easily become snap, crackle and pop!

[al101uk] 15/11/2021 17:31

Thanks outspan,

I think there are two ways of reading that RNS, the first one is that the company is fully funded for all ongoing operations for the next six months and will be profitable beyond that point, so little to no risk going forward.

The second is that Westleigh Capital is a Giles Clarke vehicle and that the finance being offered is exactly what was already stated at interims, so was already baked in to the projections of cash available.

From Interims:

"In addition, Giles Clarke and Nick Harrison have agreed to lend to the Company such cash as is necessary to enable it to meet its commitments, should there be a shortfall."

From the RNS you linked:

"Westleigh Investments Holdings Limited (a company controlled by Giles Clarke and Nick Harrison) has agreed to formalize the arrangements pursuant to which it has financed the Company's operations over recent months into a fixed term loan of GBP200,0000 repayable at the end of 2022"

That seems to be Giles & Nick formalising their loan agreement from earlier this year through their investment vehicle. In which case I underestimated cashburn a little, which isn't too much of a surprise as I low balled it and didn't add any further expenditure for the deals they have completed since.

£103K cash outflow at interims to December 2020, assume that is static = £200K for 12 months to December 2021, plus warrant conversions, what cash they already had and a little prodcution to carry them a few extra months would make the six months from the RNS date.

But I don't see where the capex spend comes from and that Opex spend appears to be cut to the bone given they spent £1.3 million in opex last full year results.

[outspan] 15/11/2021 16:05

This is the one you're looking for A101:



It's not hogwash, it's possible, if not probable. Inward investment may well still be desirable in order to advance e.g. the water pipeline to the tant mine more quickly but talk of keeping the lights on is no longer relevant as the next 3 months or so will demonstrate.

Can't blame people for wanting to see the colour of it before they believe but, for others, this is a remarkable opportunity to bottom fish even while right on the threshold of the ducks finally getting into line.

[al101uk] 15/11/2021 13:15

There's a non-cash item in the P&L for Foreign Exchange at £250K so the cash burn is probably a lot less than the P&L would suggest, should have used the cashflow statement in the first place.

Net Cash Outflow was £103K for operating activities with a further £300K in capex spend. They have £22K of cash remaining at interims. I'd hope they are in cash conservation mode now.

Their actual cash burn could be more like £150k, irrelevant as whatever it is, they have about 12 months of cash as of the date the intrerims were published plus the warrant money.

I'm going to hazard a guess that including warrants they can keep the lights on for another 9 months, but would be raising more funds in advance of that for operational cashflow if the funding isn't signed, sealed and delivered.

[al101uk] 15/11/2021 12:20

As far as I can see they had 12 months of funds remaining, they burned £500k at interims, so £1 million? They bought themselves another month or two with the £118K in warrants.

They have done deals and made acquisitions that require more funds to bring online, the Diamond Processing Plant needs to be brought up to health and safety standards and modernised at Kazeras expense, Whale Head requires funds from the Tantalum and Diamond Processing facility projects to fund it. Tantalum mine requires investors to stump up the money.

My research of the Diamond Processing Plant shows it's been an absolute horror show for the original owners and was never built to spec in the first place.

Much like Ironveld, they need funding to continue, it's that simple.

[al101uk] 15/11/2021 12:13

Where does the company say they can be fully funded from operations?

31st March Interims they said "...in the absence of other funding, future revenue from the Company’s South African diamond mining along with existing available cash resources, will be sufficient to cover operating cash outflows for a period of 12 months from today’s date. "

13th May at the investment update they said "It should also be noted that since the Company's Auditors signed off the Accounts with a view that the Company would have sufficient funds for the next 12 months, the Company has received a further £118,000 by way of warrant exercises."

20th Spetmeber at the Diamond Processing Update they said "MV5 and Kazera have entered into a separate joint venture agreement, pursuant to which Kazera will bring the Plant up to required Health and Safety Standards and implement procedures to improve its operational efficiency." which sounds like additional spend to me.

And finally on 30th September they say in the Whale Head Aquisition RNS:

"Acquisition brings near term cash flow with the Company aiming, within 6 months of the Mining Permit being granted, to produce circa 6,000 tons of HMS per month, achieving an estimated gross profit of in excess of $300,000 per month based Establishment costs of operation are anticipated to be covered by increasing production from Kazera's diamond and tantalum mining businesses."

[penrith] 11/11/2021 09:01

Of course not. They desperately need the 9mill to get the mine effectively operational. All this about being able to self fund is hogwash. If the investment doesn't arrive shortly there will be a raise.

[sabre6] 09/11/2021 18:07

Pen
Do you honestly think that they only need £250k

[penrith] 09/11/2021 16:00

They require an investment of $9 mill to fund the river etc yet by borrowing £250k they can now self fund. Why on earth have they been trying to raise 9 mill that they apparently do not require. Wish they'd just borrowed the 250 in the first place.

[mdchand] 09/11/2021 10:27

Penrith

These things do not happen overnight.

Look at Iron. They mentioned a strategic investor being in 'advanced talks' with them in an RNS dated 30th March 21, but it took until 22nd October for that deal to be signed off. However, even if you are correct - which I would question - the Company believes it can self finance the expansion of the Tantalum mine anyway.

[sabre6] 09/11/2021 09:51

Penrith
The investors have not lost interest the fact is external interest is holding up the money this has been mentioned in the past.

[penrith] 09/11/2021 08:55

If the company is in the shape you presume it to be then you would think the investors would be desperate to conclude the deal. I think the facts are most likely to be that the investors have lost interest.

[mdchand] 03/11/2021 11:19

In respect of the strategic investors, the Company have become a lot more relaxed about the need for a lump sum investment due to the expected ongoing cash flow from the Diamond / Heavy Sands / Tantalum sales.

Of course, we only have mere snippets as to what all these cash flows might mean but I've gone through all the available RNSs to peace together what the Company have stated, and what we can deduce.

a) Existing Diamond Operations.

We know the Company mined 242ct in Feb at an average sales price of 200ct. This equated to $50k pm. We also know that they recently signed a deal that would increase turnover (and hopefully revenue) 6 fold on a 70/30 split. Based on Feb's figures, this would increase revenue to approx $200k pm. Again large pinch of salt time.

b) Heavy Sands Ops

Company reckon within 6 months of relevant mining permit, they could be generating 300k per month. They also believe they could generate an additional $200k per month from diamonds found in this area. Again Company's own figures.

c) Tantalum Mining

Company have stated that they hope to be producing 20,000kg of Tantalum by Dec 22. Current price of Tantalum kg is $250, so theoretically, thats another $500k per month.

Collectively, thats approx $1.2m revenue per month excluding anything from the Lithium deposits. Admittedly, we have no idea what the cost base will be here, but these figures give me comfort that they could self fund the expansion of the Tantalum mine based on existing operations. Of course, if someone turned up with the cash in the meantime, I am sure they could find a home for it....albeit I would hope at a larger premium now that the underlying assets have been substantially derisked.

I think Align will be doing a detailed report that will flesh out the above in more detail.