Kazera Global Share Discussion Threads

[outspan] 14/7/2023 15:27

Apologies. Crossed with other contributors saying the same thing.

[outspan] 14/7/2023 15:24

Penrith is right, the CEO has made it clear at various times, including in his last interview, that the contract gives KZG the right to reclaim the mine and retain the proceeds paid to date if Hebei default.

Witness last interview from around 7:45 in connection to a further $1m having been received from them in the last month "every single dollar they pay us, is a dollar they don't get back..." In which case, the fact that they are still paying chunky sums surely heavily underscores their ultimate intent.

Interest is also accruing at 8% on the amounts outstanding so, assuming completion, the price paid will now be a chunky bit higher than $13m. If they default and KZG exercises its right to reclaim the mine, the c. $5m already banked by KZG, is a considerable buffer against the sale of the mine to another party at a lower price, or a considerable bonus if sold at around the same price.

What I think is clear from his answers on the subject from around the 5 min mark, is that DE does not intend to ever operate that mine again. The future is elsewhere, as he suggests many times in the interview concerning the money they already have. So it'll either complete with Hebei or it'll be sold to another party but, either way looks win win for KZG.

[drradcliffe] 14/7/2023 15:12

Link to interview

[gbcol] 14/7/2023 15:10

Re 1448 That is certainly not what Dennis has repeatedly stated. He has been unambiguous that any monies paid by Hebei would be kept by KZG if Hebei default. Admittedly, we aren’t party to the contract and so cannot verify that 100%.

The RNS states “ Under the terms of the sale agreement with Xinjian, Kazera retains ownership of 100% of the shares in Aftan as security until all amounts owed by Xinjian have been paid in full.”

[drradcliffe] 14/7/2023 15:10

Dennis covered this scenario in the recent interview; Xinjian are in too deep to back out without losing everything they have paid.

[penrith] 14/7/2023 13:54

Al101uk, Kazera would be on the hook to refund all or a large part of the money paid (deducting a fine for the contract breach)?I never realised that. I thought the money payed so far would belong to KZG.

[al101uk] 14/7/2023 13:35

Thanks outspan,

Not keeping up here really, so missed it...

"Under the terms of the agreement Xinjian was due to have paid and aggregate c.$6.1 million.
To date, Hebei Xinjian Construction ("Xinjian") has arranged aggregate payments of US$4.2 million.
Xinjian is currently not in compliance with the Agreement, with payment arrears of c.US$1.9 million (excluding interest). Nonetheless, at this time the Company has elected not to exercise its contractual rights to terminate the contract."

So, in a hypothetical situation where Xinjian decided to walk away (not saying they will), I assume Kazeras liabilities are not zero. Kazera would be on the hook to refund all or a large part of the money paid (deducting a fine for the contract breach)?

If the deal isn't really "done" until all funds are paid, there is a risk that would explain why the share price remains where it is. You can expect the company to rerate to a level more in keeping with a company that has a relatively huge cash pile and a viable business model once the Tantalum mine actually changes hands, meanwhile the funds are held in multiple currencies... is there any exchange rate risk on repayment if the deal fell through?

[tigerbythetail] 14/7/2023 07:58

Well, it takes many differing opinions to make a market. And it's obvious (esp. from the LSE board) there are still many embittered legacy shareholders from the days of Kennedy Ventures / Giles Clarke. Typically, "stale long" PIs wait until they get back to breakeven and then sell-out, so they'll be a drag on the share price if and when it moves up. That's how it goes, I guess.
KZG is a new company now. New management, new balance sheet, new major shareholder, new jurisdiction, new commodities, etc. So banging on about Giles Clarke isn't constructive. It doesn't really matter what the share price did in the past, based on the bad information that investors were spoon fed by former management. The question we should all be asking is, is KZG a good buy at its current price? For my money, the answer is decisively yes.
Obviously AMS agree with me, since they're paying 1.5p per share for 29% of the company.

[outspan] 14/7/2023 00:17

The balance of decisions and alternatives on the subject is all outlined in the recent RNSs and interview so I'm sure his comments are intended to build on that.

[al101uk] 13/7/2023 16:40

"This payment is a further indication of Xinjian's desire to meet its obligations. As well as strengthening the Company's cash position, it further justifies our approach to continue working with Xinjian to achieve a mutually beneficial outcome."

Would suggest that the company had to make a decision on if it wanted to continue to work with Xinjian?

[penrith] 13/7/2023 16:20

Your suggesting in 2 to 3 years time this share could reach 8p.In my humble opinion if this share ever got to half of that then 95% of us would have sold. I for one would be delighted with 1.5p (av .93) and pressing the sell button like a machine gun trigger.How many times on AIM have we heard the ten bagger line. Alliance told us 4p and skipped of at 1.5p.

[tigerbythetail] 13/7/2023 14:18

The most important three words in mining are "grade is king". And KZG have world-beating HMS grades in a naturally replenishing resource.
So, Whale Head HMS business in full operation and generating significant FCF (as it would at current market prices) + grant of licence for a second larger HMS concession in same area = (very roughly) £80m market cap. Time horizon: 2-3 years.
(I'm ignoring the diamonds. Nothing wrong with them, but small beer, IMO. Also ignoring the highly theoretical royalty from TVM.)
That's why I won't be at all surprised if AMS want more than 29% of the company. In their position, I'd like to keep the company public (a listing has its advantages), but ideally I'd want c. 60% of the shares. So I'd go beyond 30%, make a compulsory offer at 1.5p, but then be happy to settle for less than 100% ownership.
All in all, I get that AIM is manic depressive, and in its manic "up" phase it can insanely overvalue mining stocks (hello EUA), but in its depressive "down" phase (e.g. here) it can also crazily undervalue them.
ALL IMO, of course, and I haven't listed out the risks (which do exist) here.

[chrysalis99] 13/7/2023 12:50

Please talk us through the £80m valuation. Feels like most of us need cheering up.

[penrith] 13/7/2023 11:26

I bet IF we were being honest 90% of us long term holders wish they had never heard of KZG.

[penrith] 13/7/2023 11:23

Tiger you say :I've got a low average here, but it's fair to say that I invested too early, and so I've had money tied up for several months.I thought you had been here years like me?The problem is they have promised us revenues for years from producing minerals. Our only revenue has been from selling assets and that is under threat.I joined a Tant company and have ended up with a hundred year old diamond company that does not produce revenue and a radio active company that may not see revenue for 9 months if ever. Don't understand your enthusiasm. We are currently overvalued until we generate income from production....

[outspan] 13/7/2023 10:47

Getting the feeling of a bit of stakebuilding today. A bit of Director buying wouldn't go amiss. Post results, shareholders brought up to date, value seen, fully funded, great future seen with AMS influence, we hear. Perfect time?

[chrysalis99] 13/7/2023 10:41

There is rarely any discussion about future revenue potential/p&l in the interviews with the CEO. The market is waiting for clarity on this and hard evidence of consistent actual profitability.

[tigerbythetail] 13/7/2023 08:05

Yes, you have to factor in opportunity cost.
I've got a low average here, but it's fair to say that I invested too early, and so I've had money tied up for several months.
When will the share price react to the news flow here and rerate - at least to AMS's buy-in price of 1.5p?
It really should have done so already, but I guess we may have to wait till the early autumn now. Or it could be tomorrow for all I know. Good luck to all in guessing the timing of that.

[mdchand] 13/7/2023 07:48

Indeed. Boredom, lack of momentum, lack of recent RNSs, fear over the HMS operation. The list is endless, but it also throws up price distortions which you can exploit if meaningful news does materialise. On my watch list waiting for the trigger catalyst (normally production / cash flow orientated).

[tigerbythetail] 13/7/2023 07:35

So, given we know what we know, how on earth is the share price down here? It's ridiculous.
1) A "player" in the Heavy Mineral Sands business is buying 29% of the company at 1.5p per share - double the current share price.
2) The market cap is £7.5m = roughly $9.5m. But there is still about $8m to come from Hebei and the company is debt free and its cash balance must be healthy given the payments already received.
3) The HMS business is a superb mining opportunity.
I'm flummoxed. I guess it's just AIM. I can name small cap mining companies as crazily overvalued as this is undervalued.

[gbcol] 13/7/2023 06:32

RNS confirming it has received a further US$650,000 from Hebei in respect of the sale of African Tantalum. The total received now c.US$4.8 5 million