 OK, so a couple of things to explain.
The first I'll just cut and paste from the IPO document: it is lengthy but explains the obligations between PXC and ExGen.
"The principal terms of the Konnex Option, as amended by the Supplemental Option Agreement, the Supplemental Option Agreement No. 2 and the Supplemental Option Agreement No. 3 (together the “Consolidated Option Agreement”) are as follows:
(a) ExGen will hold 20 per cent. of the issued shares of Konnex on a carried basis until the completion of the delivery and receipt by the parties of a BFS following which Konnex may make a call on its shareholders to provide production funding (“Cash Call”). If ExGen does not provide its 20 per cent. of the amount of a Cash Call and the Company provides the amount not paid by ExGen, ExGen’s percentage shareholding of Konnex will decrease and the Company’s percentage shareholding in Konnex will increase, on a proportional basis;
(b) Phoenix will be obliged to provide all of the funding required by Konnex until the receipt of a BFS and thereafter for funding of further exploration on the Claims;
(c) after the exercise of the option the Konnex board will be reconstituted to consist of five persons, three of whom will be designated as representatives of the Company and two will be designated as representatives of ExGen;
(d) Phoenix must make monthly payments to ExGen of $12,500 until such time as Phoenix has invested US$1,000,000 in Konnex. As at the date of this Document, aggregate monthly payments of £217,000 remain outstanding, such sums to be satisfied following Admission;
(e) Phoenix must make an annual payment of US$100,000 to ExGen on or before 31 March until the completion and delivery of a BFS;
(f) Konnex must, from and after the commencement of production from the Claims, pay to ExGen 2.5 per cent. of the Net Smelter Returns realized from production from the Claims;
(g) Phoenix has the right to, at any time, terminate its ownership of shares in the capital of Konnex and all of its obligations under the Consolidated Option Agreement;
(h) following the exercise of the option, Phoenix will appoint a person designated by ExGen as a Director of the Company;
(i) pursuant to an “area of interest” clause, if either of ExGen or Phoenix acquire any mineral properties or mineral interests of any kind which lie within 30 miles of the external boundaries of the mineral properties comprising the Empire Mine, they must offer to transfer such mineral properties or interests to Konnex for the costs of their acquisition;
(j) Konnex and ExGen have agreed that they will, following the exercise of the option, negotiate the terms of, and sign, a formal Net Smelter Returns Agreement which will thereafter regulate the basis for calculating and paying to ExGen the option of the Net Smelter Returns ExGen is entitled to receive; and
(k) Phoenix, ExGen and Konnex have agreed to, following the exercise of the option, negotiate the terms of, and sign, a shareholder agreement which will thereafter govern the rights and obligations of ExGen and the Company as shareholders of Konnex." |
like for how long was pxc obliged to pay 100k? was there an amount or time limit?
list of detailed questions i have is long and will not bother to write them down |
full disclosures would make gossips and fun making and down talking impossible imho
half truths and opinions would not gain traction
in time it will either be all good or most truth will come out in the proceedings |
Most of the incorrect views you allude to, they make more sense than anything I've seen from you over the years if I'm honest. |
“If we end up borrowing 100%, and lending 20% of that to ExGen, is it really a big deal?”
Again, so why do it?
It’s still the same amount of money for the lender, so who wants this structure for the lending?
PXC?
The lender?
ExGen? |
To DP , Does the change in the proposed debt structure with ExGen make it more or less likely that NIUwill meet its funding commitment?
Was this change in JV funding something that was required by them or other potential bond holders ??
If this was a better structure to get funding why was it not put in place far earlier when the company first sought funding?
NIU were ..or certainly should have been aware of the ownership structure when they committed to fund the development !
If any answer a yes or no….why.
Is NUI still communicating with the company ..is it still the case as the CFO said that there is nothing to worry about on funding? Should there be more clarity as time goes on?
At what point would the company announce if they considered that the balance of $75m of the $80m of legally agreed funding was not going to be forthcoming?
Is the company taking any legal action against NUI for not meeting its legal obligations? |
If it’s all so immaterial about who owns the debt, but it’s clear someone somewhere is going to lend 100% of the money for the mine, why have they gone to the trouble of changing the details to make PXC take 100% of the debt?
I can see it saves money to avoid the BFS obligation (but increases risk IMO even if not in the opinion of PXC) but why would the lender prefer not to lend ExGen some … for the exact same total sum? |
The mine might not end up making the money forecast in the PFS.
If the price of copper collapses it might not be profitable at all.
My point is that it won't make a huge difference to PXC whether it owes 80% of the debt on the mine or 100% in those scenarios.
But having read through the 400+ page PFS, I don't think a BFS would add much.
The challenge is getting funding. How that funding is split between PXC and ExGen makes very little difference to any likely outcome. |
You don’t see them as likely?
How come? No 2 especially.
There have been plenty of failures in mining even with the benefit of the insight that a BFS offers.
PXC is proposing to set up a mine without one. |
Thank you for the clarity, DP |
One more point.
In what set of circumstances is the deal announced last week bad for Phoenix?
I can only think of 2:
1) there are 2 banks willing to lend 80% to PXC for 80% of the project but not willing to lend 100% for 100% of the project; or
2) the project is funded but the profits from 100% of the project are not sufficient to repay 100% of the liabilities under the debt, and so PXC needs to fill that gap somehow. So its a 25% larger shortfall than if PXC had only produced 80% of the funding.
I just don't see those as being likely scenarios. However, if I am missing something, please let me know. |
There is a lot of disinformation/total lies on this BB.
ExGen originally owned 100% of Konnex. At IPO Phoenix acquired 80% of Konnex for a relatively low price, in return for guaranteeing a minimum annual payment of $100k to ExGen, a minimum annual spend of $500k on the Empire property, and some shares in PXC.
It was, and remains, an arms length relationship. It is technically a related party transaction because ExGen has a single director, Jason Riley, on the board of PXC. But ExGen are an independent company with their own activities.
This is relatively common in the mining world. X owns a site but for whatever reason isn't developing it, so partners up with Y, who promises to do so, and X gets cash, certain guarantees, and an interest in the property being developed, and may put a director on the board of the JV to keep an eye on progress.
These are not the same people negotiating among themselves. It's simply wrong to suggest otherwise.
As for PXC now funding the whole of the mine...
Prior to this RNS, PXC were required to fund 80% of the mine, and if they produced a bankable feasibility study, accompanied by two offers of funding for the full 80% from banks, then ExGen would be required to fund 20%. The problem with that is that a BFS costs a lot and takes a lot of time, and anyone willing to fund 80% of a mine is almost certainly going to be willing to fund 100% of a mine. Or to put it another way, nobody will fund 80% without knowing where the other 20% will come from.
So it is simply more practical for PXC to borrow the full 100% than require the BFS, 2 formal offers, and then either Exgen gets 20% or PXC has to find the other 20% anyway.
So this is a very positive RNS that simplifies the obligations between PXC and ExGen and provides a clear foundation for funding.
Whether funding can be obtained is the key challenge. Nobody disputes that. But recent posts on this thread have simply been factually incorrect, and those making them should ask themselves why they feel the need to go onto a bulletin board about a company they have no financial interest in to post lies. It's not a good look. |
@kaos
:D
Yes I feel for them. Good job they've been getting an extra 100k/yr to make it a bit easier for them.
After all, it must've been all work, work, work at EXGEN. Bless. |
It’s a dead duck |
jbravo2 - it is difficult....
imagine a desk with 4 chairs. two on each side. on one side it stands Phoenix - on the other Exgen.
2 man talk for PXC... then stand up.... go around the table ...sit where it says Exgen.. and answer for Exgen .... then stand up, go around the table and sit for PXC ... and stress the PXC point once again and make further argument for PXC... than stand up again and go around the table
and so on
it is very difficult imho
respect |
Well I’m disappointed I missed that doozy of an announcement whilst I was away.
I love the spin.
From the RNS…
“Following recent discussions, Phoenix, ExGen, Konnex and KPXH…” makes it sound like it was a complicated negotiation rather than all sides involved being basically the same people and arranging things to suit themselves.
From Donald
“This announcement simplified things considerably. The 100k annual fee and 500k annual spend requirements are waived”
Hang on. PXC has been gifting, sorry paying an annual fee, of 100k to EXGEN? Ha ha ha ha ha
Hilarious. Like the people involved aren’t being paid enough of the shareholders money so they need to siphon off a bit extra? How many years has that gone on for til now? What did EXGEN do with the money? (No prizes for guessing)
If you’re still in and you can’t see you’re all being had for mugs then investing really isn’t for you. |
I don’t claim to understand this transaction as well as others so this will be my last comment. You would agree Zaphod that funding for PXC is scarce and costly. Funding for exgen seems to be non-existent. So why is PXC carrying exgen without substantial penalties to reflect the latter’s lack of financial standing? The answer appears to be because the two companies have overlapping Directors. |
Please explain how "PXC is gifting a 20% interest in the Empire mine to certain of its Directors via exgen" |
Read the RNS. |
Please explain what exgen is contributing in exchange for its 20% interest. I understand that exgen’s interest is longstanding, but if they fail to contribute their share of funding then they will have defaulted on their contractual right to 20% equity. |
no - it is not a gift - they own it for a long time |
PXC is not gifting a 20% interest in the Empire mine to certain of its Directors via exgen.Where on earth do you get this stuff from? |
tim000 - it was known before the deal. it is reflected in the deals huge costs imho
in the end the innocent looking bod might outsmart even mr cener, who knows
maybe a light went on in mr ceners head that he was taken to the cleaners heh heh
time will tell. pcx is better than tv or theater. only much slower
imho and it does not reflect reality |
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