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 |
If PXC is gifting a 20% interest in the Empire mine to certain of its Directors via exgen, why would any third party want to fund the thing? That includes NIU. If I read this correctly, it would explain why NIU had ceased to provide its promised funding. The latest RNS surely indicates the Directors are working for themselves, and not PXC’s shareholders. |
exactly - all structurally prepared. the last move was the latest RNS |
I think I’d be keeping one eye on the potential of administration at PXC and what happens with the subsidiary structure in such an event, Konnex, KPXH etc - all those shareholder loans from the UK listed parent to these US registered subs for instance.
Who gets to walk free, who gets left holding the baby, who ends up profiting from those ‘assets and sunk costs’? |
Greyingsurfer. I think you are missing the point here.
Exgen cannot afford the 20% cost of production at this moment in time and will certainly not be able to afford the 20% of $80m dollars to complete the production.
It is a private company owned by JR and RW and maybe some other players.(Are other PXC board members shareholders too in exgen? I do not know)
There are no shares traded in this company which makes me think that they have been part of the stumbling block all along. Unable to get a sizeable loan at decent rates of interest and lenders prefer to lend to one party, not two anyway.
PXC state that by lending them funds and creating a single loan source (bonds), this will make it easier to fund the proposed production. Agreed, this will make it easier, but what have exgen given in return. Absolutely nothing.
As I have tried to state previously, what are they putting on the table for this deal?
Seems to me that they are not giving up any of their 20% holding, and the risk is now entirely with PXC and its shareholders.
Did PXC board require some form of guarantee from exgen to cover potential losses? I do not know, but PXC board should have insisted that exgen either help in funding or simply lose their stake in Empire.
This is what running a business is all about.
This agreement has meant that PXC shareholders have lost an additional 20% ownership which in itself might have sparked the market into some positivity.
As I stated, RW and JR are big players in both exgen and PXC and may have had a big input in PXC not demanding that exgen stump up or lose their interest in the mine.
Perhaps the PXC board can shed some light on this, as it seems to me that PXC shareholders are losing out.
This is just my take and if you have read some of my previous threads, you will note that I have repeatedly asked about exgen, their ability to provide production cost funds and why on earth did PXC not buy them out, absorb them or just enact the clause that gives the exgen part of the mine to PXC.
To date, I have never had a satisfactory reply on any threads and this bee in my bonnet has just been brushed under the table every time.
Perhaps Marcus can offer some form of clarification over my issues. |
Absolute state of this up and down like a yo-yo |
i see the latest RNS as masks falling.
no need for them any more.
preparations. |
"The only way that PXC can gain is if exgen give up part of their 20% holding"Missing the point. PXC can gain if the agreement eases the way to get finance and development moving. Given exgen had a right to contribute nothing till a BFS was produced, and it's not clear where their share would come from anyway, PXC would potentially have had to fund, and wait for a BFS, and then face a possibility of having to loan the cash anyway. If this helps move development forward that's a major gain. |
Exgen sold most of their royalty off about 18 months ago.
The only way that PXC can gain is if exgen give up part of their 20% holding, which seems very unlikely.
This is turning into a boys club moment for me.
Will the share price rebound? Good question.
What is known however is that there is no initial risk for JR and RW, who are major shareholders in exgen as PXC is taking 100% of the risk.
If PXC flounders in Q2 and goes under,will exgen still be a viable Company? I don`t honestly know as I don`t have the small print details of this new arrangement between the two companys`.
Only time will tell. |
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