Shall we cut to the chase,PXC is running on fumes,unless DP/Board can convince someone to put up 63million to fund a unpermitted mine without a bfs and another circa12 million to fund the plc whilst they do it a fundraise is coming here in short order.It makes no sense to keep spending at empire or paying exgen if the mine can not be funded in the short term.If PXC can get committed funding you could triple your money here,sadly i think its just as likely you could also lose the lot.GLA IMHO |
But isn`t the funding dependent on a bfs being produced and haven`t you already stated that the "lender is only offering its loan to PXC. In other words, exgen has to find its own lenderi
If PXC have had to make a 20% loan to exgen, then It tells me that the lender did not want to give exgen a loan to cover their 20% cost of the build.
In other words, they could have been too risky to lend to.
There may be other explanations of course.
PXC have had many mnay months to produce a bfs and if this had been completed earlier then exgen would have had to stump up the money.
I disagree with your notion that one has to take the agreement in total.
Surely, if one part is not completed then they have broken part of the agreement and the whole agreement is invalidated.
Without clause a,the rest of the agreement cannot be actioned so it is therefore the basis of the whole agreement. This is why it is clause a.
I also thought that RW had a vested interest in EXgen.
Am I wrong on this point as well. |
funding the “mine development”
That covers very broad range |
But kkj, I go back to the fundamental issue, which is that we don't have a BFS and it would take 6-12 months and $500k+ to get one.
The circumstances where PXC can compel ExGen to contribute and ExGen are unable to are extremely unlikely.
You are concerned about a risk that arises only if we produce a BFS, obtain funding, and then ExGen aren't able to obtain funding.
But if we had a BFS and could get funding for 100% of the mine based on the BFS, then ExGen would be able to go to the same lender and ask for the loan to be split 80/20 and the lender would almost certainly say yes.
We are focussed entirely on obtaining funding. We think that these changes improve the chances of obtaining funding without diluting the returns on the project. That's the logic. |
kkj: "Now I would have thought that clause 1 is the basis point for the whole of the agreement"
I assume you mean (a). But your assumption is wrong. The whole agreement needs to be read together. You can't list the clauses in order of importance, they all need to be followed or else it ends in a dispute.
As far as the boards are concerned, Jason is the only overlap between ExGen and PXC (hxxps://www.marketscreener.com/quote/stock/EXGEN-RESOURCES-INC-164292/company-governance/).
The loans to Konnex have been spent on funding the mine development but I will ask for confirmation on your other points. |
 DP, why did you mention exploration costs in answer to my questions?
I never wrote about exploration costs as I had believed that those costs were solely up to PXC to pay, not exgen
I appreciate that you would like to take the whole of the agreement as a single linked agreement. It is not.
Clause 1 of the agreement as written by your goodself states as follow:
(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;
Now I would have thought that clause 1 is the basis point for the whole of the agreement. Renege on this clause and one would therefore invalidate the rest of the agreement subject to a bfs being produced.
Surely PXC could have created this long awaited bfs and then proceeded to act on clause 1, require exgen to fund their 20% cost of manufacture or lose their shareholding in Konnex and then pursue the full 100% loan facility as the new full 100% owner of Konnex and thereafter full 100% ownership of PXC.
As exploration is winding down for the near future,minimal monetary amounts only would pass to exgen,and the bfs could have been produced from the savings accrued.
I am sorry, but I cannot see the logic in a 20% loan to exgen. It just doesn`t fit into my management head.
You have still not answered my questions concerning directorships and salaries in Konnex and exgen.
Apart from JR and RW, are there any further crossovers of directors within the three companies and what salaries are paid out. I know what the directors are paid within PXC, but as exgen and Konnex are partner linked, I believe that more openness should be highlighted here.
Finally, where and what has the massive loans to Konnex been spent on and what salaries have been paid to Konnex directors?
over to you DP |
:)
OK I guess that sounds fair enough. Thanks.
:)
We’ll go to my other concerns (not financing related) once you’ve solved the doddle that is the money. |
jb: "So PXC have given up their right to claim over 80% ownership of Empire/Konnex (if ExGen didn't come up with funds) in order to save 100k/yr direct payment to ExGen and to avoid 500k/yr spend on site."
No, PXC have 80% of Konnex and ExGen have 20%. If PXC had jumped through the hoops then ExGen would have been required to put up 20% of the funding or be bought out. But in that event PXC would have to find 100% of the funding anyway. And the general belief was that if someone was willing to provide 100% to PXC, then when we went to ExGen with our 80% funding they would go to the same lender and ask for the remaining 20%.
In other words, the risk that PXC would be able to fund 80%, and ExGen would be unable to get the final 20% was regarded as minimal.
The challenge is getting the funding, not in how it is split between the parties. But it does make it easier to discuss the project with lenders if they only have to deal with a single counterparty. Trying to raise (say) $60m for a $75m project and saying that someone else has to find the other $15m but if they can't we will need another $15m leads to the question "so how much do you actually want to borrow?" |
Trying to understand whether this change to 'simplify' things is anything to do with NIU releasing funds or a result of fact there is little chance of that and the company are starting from scratch...one has to fear the latter.Will they ever surprise with a genuine positive ?? |
DP - thank you for your effort. appreciate. lesson learned. IPO document
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;
there it is |
 Thanks donald. Useful stuff. I'm sure you're right that if you took out a part of the new agreement one side or the other then wouldn't want to sign it.
So PXC have given up their right to claim over 80% ownership of Empire/Konnex (if ExGen didn't come up with funds) in order to save 100k/yr direct payment to ExGen and to avoid 500k/yr spend on site.
They could however have saved this money by publishing a BFS. It was often stated this was a goal of the company and I think several times it was less than a year away, possibly only months. Why has the company decided to not pursue the apparently nearly completed BFS?
Is the company now planning on spending less than 500k/yr on a site/mine they say they intend to have in production very soon after receiving the funds for the mine?
With some rough maths, drawing a line through this, if, for example, the company says production could be achieved in 18 months post funding it would suggest that the company values 20% of Empire/Konnex at 900k? Possibly less, seeing as the majority of that is spend on the site and not a payment to ExGen. |
fair comment kooba.
The challenge is always to get funding. I think the changes announced last week simplify that process and probably make it more likely, that's the only point I'm trying to make. |
"Instead PXC will obtain all the funding and on-lend the 20% to ExGen."Or will they ? Evidence suggests not ...or if they get the promise of funding will it actually materialise or do we just give another large chunk of equity away for a worthless agreement ?That non dilutive type of funding we were promised!! |
The second is in response to bravos question.
There are several things the agreement covers. To pick out one of them and say "who wanted that" misses the point. PXC no longer has to pay $100k a year to ExGen, spend $500k a year on the site or produce a BFS and proof of 80% funding. In return, ExGen no longer has to provide 20% towards the construction of the mine when PXC produced a BFS and proof of funding to them. Instead PXC will obtain all the funding and on-lend the 20% to ExGen.
It is an arm's length negotiated agreement. You can't take the pieces out individually. As a whole, both sides are happy with the entire agreement. If you remove any part, that would probably change. |
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. |
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