The Mission Share Discussion Threads

[tim00] 06/10/2007 14:31

rainydays, of course management says these things are temporary, what else do you expect them to say given the mine is being sold? The problem is that the mine's infrastructure is falling apart and needs substantial investment if Steyn is to be viable. This is just one of a whole series of so-called temporary set-backs. Clearly there are no other bidders for the mine and TMG needs to sell it asap to a company that hopefully has the funds to secure its longer term viability. In that situation arguing the toss on the price is rather pointless!

[bbbb] 06/10/2007 10:21

from the rns:

payment on completion
of ZAR 100 million (One Hundred Million South African Rands) in cash

At this stage an
adjustment downwards of between ZAR 30 million and ZAR 50 million in the cash
portion of the consideration is expected.

The net cash is therefore estimated to be between ZAR 50m and ZAR 70m

The convertible is in the form of an SPV redeemable in 2009.

valuation of SPVs is sometimes difficult or impossible, hence the global liquidity crunch.

counting a total of ZAR 50m or 70m and ZAR 150m (?) in an SPV not redeemable
until 2009, and then conditionally subject to further variables as a
'bird in the hand' of "say" $35.7 without even knowing the $/ZAR rate in 2009
is the kind of loose wooly thinking which has led shareholders and readers
of this thread astray before.

[giant steps] 06/10/2007 09:40

CGA investment = 40.985m * A$1.045 * 0.89 = $38.11m
PSGM sale $35.7m (40% cash vs 60% convertible loan)
PSGM Rehabilitation trust fund $2.2m
Masbate escrow $4.5m

$80m, say $65m to offset gives $15m for shareholders

[bbbb] 06/10/2007 08:56

so, if you want to sell a business cheap, run it down,
slow down sales, revalue as a multiple of the depressed profit.

what's new?

even the tmg rns says: 'Management sees these
production problems as being of a short term nature.'

glossary.
production problems = reduced production, aka 'lost' production
short term nature = NOT permanent.

[tim00] 06/10/2007 08:51

bbbb, you clearly don't understand simple concepts of revenue and expenditure. The production has been lost in 2007 and there is no guarantee that it can be made up in future. The risk of Steyn has just increased significantly, hence the downgrade in its valuation (ie discounted future stream of profits). Do you understand this?

[bbbb] 06/10/2007 08:23

your words post 807: 'The increase in the gold price may be transitory, the loss of production is not.'

understand what your words mean: = 'the loss of production is not transitory'

transitory = between events, for a time period.
not for a time period = permanent

production is not lost permanently when the reduced production is caused
by TEMPORARY inability to hoist ore, or process stockpiled ore.

[tim00] 06/10/2007 06:58

Not sure I can be bothered to reply to you, bbbb. Wow, the gold is still there, I hadn't thought of that!!! Do you understand the concept of profit bbbb? If you read the latest RNS, you might get an inkling that the negotiations for selling Steyn are a little bit more sophisticated than you imagine.

[bbbb] 06/10/2007 00:08

the evironmental liability would become the purchaser's liability, and treatment
of the provision made by tmg in the sale is also relevant for minorities. like is all the cash relating to it handed over or what?

There's no breakdown of 'loss of production ' from
The flooding at the bottom of the shaft and
The above ground electricity substation explosion (supplying the gold plant) as well as pumps.

Presumably the flooding hampers hoisting of below ground ore.
Which would resume when the pumps are fully functional and include
Ore stockpiled at the shaft bottom.

When the electricity is back to normal, the time to clear the backlog at the gold plant
depends on the percentage of capacity utilisation before and after repairs.

If the gold plant includes the ore mill, stockpiled above ground ore would
be available for full capacity working or sale to another mine.

The completion of sale documentation will need to bring to account relevant
figures for this delayed production so minorities can be satisfied that extra free
ore stockpiled this way doesn't get given away in the deal.

Adjustment to the final price could be large – either way....or lost....

[giant steps] 05/10/2007 23:58

Recall $4.5m escrow

Plus note:

At June 30, 2007 the Company has a provision of approximately $6.6 million
recorded for environmental liabilities in South Africa. The Company makes annual
contributions to the rehabilitation trust fund created in accordance with
statutory requirements, to provide for the estimated cost of pollution control
and rehabilitation during and at the end of the life of the mine. The funds held
in trust are invested in a mixed portfolio of cash, bonds, property and equity
instruments. The Company intends to fund the ultimate rehabilitation costs from
the money invested with the trust fund. As at June 30, 2007 the balance of the
rehabilitation trust fund was $2.2 million. The total liability will be funded
over the life of the mine currently estimated to be 14 years.

[bbbb] 05/10/2007 22:59

'loss of production' is reduced production in a recent time window.

the gold is still there!

if the gold price rises, the 'unproduced' gold will be worth more
in the future when it is extracted.

flood or explosion are always risks.

in any business there is flexibility to bring costs forward and delay
sales. or stockpile product to increase later sales, and defer costs. sometimes
called WIFL. (whatever I feel like)

The revised terms for psgm sale (still non-binding) inlude reduction of the cash
element of zar100m by estimated between zar30-50m, so the fantasy of
getting tmg debt cleared looks more unlikely, unless 'change in working capital of psgm' has a balancing charge against debt due by thistle to mc/c. any accountants know the answer to that one? .

the only fragment of good news is the september advance from mc/c carrying interest of prime plus 2%, - if that is less than the 11.6% on preceding
debt.

[giant steps] 05/10/2007 20:07

Yes, sale needs to complete albeit at bargain price, but then we had that
with Masbate, and that investment looks most promising.

Banks clearly not pulling the plug as funds released for september.

May be suspended for some time, a good thing given artificial s/p.

[tim00] 05/10/2007 17:52

The increase in the gold price may be transitory, the loss of production is not. The lower price looks fair to me, and fortunately the loss in dollars (which is the currency that matters) is rather less given the continuing strengthening of the Rand. We have to keep our fingers crossed that the new production targets can be met and the sale completed.

[simontemplar] 05/10/2007 17:48

A flood and an explosion eh! Now what are the chances of that happening and just when gold takes off!

[tim00] 05/10/2007 06:46

ST, yes. More good news on Masbate announced by CGA today, though production now expected early 2009. I haven't done any sums yet, but with a gold price above $700 the project must have a very large NPV. Hopefully we will be able to maintain at least some of our CGA shareholding long term and TMG might still rocket!

[simontemplar] 04/10/2007 22:00

CGA looking very strong!

[giant steps] 04/10/2007 08:38

Thanks tim.

Amended record date for voting Mon 22nd October, AGM Thu 22nd November

[tim00] 04/10/2007 06:41

GS, now moved to 22nd November.

[giant steps] 03/10/2007 07:59

Thanks tim.

Record date for voting 19th October, AGM 20th November

[tim00] 03/10/2007 07:13

Notice of AGM posted on SEDAR. From which I conclude that maybe TMG's suspension arises from arranging additional funding. News must be soon?

[tim00] 02/10/2007 06:45

CGA now trading again. Placement to finance Masbate, there was in fact no link to the TMG suspension after all.

[giant steps] 01/10/2007 21:15

Conflict of interest has been resolved, worth considering




Andreas J. Graetz
Independent Director

Mr Graetz is a Mining Engineer with over 25 years experience in operations, project and corporate development, finance and administration in the South African, Canadian, Philippino and USA mining industries. Mr Graetz is the Chief Financial Officer of Thistle Mining Inc ("Thistle") and prior to this role , held various senior technical and financial positions with the Placer Dome Group. Mr Graetz is a Canadian citizen and is Thistle's representative on The Board. Mr Graetz was appointed a director of the Company on 19 March 2007.