It sounds like the International Lawyers and Treadstone are working for their money, which is a good thing.
It might end up being a good move to get them involved - time will tell.
As for both, their services won't come cheap.
Either way, the Malians simply must be convinced, beyong reasonable doubt, that FFX and LLL are now completely different entities in every way.
When they were a combined entity, prior to demerger, the boards of FFX and Leo made a significant strategic mistake when setting up Leo.
They employed the same in-country manager, and this error seems to continue to be haunting them, given the continued perceptions of the relationship between the two companies by the Malian government.
Interesting announcement today, and potentially a few things to be read between the lines.
Unfortunately for Leo, as stated, it seems they are going to great efforts to point out to the Malian government that they are not associated with FFX in any way.
This would only be necessary if the Malian government still continues to believe these companies are one entity, or at least very closely related - which is not optimal for Leo's prospects.
Almost every French language mining journal in Mali, right up to today, still quotes Goulamina as being owned by both Firefinch and Leo, with very little mention of Ganfeng.
This is a very sticky situation, because trying to change any government's perception is nigh on impossible, or at least extremely difficult and time consuming, and can be costly.
Money, money, money .... as usual, this seems to be what it's all about.
The Malian government want FFX to pay the monies they believe is owed to the contractors, but why are they going in to bat for contractors?
The government also probably wants the 1,700 workers at Morila to be paid some compensation, or their salaries paid in retrospect for the period since the FFX exit.
The government also wants the company to pay environmental bonds, which may be a euphemism for wanting the company to pay monies for agricultural and community projects they may have previously agreed to fund ongoing.
How much will all this cost?
More importantly, how much will they accept as their perceived total compensation?
Lets put it this way, and here is the starting point for discussions.
The Malian government want $200 million, and FFX want to give $0.
Now let the negotiations begin.
The International lawyers sure have their work cut out for them, and lawyers charge every time they breathe.
Retrospectively, it does somehow feel like the former chairman may have been set up for a Sting by Barrick.
I'm doing a completely wild estimation here, just for fun (even though I know this is very far from a humorous topic), but I reckon the Malian government may consider accepting a settlement of between $80 and $160 million dollars, let's make it a nice round figure though and say $120 million might do it. And then the Malian government will permit Leo to continue, and Morila S.A. to be sold, and all will be well in the world - LOL - until next time.
Sportsbet should be taking odds on this now.
Very unfortunately, Leo seems to have been roped into this, because they are mentioned in the FFX announcement today, and are clearly seen as a closely related entity to FFX by the Malian government.
It should not be surprising therefore, to realize that the Malian government may be intimating, though perhaps not overtly yet, that the continuation of Leo's work in their country rests partially on the payment of compensation to the government by FFX, for the FFX fiasco.
So the former MD resigned when he found out the state of play at Morila, and when FFX probably received demands for even more money by Morila S.A.
And this MD resigns soon after FFX receives a letter from the Malian government.
It does seem like neither gentlemen want to be involved in all of this, over time. They may simply see it all as just too hard, and life is too short.
I'd say the government of Mali holds the whip hand, and that they will need to be placated and paid to some significant degree, the question for the International lawyers to negotiate is how many million the government is willing to accept. If they are not happy, then Leo may be in their sights.
Like a lot of things in life though, these things often come down to the bottom line - to just one figure, with a lot of zeros trailing it.
Everything is speculation.
"Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth".
(Marcus Aurelius 165 AD)
Gw
FFX Price at posting:
20.0¢ Sentiment: None Disclosure: Held
