Are you sure about the parent company guarantee?I was relying on...

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20/03/24

10:32

Post #: 72973373
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Originally posted by 2ic: ↑

Good that you are considering all the angles, and you are correct that security is only over the Coburn Pty Ltd that owns the Coburn deposit and assets. On the other hand, Strandline Resources Ltd is "Guarentor" so the loan is recourse to STA and ultimately creditors will assume all STA assets in the effort to get all their debt/interest/fees back. IMO, the incentive bonus for JP to secure an asset sale that repays the SS $20M loan is a nudge to get moving on a sale now and remove the need to creditors to keep tipping in working capital etc... if Coburn cannot survive and stand on its own then Tanzania will not make much difference.

Keep in mind the broker valuation for Tanz deposits was some sort of NPV estimation of what they might generate if developed at the right commodity price etc. What an undeveloped deposit is worth as a 'potential future development with some discounted, risked, maybe, maybe never' value is the 'market value', which may be very little, especially in a fire sale situation.

Creditors desperately want the operation to become viable, be recapitalised by other investors, stay listed and get their money back. Fisrt step is to demonstarte the WCP can produce enough HMC LT to cover costs and make free cash, then invest the working capital into ramping up MSP for premium product etc. It will take months of no HMC sales to keep HMC on site and ramping up MSP before premium product stocks re ready to sell and ship. This is one poart of the extra investment required to recap for LT survival.

It remains to be seen what is the new 5 year plan for more than a campaign style run at nameplate... we are all guessing beyond the crumbs of info drip fed out atm.

GLTAH

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Are you sure about the parent company guarantee?

I was relying on the last annual report, and could find no reference to such a PCG.

There were, on the other hand, detailed comments about the security given, a corporate structure diagram showing the parent as providing equity (but no reference to a guarantee), and a note stating specifically that the parent had no contingent liabilities.

I would have expected to see reference to such a crucial PCG in the AR, also given its bearing on financeability of the Tanzanian projects.

I have now gone back to look at the 2021 announcements of the debt, and in the case of the Bonds, but not the NAIF Facility, there is indeed reference to a Strandline Guarantee. However, it was "to be released on the date of Project Completion". While no definition was provided, I suspect that has passed.

Am all ears.

STA Price at posting: 9.5¢ Sentiment: Buy Disclosure: Held
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