Phew 21 pages, that was quite the tale.
Very disappointing that we, the shareholders will lose almost $2.5M in cash after all is said and done. Hopefully we receive some deductions in good faith due to the voluntary disclosure of the new directors. The previous noncompliance isn’t the fault of the new directors nor the shareholders, so it would be senseless to penalise the company further.
I am interested to see if further action is taken against those responsible for these disgraceful issues i.e. ex-directors and contractors. I can’t count the number of times I’ve read posters on HC state that “we have the best gold geo in the world” and that “our team knows how to operate in Mali”… the best geo in the world couldn’t spot additional 100m wide outcrops a brisk walk to the south-west of the project, and no one in the A-Team could be bothered to fill out the VAT exemption form!!!
It is very important to note though, that these skeletons existed whether the new board uncovered them or not. Unlike wine... or myself in fact, bad news doesn’t get better with age.
As shareholders, how would we be if all of a sudden, the ATO came knocking and BGS ended up in a T/H swiftly followed by administration? What if ESIA/exploitation permit applications suddenly went missing? What if the gold deal was ripped out from under us by Randgold because the “contract” BGS entered into wasn’t water tight? Sweeping these issues under the rug does nothing, the best course of action is to tackle them head on, ensuring that everything is above board so that the company can move forward with a clean slate.
Quite a few issues turned up regarding the gold “deal”… Randgold and the Mali Government will still want to process our gold, so I am very confident that a new contract will be drawn up and renegotiated to address the issues that have been found. As another poster stated however, this project is currently a sideshow compared to the value of the lithium project. Speaking of which, the tenements for the Goulamina Project are firmly under our control which is a relief.
The executive appointments look solid, good to see development continuing on. We are finally starting to look like a legitimate mine developer.
The new option incentive plan is more reasonable than the ex-directors plan but some tougher vesting conditions would have been nice.. yes, the outcomes should result in significant value add i.e. doubling of resource size, granting of exploitation permit, but the majority of this work will be carried out by contractors. I need to think about this a little more, but I hope we see some on market purchases from the directors to bolster this generous package.
Having said that, the strike price is double the current market price, with only a 2 year expiration date.. indicating to me that they believe the price will be going north sooner rather than later.. or dare I say it, that a T/O is on the cards in the near term. The ex-directors performance shares+options totaled approx. 20M from memory, with an exercise price of a mere 10c. Shareholders come out the other side of this with less dilution and a raising of $3.3M which will more than cover the expenditures and liabilities detailed in this report.
I personally liked this bit:
“a change of control event”
Signifies to me the likelihood that this asset is going to be taken out.
“the Company has demonstrated a mineral resource (inferred or greater) of at least 70Mt within the Goulamina Project”
A 70Mt resource (conservative assumption from the directors) will likely result in a reserve of ~50Mt based upon previous JORC and SS announcements.
A reserve of this size translates to a potential production capacity of 60ktpa of LCE with a 20-year LOM.
This is double the size of Nemaska (trading at >$550M market cap)
Considering that lithium battery end users are paying >$20,000/t,
60,000 * 20,000 * 1.27 forex = >A$1.5B in annual revenue.
If that doesn’t make BGS a takeover target, I don’t know what does.
Game on.
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