Some random thoughtsFirstly, it is what it is - you can’t...

Some random thoughts

Firstly, it is what it is - you can’t unscramble eggs. As I said in a previous post I think Simon was faced with either having to raise funds ourselves (~17% dilution) or go with this direct equity investment by Ganfeng. We don’t seem to have received any premium for giving away control which is disappointing. It’s a done deal now (subject to CPs) so we can either like it or move on.

Ganfeng is a reputable company with many JVs that seem to work well. I think both company’s objectives are aligned, with Ganfeng mainly trying to secure supply.

Remember too, our vote + the Governments vote will out vote/equal Ganfeng. So if Ganfeng did try to (for example) reduce the price the JV sells the offtake to itself, that would clearly not be in our interest or the Governments - so it would be out voted (probably a bad example as pricing formulas are set in stone). Effectively Ganfeng having that extra 5% doesn’t change anything. Even if we were back to 50/50 any disagreement would depend on which side the Government took in the vote.

IMO we’ve been treated very harshly by the market.

The taxes & Duties issue worst case will cost LMSA US$45-50m, so our 45% = $20.25 - $22.5m

DSO at current prices I can’t see adding much profit - the broker reports talk of Revenue, but it’s profit that counts.

Losing 5% is important, that is offset by the 10% extra shares we’ll no longer be issuing, so in theory revenue neutral to Leo

For the above we’ve had our MC halved or $700m wiped

The cost to us max A$35m taxes etc (US$22.5m), planned 185kt of DSO, being very generous at $100/t profit is $9m (our share)

So max $44m

Assuming DSO is completely banned, that high grade ore will now be processed into SC6 bringing a higher monetary value into the JV

Even the Direct ownership is cost/revenue neutral

For example if MLBV (the JV company) was to pay out $100m in dividends after we were in production

Under the old scheme, we’d get $50m each

Under the new scheme we get $45m but we have 10% less shares on issue to the earnings per share (EPS) would be the same.

Of course we now only have to pay 45% of the remaining capex including for further stages so in that respect we’re better off.

We have the African Discount because of the possibility of events like this. But now the market has heavily discounted the SP which already contained the African Discount. End of the day the agreement between Ganfeng & Leo has nothing to do with Africa, Firefinch’s demise was mostly self inflicted & if I was the Mali Govt I’d be pissed too. I think most of the bad news is out now & these issues will be resolved over time.