Apologies for the slow response, got a bit caught up in LLL.
Good commentary as always.
Could be as you say.
My understanding of that US$37m intercompany loan is:
- It had to be inherited, because MLL/FFX didn't have that kind of money to chip in at that point.
- So either Morila SA or Morila Limited owed a loan from a US$37m capital injection to Barrick and/or AngloGold, or the Morila Limited holding company - lots of reasons to handle the injection of capital in the company in different ways, and I imagine this went up and down over the years.
- We must have negotiated as part of the purchase to take over all intercompany loans to Barrick/AngloGold, which makes sense.
- I suspect Morila SA owed it rather than Morila Limited, as while we have an argument to walk away from Morila SA no such argument exists for Morila Limited, which means we should still include Morila Limited in our reporting, but that intercompany loan was deconsolidated.
- I also suspect it was owed to either Barrick and/or AngloGold directly (not to Morila Limited) given it is listed as a loan owed directly to Firefinch Limited.
- Any further money we gave to Morila was either handled not as an intercompany loan (e.g. as further equity issue, although this looks a little odd given we already held the max we could, or perhaps simply paying invoices directly?) or was handled as loans denominated in $AUD (given if they were in $USD we'd see an increase in the foreign currency sensitivity of the financial reporting, which we don't). $AUD denominated intercompany loans would disappear on consolidated reporting. On a first pass I don't see enough hints in the 2023 Annual Report, which together with the half-yearly report is the first real glimpse of a deconsolidated state to really tell.
As an aside, going back in time and looking at Morila at the time of acquisition.
- We paid US$28.8m for Morila
- Barrick reports for their half of that sale (US$14.4m) a profit of US$27m. Which means they were carrying Morila on the books as a liability of -US$12.6m which they get to write off and keep the US$14.4m cash to call US$27m
- AngloGold reports for their half of that sale (US$14.4m) a profit of US$3.6m. Which means they were carrying Morila on the books as an asset of US$10.8m which they were paid US$14.4m for netting the US$3.6m profit.
You make a good point about FFX being a major creditor. I suspect the major creditors are, in no certain order:
- The MEIM joint venture (now disbanded effectively to the ME part of that, who seem to be largely pretending the whole thing didn't happen in their annual report, while the IM(S) part seems to still be working on LLL without much clarification given, if we've interpreted correctly, FFX tried partially pinning its problems on them)
- The Mali Government (including the inherited US$7m loan we owed them with no terms of repayment from the original permit grant, and I suspect taxes in dispute)
- FFX
Other creditors could have been salaries, the other contractor(s), and the providers of the plant and equipment they were importing (though presumably already paid for but not delivered?).
At the time of the recapitalisation it was strongly implied that MEIM was the major creditor, that we were worried about legal action, and that giving them a huge stake would make it all go away. I wonder in hindsight whether that worry about legal action was more about settling liabilities with the Mali Government, given we haven't heard any further from MEIM since.
