Was thinking the same but my view has gradually changed as more and more positive developments have happened over the last few months.
- USD $5mil, then $10mil, then another $10mil, then another USD $10mil have been deposited by Quantum, total more than USD $34mil has been deposited into drawdown account.
- Quantum's founder and managing director, plus another director are now embedded on the BOD of BEZ.
- Research into the history of how the deal came along showed me it was first announced that BEZ was negotiating with Quantum for USD $300mil started in Nov/Dec 2022 when gold price was moving from USD $1600 to $1800 per ounce. They signed and sealed the USD $300mil deal when gold price was at around USD $1800/Oz. Gold price now is at around $2030-$2050/oz and most of gold price forcasts are pointing to $2300-$2500 price in the next couple of years. Gold price is the ultimate factor in the success or failure of all gold projects. At $2000/oz, the profit margin of each ounce of gold produced from BAU project will be very strong and compelling. At USD $2200 -$ 2300 price, it will be absolutely amazing.
- The issue of pilot plant concentrate to be produced by 31st Dec 2023 to meet the deadline stipulated in the terms and conditions of the funding deal was also a big concern as many believed BEZ was not going to be able to meet the deadline but it has now been resolved by BEZ producing the sample concentrate through a 3rd party. So, another risk factor has been removed.
- BEZ and Quantum has just spent $500000 to increase its ownership of the BAU project to 93.5% is another major indication that the 2 parties are working to ultimately bring it to 100% ownership before construction and production begins.
- Quantum remains the biggest shareholder of BEZ, holding 30% and is the biggest beneficiary.
- Another USD $10mil to be deposited into the drawdown account has been announced and we are waiting to see if it has been done so in the quarterly or some other update in the coming days.
These developments over the last few months are extremely positive and give me confidence that this is a real deal for BEZ in its own right.
The thought of JB selling down her shares in my opinion could be the result of her and/or her company having a financial burden somewhere else that she needs to sell down her BEZ holdings to pay for that financial responsibility. Pangaea is a company and it would not surprise me at all that it has some loan/debt due or overdue to be paid back, especially after years of sp staying at 4c, 5c and you can imagine a lot of financial obligations to pay has been accrued for many months and even years. We will never know.
Talking about Quantum and the deal and the benefit as a 30% shareholder as well as a customer and funder, my calculations show:
- Quantum puts in USD $300mil or roughly AUD $445mil over 30 months or so as pre-payment for 3mil oounces of gold deliveries. In return, Quantum can potentially earn:
- 10% discount on average price of USD $2200 on 3mil oz of gold delivery = 10% × USD 2200 × 3mil Oz ÷ 0.68 ( assumed average long term AUD/USD rate) = AUD $970mil.
- If the average gold price over the next 15years-20 years is about USD $2500 which I believe is more likely than average USD $2200, then 10% discount will earn Quantum 10% × USD $2500 × 3mil Oz ÷ 0.68 = AUD $1.1bil.
- If BAU project is successfully transitting into a producing mine with 5mil oz resource, BEZ will easily become a $1bil MC company with sp at $1.80. As a 30% shareholder, Quantum could see its holding worth $300mil, compared to a mere $10mil worth 6 months ago before the deal was signed.
- As a 30% shareholder of BEZ, Quantum will also earn dividends for 15-20 years to come.
- As a gold bullion trader, Quantum will also earn substantial profit from 3mil oz of gold purchased from BEZ and sold to its international customers and help make its name more well known in international markets.
So, by advancing the AUD $445mil to BEZ as pre-payments for future gold delivery and help bring BAU Gold project to production, Quantum is able to reap the benefit probably close to AUD $2bil. I am sure QUANTUM has done its maths before signing the deal.
So, the fact that JB has been selling down her holdings is a concern but could be due to many personal reasons, when i look at all the other benefits that Quantum can potentially earn I cannot find any good rationality that Quantum would not commit to its signed deal.
Let's put it this way:
Quantum owns 30% of BEZ and we shareholders own 70% of BEZ. But when it comes to the comparative benefits, we shareholders earn 30% and Quantum earns 70% of the benefit when BAU Gold project is a successful gold producer.
All in my opinion. DYOR.
BEZ Price at posting:
15.0¢ Sentiment: Buy Disclosure: Held
