BEZ (ASX) Bullish Reversal Chart

Originally posted by Tran: ↑

- "It would appear no further cash has been received (so far)". I agree with this statement. As I said it appears they do not want to do it while JB is still holding 20mil shares until yesterday. There is no doubt in my mind that THEY DO NOT WANT TO WORK WITH THIS LADY. And why would they anyway? They put their own money (and it is a huge sum of money, ~AUD $450mil) on the line and they should have the power to do what is best for BEZ and for Quantum, not for JB. In fact I really doubt her intellectual capacity and her managerial capacity to be fit to be a director of BEZ.

- I do not see any serious issue with their pre-payment as you clearly pointed out they do have the flexibility to pay "up to USD $10mil" per month. "Up to" is the key term here. They can choose to pay a bigger sum at any time by the way. It is in their interest to time the payment for their maximum benefit. To put it into perspective, the last lot of 372580 oz of gold purchase was contracted at USD $1900. If they are going to lock in the same amount of 372580 oz of gold purchase by paying down the 5% pre-payment deposit at current price of USD $2035, it would mean they pay extra 372580 oz × ($2035 - $1900) ÷ 0.66 AUD/USD rate = AUD $76mil missed profit or extra cost. Does anyone think they can easily throw AUD $76mil away that easy? No way. If I was Quantum I would wait for any opportunity of gold price dipping significantly lower to do the pre-payment and lock in significantly lower contracted price. That is extra AUD $76mil missed profit or extra cost to them on 372580 oz. Imagine how much of missed opportunity on the balance of around 2.63mil oz (3mil oz - 372580 oz) gold purchase contract? This has nothing to do with fact that Quantum stand to benefit multibillions dollars profit in the future and I am going to show you guy some calculations on their massive future potential benefit. Of course after waiting and waiting for weeks for an opportunity to lock in lower contract price but gold price keep going up, then I have to lock in current price. That is how I see the current situation. $76mil is a big sum of missed profit or extra cost to QM and it cannot easily accept but it may have to contend with if gold price does not go lower and intact go higher.

- As I have posted numerous arguments and articles over the last few weeks which I feel very confident to believe gold price will continue to average around 10% growth per year for many years to come. If people follow gold price movements closely they should see about 4-5 events over the last 6 weeks or so that should have a negative impact on gold price due to persistent high inflation figure, producer price index, strong US job growth, strong US economy growth which dampen the prospect of early interest rate cut by the Fed. But each time a set of data was released, gold price took a dip but quickly recovered back to USD $2020-$2030 range. What it showed is gold price is has been very resilient and is waiting to bounce higher. In fact I think this week Thursday new set of inflation data from the Fed will be the last hurdle for gold price before it starts testing USD $2100-$2200 in the months ahead.

- Assuming BAU project is to start construction at the end of 2025 at the earliest and have the mine ready for commissioning plus the processing plant by the end of 2026. It takes them at least 1 more year to get to full capacity production. So, Quantum will start receiving gold deliveries by the end of 2027 or begining of 2028. Assuming also the 3mil oz of gold to be delivered to Quantum over 15 years from year 2028 to year 2043 and gold price increases on average of 10% growth, gold price average should be the same as projected gold price half way between year 2028 and year 2043 which is year 2035 gold price.

If the average REFERENCE prices over the next 24 months during the time QM progressively pays down the USD $300mil is USD $2200 and based on 10% average gold price growth per year, gold prices over the years are expected to be:

- Year2024: average USD $2100/oz

- Year2028: $2100 × 1.1^4 = USD $3050/oz

- Year2035: $2100 × 1.1^11 = USD $5990/oz

- Year2043: $2100 × 1.1^19 = USD $12800/oz

I know when people look at those projected gold prices over the next 19 years everyone would say it is way too high blah blah blah but it is not. It is 10% growth per year, just like the last 5 years average, last 10 years average, and last 20 years average.

Historical gold price growth was around 11% per year. There is no reason not to believe gold price growth won't follow the average growth over the last few decades.

No one knows for sure what gold price will be at any particular year over the next 10 years, 20 years but by the same token no one can tell why it wont average 10% per year like it did over the last 20 years either. All we can rely on is the historical data and that is the safest way to project future gold price growth.

So, as I explain above: QM will like to receive the gold deliveries over 15 years from year 2028 to year 2043 and the average spot gold price should be equal to price of gold in year 2035 which is half way between year 2028 and year 2043. And average price of gold in 2035 is around USD $5990 based on historical price growth of annual 10%.

That should bring us to the potential benefit to QM as:

Purchase gold price after 10% discount = USD $2200 - 10% discount = USD $1980/oz

Average selling price = average projected spot gold price in year 2035 = USD $5990

Potential profit = 3mil oz × (USD $5990 - $1980) ÷ 0.68 assumed average long term AUD/USD = $USD $12bil = AUD $17.7bil.

I have done the rough calculation over the last few weeks and I have said this is a MASSIVE deal in the history of QUANTUM and now you can see how MASSIVE is can potentially be. It is not a guarantee of course. But it can potentially be.

Even if you want to play conservative with gold price growth at average 5%, then in year 2035 gold price should be:

USD $2100 × 1.05^11 = USD $3592

Potential benefit to QM = 3mil oz × (USD $3592 - $1980) ÷ 0.68 Fx rate = USD $4.8bil = AUD $7.1bil. That is still a MASSIVE potential benefit to QM.

So, does anyone still think QM wants to walk away from this deal? Why? This is the best deal QM's founder can ever make in his entire business life in my opinion. This is history making deal for QM and for BEZ.

Expand

Great post Tran.
The only thing i can say is i dont think for a minute the question is will QM walk away? The question is are they somehow trying to create a scenario where they can gain full ownership of Bau holding company and sideline Bez.
As things stand right now if qm make no further payments what happens? They would not be in breach of the deal.

Your earlier post pointing out some of the previous board members had appeared in top 20 list was encouraging as I hadn't realised that. That in theory indicates Bez internal staff still seem to believe the mine development will go ahead.

(20min delay)
Last 8.4¢		Change -0.009(9.68%)		Mkt cap ! $34.90M

Open	High	Low	Value	Volume
9.0¢	9.0¢	7.4¢	$111.1K	1.380M

No.	Vol.	Price($)
1	9999	0.083
1	200000	0.082
1	6520	0.079
1	10000	0.078
1	10000	0.077

Price($)	Vol.	No.
0.084	55000	1
0.090	11751	1
0.093	10000	2
0.094	11000	2
0.095	25000	1

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