FFX (ASX) Current SP and any other thoughts

Originally posted by fooca: ↑

It is always a dilemma, the sole reason for investing is to make money, and at this point do I buy on market or do I take up shares in the SPP?
Using the closing price over the last 5 trading days of $0.155c (excluding todays) as the base and purchasing an allotment of $10,000 shares:
@$0.155 = 64,516 shares @$0.16 = 62,500 shares, a deficit of 2,016 shares, no doubt buying on market will reap better returns and why I was somewhat surprised that there were no attaching options in the SPP.

What intrigues me no end is you "have no joy seeing MLL trading below the SPP price for a week" but in that same week you have been espousing the merits of you decreasing your holding by 50% @$0.175 to then suggest buying in at a lower price. In essence that is a normal sequence of events sell at a higher price/buy at a lower price - rinse and repeat per se, but to buy @$0.50, sell at @$0.175 to buy back at @$0.155, that sir is the pure definition of defying logic.

Over multiple posts and duplicated questions, maybe some of the following will help . . . . .

(1) re: "There is potentially a massive environmental liability here. Where is a statement from Mali Govt that this is not the case."

This isn't the first time you have asked about the environment liability, I would think that it is something that no doubt would be covered by the original EISA, permit to mine, etc. But because I can be bothered to read annual reports, etc - Morilla SA is responsible for the rehabilitation of the site, if it closed today it is estimated to cost US$6M - US$8M, this figure will obviously increase as the size of the site increases through extended mining, there is an agreed closure plan in place with the Malian government.
Also from previous Randgold annual reports, the rehabilitation and regeneration has been ongoing, they have also spent substantial dollars on establishing farms, educating the local communities to run these farms, running water, build new schools, provided jobs etc.

(2) re: "The sellers have an obligation to their shareholders to act in their best interests. This is not in MLL shareholder best interests"

There appears to be a limited number of posters that would agree with your sentiments versus the majority of actual shareholders/posters that are somewhat excited by (possibly) becoming a gold miner in the near term, I know I am. Before you feel the need to refute whether MLL will be a miner or not, from Barrick/Randgold's annual report they have enough "tailings" feed to continue until mid 2021.

(3) re: "The price paid is more likely to be USD 27 million not the USD 22 million everyone@ozblue keeps mentioning that."

Unless you can show how you have reached this figure, then it is only you putting your "worse case scenario" bias on the topic because it isn't a figure that suits Barrick on the day with a rub of his chin, yeah/nah we going to charge the full monty, the final consideration will be defined once tax credits are accounted for.

(4) re: "Holders seem to forget a number of prior SPPs for MLL have failed or been pulled due to a lack of interest."

Another throw away statement that you fail to provide any evidence to, the most recent Rights Issue was competed October 2019 with 52.8 million shares applied for from current shareholders and new investors, this represents an 81% take up of the offer. It may be deemed not perfect, BUT, if you included the economic climate AND the depressed Lithium prices at the time, then it is hardly a failure, conversely I think it was an excellent result.

(5) re: "Also I see posters stating the MLL board of directors has not actually been inside the plant MLL is buying. If this is true it is amazing fund raising outcome for groups to put money in (in the middle of a coup) for an asset that no one in the board has potentially been into."

@Roller62
re: "I guess you guys know what the condition of the mine is in."
re: "What no third party report. So MLL bought a mine sight unseen."

Oh dear, I can answer two in one, It appears we do know what the condition of the mine is considering that management and consultants visited the mine to complete technical, commercial and legal due diligence.

cheers
Should run a poll to see what the next flaw is in this acquisition will be ..........

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@fooca

My understanding of the purchase of the tax credits is that essentially for ever dollar we spend buying them now, we later receive the same dollar back in reduced taxation. In effect a zero sum. No doubt some of the accountants around here can elaborate, I'm not really into that kind of thing.

I'd also like to add that since certain folks have questioned why the mine is being sold for such a low price there is certainly a good reason for it in that it no longer suits the Barrick/Anglo portfolio (which has been publicly stated by both parties).

Bit of background to that if you have a look back into the 2011 Randgold Annual report, they had already investigated the closure of the plant ten years ago.

"In 1996, we discovered the Morila deposit, which we financed and developed and was our major gold producing asset through 2009. Since production began in October 2000, Morila has produced more than 6 million ounces of gold at a total average cash cost of $239 per ounce.

Morila’s total production for 2011 was 248,635 ounces at a cash cost of $782 per ounce. Consistent with the mine plan, Morila ceased pit mining in April 2009 and is currently processing lower grade stockpiles.

During 2010 a study of the reprocessing of the Morila Tailings Storage Facility (TSF) was completed and in 2011 a full feasibility study on the viability of treating the TSF material, marginal ore and mineralized waste stockpiles was completed and approved by our board in January 2012.

We now expect the operation to continue up to 2021."

My bolding, page 24, https://www.sec.gov/Archives/edgar/data/1175580/000119312512144009/d321465d20f.htm

It strikes me that if Morila made the formal decision to close the mine nearly nine years ago, there would be little point in further exploration or infill drilling since
The capital investment would be pointless
Morila did not have the rights to explore the adjacent tenements

I also think that given the accuracy of the feasibility study in predicting a 2021 completion of reprocessing, its pretty safe to rely on the available drilling data for remaining gold ounces.

Plenty of exploration upside both on existing Morila tenements and our own tenements surrounding the mine as well.