There is a lot to digest in your post ....
A little light reading for you to catch up on .... the rest is coming lol
The following are opinions based on limited information from the company, my interpretation of that information, (unsubstantiated) information gathered across multiple social media sites, information from various share forum and share analytic sites & personal points of view.
I know that
ALL shareholders are hurting but there was a lot of buying in June, just prior to the Trading Halt .. .. ..
Bullet point 1: It is obnoxious of the company to think that share holders are this gullible to believe they have engaged (Clifford Chance) one of the worlds largest law firms for something as basic as (good faith) discussions.
Engaging top International Lawyer Clifford Chance & Gilbert & Tobin.
~ information suggesting that the Mali government are making claims against Firefinch Limited for breeches of Establishment Conventions has been mentioned across social media outlets.
Does Firefinch have liabilities?
Firefinch's wholly owned subsidiary, Birimian Gold (Mali) Pty Ltd holders of 100% equity in Birimian Gold Mali SARL (BGM) were the signatories to the Establishment Conventions to the Finkola and N'tiola permits. BGM agreed to the fees (founders fee) of US$300,800 & US$192,512 and was contingent on granting an exploitation permit over all or part of the area covered. The fees are calculated on the whole area covered under the exploration licence, the founders fee is payable by the company receiving the Exploitation Licence but as the star point below, Morila SA isn't liable.
~ but it was/is (per FFX's view) not clear if as a result of the historical transaction (Randgold/BGS Option over area of interest) with Morila there will be a liability to pay a fee as a consequence of the areas of interest being included in the enlarged exploitation permit held by Morila.
**
Sociétés des Mines de Morila (Morila SA) has no liability to the State of Mali as a consequence of the Establishment Agreements entered into with BGM. There was a possibility that the State of Mali may, in the circumstances request a payment fee from BGM, notwithstanding there was a doubt over the legal basis for making the request. This uncertainty stems from the legal requirements for the payment of Fees being contained in the Establishment Conventions that are binding on BGM and not Morila.
++ The Mali Repository does not indicate payments of "founder fees" on any of the Exploitation Licences.
There is no evidence of this being paid by BGM, not mentioned in quarterlies etc it was paid (that I can find) as it would show in Firefinch's accounts?
The Mali Repository hasn't been operating/updated for some time either.
On an overall scheme of things, founders fees for a total of US$493,312 is trivial
but, if BGM was liable (found to be liable) for the payment of the fee under the Establishment Agreements
would they also be liable to the rehabilitation costs of restoring these two open pits (Viper / N'tiola) under the same agreements?++ Could this be one of the environment issues the Mali government is claiming against Firefinch?
If it is the case that Firefinch are liable for the rehabilitation / restoration of the Viper & N'tiola pits, it makes the Randgold/BGS Royalty option hardly worth the A$ we were paid as the cost of rehabilitation would no doubt exceed what were were paid in royalties.
Initial payments US$1M from Société des Mines de Morila SA for exercise option fee over Viper & N'tiola, US$200,000 of that was paid to Société Hanne General Trading which had reserved a 5% interest in Viper and entitled to a 1% NSR in respect to the (whole) area covered by the exploration/exploitation licences.
~ Total A$4.99M royalties paid, Viper royalty paid to Hanne was from BGS's payments A$478,000 + A$234,000 == total to BGS A$4,278,000.
As previously posted, On 3 September 2020, the Company (Firefinch Limited) entered into an agreement with Capital Drilling pursuant which Capital Drilling was given the right to convert part or all of the Capital Drilling Debt to equity in the Company at the same price as Tranche 1 issue price (
Equity Conversion and Drilling Deed)
In addition to the conversion of the debt to equity, the Company has agreed to grant Capital Drilling the right to bid for all drilling work which any of the
Company's Malian subsidiaries (
including Morila SA once completion of the Morila Transaction has occurred) may wish to undertake in Mali for the period ending 30 June 2023. Capital Drilling will be awarded the contract to undertake the drilling where Capital Drilling's quote is competitive with the quotes of other parties. The Company has agreed to guarantee the payment for work which Capital Drilling may undertake for the Company's Malian subsidiaries.
~ this would have included the drilling at Goulamina up until the Company's demerger
-- I'd be interested to know if they actually did source tenders from other parties, as it just seemed like once Capital Drilling started they went from tenement to tenement as directed.
** in the 9 September 2020 notice of Capital Raise for Morila, "Capital Drilling had also been given the
preferred contractor status for drilling to be undertaken by the Company to 3 September 2023.
The Company's AGM was held on the 31st May 2023; there is 3 words I would like to refresh everyone's memory on:
No Parent Guarantees - "as above" fact is (although the meeting was post the walkaway) there was a Parent (Firefinch Limited) Guarantee provided to Capital Drilling that hadn't expired? Unless it was terminated by "one of them at arms length deals?" but I can't find any mention of it other than the original announcements.
~ is there more of these types of guarantees in the closet?
Wait!! I am confused (normal some would say
) scratching my head .. .. .. ..
The Annual Report for the year ending 31 December 2020, doesn't include any reference to the Conversion to Equity Deed entered into with Capital Drilling, it has buried the issuance of the both the initial 1,562,500 (converting $250,000) and the balance 6,251,095 (converting $1,000,175) under the tranche 1 & 2 placements to professional and sophisticated investors, although the debt to equity shares were voted (ratified) on separately at the General Meeting.
~ furthermore, the Company completed the transaction on the 11th November 2020, but included in the Annual Report were prepayments with the footnote:
** prepayments relate to insurances and
drilling services prepaid throughout the group.
++ how can the Company suggest that Capital Drilling is the preferred contractor, and will be awarded contracts to undertake drilling if their quote is competitive with other parties and within weeks of finalising the Morila transaction already had Capital Drilling engaged?
-- IMO, it is no wonder that Capital Drilling wanted a guarantee for payment for drilling services provided, the equity conversion was for services provided 12 months earlier.. .. .. ..
-- as we all wonder were the funds have gone? Capital Drilling provided 12 RC drill holes for 1,600 metres at the Koting deposit in November 2019, a cost to the Company of EUR .8 million (A$1,250,000) equates to $781 per metre?
Unless the Company had other outstanding drilling payments, is this a competitive price? seems exorbitant?
How much drilling has Capital Drilling provided since the acquisition of Morila including drilling at Goulamina (prior to the demerger)
There is more than just the "no parent guarantee" catch cry from the board at the AGM, there is this little (insert own descriptor here) that the Company included in
every Annual Report including post entering into the Drilling Deed?
-- of course, unless i am reading it incorrectly .. .. .. ..
Quote "There is no guarantees entered into by Firefinch Limited for the debts of its subsidiaries as at 31st December 2020 (2019 nil)
cheers
