I'm amazed at the number of people across multiple companies and commodities that expect some type of payment or contribution from dirt poor African countries that are struggling to give their population a better standard of living.
Companies from the 'West' have to pay the lot when it comes to development, then of course the country will try to gain the maximum benefit for their own people.
One of the large advantages of our project is that a goodly whack of it is owned by Zimbabwean interests and companies. The govt hurts a lot of their own, by screwing us down too hard, making development too difficult, so I'd expect all this sudden 'news' in Zimbabwean media means 'something' is actually happening.
Assuming the 40% is of 'profits', then 10% goes to state, then add the 25.75% corporate tax rate IVZ will pay, and Zimbabwe does very well out of anything we develop. Taking so long to get it correct is an indictment on the government helping the Zimbabwean economy and therefore the people.
100% ownership.... 40% of production to Zimbabwe... 10% to Zimbabwe entity, leaves 50%. IVZ only own 80% of this 50%, so 40% remaining??
Out of this remaining 40% of revenue, we have had 100% of costs so far, yet more of our percentage is going to 'someone' to go further with exploration and development. Even assuming it's only 50% (of our 40%), then we are left with 20% interest. When profits flow we get taxed the corporate rate now up to effectively 25.75% including the AIDS levy.
This leaves 14.85% for us shareholders, similar for whoever is our partner, less Scott's 1% royalty (of sales).
All this means is that we can't really afford any more than a 50% dilution from where we are now and that Scott's 1% royalty agreement with Invictus is taking an outsized proportion of shareholders profit the way the project has progressed.
Quick example, revenue $A2B, costs $A400M, = $1.6B gross profit.
Zimbabwe $800M, leaves $800M, our 20% Zimb partner gets $160M, Invictus gets $640M.. Assuming further dilution/partner for 50% of remainder, leaves $320M for us.. less Scott's 1% = $20m = $300M, less tax = $222.75M for all IVZ shareholders, or after all options rights etc about 1.9B shares... 11.7c/sh.
Not worst outcome I could think of, and 11.7c/sh doesn't sound much, plus I haven't allowed for any corporate costs etc, so allowing for even more dilution halving this again to 5.8c/sh works out OK in the long term, but certainly not a large money spinner we were all hoping for. That's with $A2B in sales annually, and relatively fast production, paying for most costs from here forward.
Sales of $2B would equal around 350Bcuft/yr in sales (assuming $A6/Gj), so we would have to find 7Tcuft in total resources for 20 years worth of production.. all easily doable..
I did all this analysis for my own benefit, no-one has to agree with any of it. I just find putting all this down in a post helps me clarify my thoughts.
Also interesting, that if Revenue were to be $500M and costs $500M for that year, Invictus would have to pay Scott $5M for his 'royalty'.
Interestingly, Scott's 1% royalty only applies to IVZ shareholders and is paid out of IVZ's earnings. The more the company has partners, not associated with the 1% royalty, the more it hurts IVZ shareholders. At signing IVZ had 80% of project, but with Zimbabwe effectively halving our interest to 40%, then that royalty is effectively doubled to shareholders, likewise any further selling off or farm down any part of the Caborra Bassa Project.
Interestingly, I went back to the original agreement with shareholders that was voted on..
The definition of the Cabora Bassa Project of which the 1% royalty applies is as follows...
"The Cabora Bassa Project covers 100,000 hectares over a highly prospective part of the Cabora Bassa Basin"
This quoted from the announcement of the extraordinary meeting called to vote on acquiring the project 5/5/18...
This would mean to me that the 1% royalty applies to the special grant 4571 and not the extra areas picked up as per announcement 22/8/22 for EPO 1848 and EPO 1849. (no mention of 1% royalty).
Can't find anything about our 20% 'partner' paying anything for the exploration costs. This One-gas Resources, owned by Paul Chimbodza who made $22M selling his share of the Prospect Lithium deposit to China, seem to be free carried, even on the extension EPOs. (I can find that a new agreement between IVZ and One-Gas, was being drawn up, with shareholders to be notified, but can't find any notification of new agreement or terms!! 28/3/22 pg 4.) Also even though Geo associates is 80% owned by Invictus, Paul C is the chairman with his 20% ownership.
It would be very ordinary if One-Gas was again free carried, even though it was IVZ shareholders money that was spent in all exploration up to that point, that allowed the extra leases to be picked up. Mind you, the original notice of One-gas holding 20% of Geo-associates doesn't mention anything about being free carried, even though we paid $500k to them at the time.(18/4/18 pg 4) Their exploration lease only had 18 months to run with expenditures required to retain lease, of which IVZ then paid 100%...
Enough Sunday afternoon ramblings....
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