KPC Satimola Acquisition Conclusion

Looking at a timeline for completion of the Satimola acquisition:

• 8th May 2013 – Original Sale and Purchase Agreement announced. Note the wording “The purchase price is US$150 million.”
  
• 4th Sep 2013 – Announcement – Ministry of Industry and New Technology of Kazakhstan (MINT) approve KPC’s acquisition of the Satimola Project.
  
• 23rd Sep 2013 – Announcement of General Meeting to consider approvals required for the Company to proceed with the acquisition of the Satimola Project and the associated funding of the acquisition. Note the General Meeting is called AFTER approval of acquisition by Kazakhstan govt.

Now we have:

• 7th Jul 2014 – Revised Sales Agreement announced. Note the wording has changed this time to “The balance of the purchase price is US$140 million.” i.e. the transaction is already partially complete.
  
• 18th Sep 2014 – Revised Consulting Service Contract announced. From the announcement: “this engagement includes the negotiation with shareholders of Satimola Limited to conclude the transaction and the provision of advice to get necessary approval so as complete the transfer of the beneficial interest of Satbor LLP (the wholly owned subsidiary of Satimola Limited which holds the potash deposit in the Republic of Kazakhstan) into KPC. In addition and as required Goldquest Services Inc will obtain the extension of agreements with the government of Kazakhstan in relation to the subsoil rights of the Satimola deposits. In exchange for the service, KPC has agreed to issue 100 million shares of KPC to Goldquest Services inc.” 25 million of those shares go to City Winner Holdings (CWH) an entity controlled by Madam Cheung. So Goldquest end up with 75 million shares. Considering 75 million shares equates to (for example) $21m at current share price (note Goldquest would now have an even larger vested interest in seeing the SP up as high as possible. At $2/share their ‘consultancy fee’ would be worth $150m), that’s a lot of ‘consultancy’ (At ‘only’ $21m it would equate to 5 people working 50 hours per week at $200/hour for 8 years!). Handy then for them that they are the party who will be ‘facilitating’ the conclusion of the transaction, both with existing Satimola shareholders and the Kazakhstan government. Goldquest were also the party who successfully facilitated the acquisition of the Zhilyanskoye and Chelkar Projects for 110 million shares (valued @ $1.80 at the time – when it was just 2 projects), so they’ve done it before.
  
• 10th Oct 204 – CEO Appointed.

Last time from announcement of Sales and Purchase Agreement for acquisition of Satimola, to Kazakhstan govt approval, was just under 4 months. Revised Sales and Purchase Agreement was announced 7 July 2014. Going by that timeline we’d be looking at Kazakhstan govt approval first week of Nov. Then it just requires Shareholder approval (with Top 20 holding over 90% that would appear to be a given IMO)