Mawson West Ltd Ord MWSWF

RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:So...

[CQCmaster]

snootchybootchy wrote:

CQCmaster wrote:

snootchybootchy wrote: I think shareholders pretty much have to take the offer.  I don't think there will be any other offers given the price of Cu and the political uncertainty in the DRC.  It's a raw deal for long-term shareholders of the company but a pretty good deal for anyone who started a position within the last couple of months.  I still think Galena's overall plan is to flip the company as soon as Cu prices go up, and Kapulo can be shown to run reasonably efficient.  And likely by that time, there will be some resolution in the presidential elections in the DRC.

There is no way they'll flip it. This mine is theirs and Trafigura's for the next six years. The whole purpose of Kapulo is to produce for Trafigura. It's basically written in the books. $1.92/lb production cost, sell it in low $2s to Trafigura. We get a small portion of earnings (to keep the shareholders somewhat happy) and Trafigura sells it for God knows how much. If Cu hits $3s or even $4s in the future, Trafigura will be laughing with $1-2/lb of profit. And $1.92/lb production cost might be lowered with Galena's technical team stepping in. That could mean more money for us if the price per tonne is fixed for Trafigura or more money for Trafigura if it's percentage based. In the end, no one knows for how much Trafigura will be buying from MWE, so whatever I wrote here, take it as an idea and not a fact. I'm just trying to be realistic here even thought I want the best for us and not them.

I don't agree but I am hardly an expert.  If controlling the profit has been the goal all along, why didn't Trafigura just buy the entire company outright?  And they probably could have bought the company at a much cheaper valuation than $0.12.  That seems like a much simpler plan than the circuitous route you are hypothesizing.  I think the reason for the debt and private equity financing is so Galena can lessen their risk but also have the option to take majority control of the company for any future M&A opportunities that may arise.  But like you said, please take what I wrote as an idea and not a fact.

Actually if you think about it, Trafigura already owns the company with the 50 million dollar loan they have lent to MWE back in April of 2014. Part of that loan deal was the Offtake Agreement till 2018 (which would be cheaper to obtain their resources rather than buying MWE right off the bat). Trafigura probably either knew that 50mil wasn't enough to jump start Kapulo (Part of their plan to bring in Galena) OR they were surprised just like us by the incompetent management (hence the dismissal of our CEO) that almost turned this company bankrupt if Galena didn't step in. Since Galena is fully owned by Trafigura, they let Galena to do their work for them as it might be Galena's speciality in these type of dealings. And now with this new agreement, Trafigura gets a better deal by extending the Offtake agreement till 2021. Who's the big winner here? I guess I can say it's a win-win for both, but more so for Trafigura. The company will be back in production and still be listed on TSX. We all win in the end. However, with major dilution on the way, what will happen to our share value? Either way I respect your opinion, it could be that you're right and I'm wrong. Or both. I hope we are both wrong and think of this as a healthy deal for MWE shareholders.