Mr. Cohen's note in the January 14 press release set off a rush of adrenaline all over my body and especially in my head. That little phrase that started it all is this: "... our strategy to create a group with multiple assets ..." It's short, but it didn't take much to figure out what's to come. If you combine that phrase with the arrival of Mr. Bonneviot, all the haze surrounding Robex's development dissipates.
Considering that 3 years would be needed to develop the exploration permits we currently have, I came to the conclusion that Robex absolutely had to buy a permit already developed by another company on which a new plant could be built quickly. As a result, I did a lot of research to try to find the perfect match.
First, I determined the favorable criteria and from there, I started the research.
Considering that Robex already has an excellent network of suppliers in Mali, has been dealing for several years with the Malian administration as well as the environmental authorities, banking institutions, and so on. I felt that Robex absolutely had to use this knowledge and this network. Therefore, this permit had to be located in Mali.
Another element, the low cost. While low cost relies firmly on the quality of its operations, it must be understood that the geology of the Nampala permit also contributes a lot. Therefore, this permit must be located in the Birimian Gold Belt zone, in the south of Mali. By remaining in this area, Robex could build a new plant there, the process of which would be identical to that of the Nampala plant. This would therefore be another way of building on the knowledge acquired over the past few years, limiting financial risks and ultimately ensuring the efficiency of this plant as quickly as possible.
Safety, another good point. Staying in rural Mali such as the south, I felt that this choice would be reassuring for all employees and investors of Robex. The proximity to the city of Bamako and its analytical laboratory services is another factor that leans in favor of the south.
Ideally, you could find an exploration license with a pre-production 43-101, or better yet, an exploitation license but no plant. I am convinced that Robex could not achieve such splendid operating results if the plant had been built differently. It is therefore important that Robex can reuse his knowledge by setting up a plant similar to that of Nampala, or perhaps an improved version.
In summary, I had to find a plant-free operating permit located in the Birimian Gold Belt zone, in a rural sector in the south of Mali, where the 43-101 has mineral reserves around 1 million ounces of gold and finally, that Robex's financial resources could support.
According to these criteria, I consulted at length the website of the general directorate of mines of Mali, you know what? I found the perfect match. AFRICAN GOLD GROUP and its KOBADA permit meets all the criteria set out. KOBADA currently has just under 1 million ounces of gold in reserve and has good potential for new mineral resources. In addition, African Gold Group has been seeking funding for the establishment of a plant for some time. I repeat, this is the perfect marriage.
Since that time, I have been studying all financing possibilities for African Gold Group, be it bank financing, by issuance of shares, through a royalty financing company such as Franco-Nevada, merger companies, the cash takeover and finally, the option that seems the most interesting, the takeover by exchange of shares.
Under the takeover share exchange option, AGG's shares would be converted in a proportion negotiated between the RBX team and AGG, as would call options. Thus, AGG shareholders would become RBX shareholders while African Gold Group would probably be delisted. In the end, RBX shares would be diluted by about 10%, depending on the results of the trade.
Such a scenario would secure the financing of the plant for the Kobada permit, would significantly grow the Robex company, allow the current shareholders of AGG to end the recurring dilution of their shares, immediately profit from the distribution of profits from of the Nampala plant and finally, would eventually allow all shareholders to participate in the profits generated by these 2 factories in operation and others to come. For AGG shareholders, this solution is undoubtedly the best among all the solutions that are technically possible.
If necessary, an option could involve the repurchase of any number of AGG shares at the current stock price plus a premium. This bonus could motivate a few shareholders not very interested in the conversion of shares and be tempted by immediate added value. For the current shareholders of RBX and those coming from the conversion, this buyback with a premium would have the effect of diluting the Robex shares to a lesser extent and consequently, would allow the earnings per share to be further increased.
While I don't know if any discussions between RBX management and AGG have already taken place, I still believe this would be the perfect match. I am convinced that members of the AGG team, including Mr. Callow, could join an extended RBX board of directors and benefit all shareholders according to Robex's development objectives.
I thank all my friends who help me to take my thinking a little further.
GLTA