KZG - Kazera
Scheme, co-incidence or just good ol' deep value?
Today Align appear to have finalised the sale of their 29.9% holding to AMS.
Why is that important?
Well, a couple of reasons.
AMS PAY TRIPLE YET NO ONE CARES
AMS have paid 1.5p a share. That’s about 3X the market price of 0.5p bid and 0.55p ask. That’s £4.5m for 30% when 100% of the company is £5m market cap.
Why? Well, there’s only 1 immediate explanation. To own 29.9% in UK Corporate Code is one rung away from a takeover bid. It’s the Throne Maker’s shareholding.
Meanwhile rather than expressing joy and hope, the KZG bulletin board is awash with nerves, despair and LTHs who sit on large losses. People or maybe Bots speaking of despair who say they are long term holders. Who knows. Some BB posters (people, bots) express a willingness to accept an offer at 1.5p. Co-incidence?
Checking the large holders on the register, they appear to only be insiders and ex-insiders. No IIs at all (at least none above the 3% reporting threshold). Ex-insiders who now run Ironveld and other companies and have their own funding challenges so potentially are open to selling their KZG holding. These make up another 18% of the holders according to Refinitiv.
Is the lack of news, the apparent despair all the work of a mysterious “Kazera Sosei”? By convincing the shareholders that the opportunity does not exist is not the leader hidden in plain sight pulling the strings to orchestrate something? A buy out is the obvious answer.
How? Frustrate shareholders. Make them afraid. Orchestrate delay. Make them despair. We don’t lose a single diamond by leaving it in the ground a little longer…..
Who owns AMS? No one knows. Could Hebei Xinjian own AMS? No that’s fanciful… Surely.
HEBEI XINJIAN
I’m sure if you’re interested in KZG you’ve already read my prior post All Aboard the Diamond Miner! written on the 6th October. It’s worth re-reading that.
You will therefore know that there’s an obvious proxy to the burning question will Xinjian pay up what they owe?
Well, the answer is obvious. Yes. How am I so sure?
Well let’s go back to the Arcadians over at Arcadia Mining whose concession surrounds Aftan. In their quarterly newsletter on 31st October 2023. Their update is:
Jurie Wessels Executive Chairman of Arcadia stated: “We are very pleased with the progress Hebei is making at advancing the Swanson Ta/Li project towards production. Since inking our deal with Hebei, construction has already commenced and work is accelerating both on site and around equipment receipt/ordering. At the site, roads are already being constructed and earthworks around the plant location will commence shortly. Equipment such as the jaw crusher, cone crusher, feeder, screen and conveyors have been ordered or are enroute. Long lead items such as the drilling machine, ball mill and crushers have also been ordered. The balance of equipment, particularly the MGS plant equipment, is expected to finalised before the end of November.”
Hebei’s continuing construction is directly next to the land held by Aftan. It’s not like they’ve sloped off back to China and the windows are all shuttered. Why would they be accelerating construction if they meant to renege on the Aftan deal? Why would they delay paying having paid nearly $5m unless they knew there was no risk in delay. No risk of KZG taking back Aftan. The calculation of risk otherwise makes no sense.
So one of 2 things can happen from here.
Hebei Xinjian do pay Kazera the remaining sum for Aftan and the production plant they’ve built processes Aftan lithium and tantalam and Kazera get a 2.5% of revenue royalty. At $15k/Tonne of Lithium, the Royalty is theoretically worth $138m to Kazera (with no associated cost).
Hebei Xinjian don’t pay Kazera, Kazera keep the $4.85m paid and can take back the mine due to default. Remember the JORC for Aftan shows an indicated/Inferred 110,000Kg Tantalum and 370,000 Tonnes/ Lithium. At the edge of the Aftan claim is a lithium and tantalam ore processing plant majority owned by Arcadia. KZG agree terms with Arcadia and start mining.
I still believe fully payment will come from Xinjian, and the delay is prioritising funds to build the plant, and not pay Kazera yet. After all the money owed to Kazera accrues at 8% p.a. and with cash already in the bank and HMS on hold it’s not as though paying sooner would matter. The plant will be operational Q1 2024. Is the delayed payment a co-incidence?
HMS
Meanwhile in other news the radioactive measures should be squared away in the coming quarter. Then HMS - heavy mineral sands - can begin to be processed. AMS has worked with Heavy Mineral Sands over many years. It baffles me that the price has dropped down to 0.50p on the day when such an important shareholder joins the company. One whom carried great HMS expertise.
Do I believe the radioactive testing delays are also the scheming works of a Kazera Sosei? Is it a funny co-incidence that on the cusp of production, a spanner got chucked in the works from someone from a testing department in government. It will be fixed Q1 2024. Surely that’s a co-incidence too?
Diamonds
Just over a week ago all in not well in the land of diamonds. The RNS 28/11/23 tells us that a further piece of equipment, a pulsating diamond jig is required which is a disappointment. No production discussed. We’ve been here before with Alexcor. We’d resolved it. Now it’s unresolved again. What changed at Alexkor? How did the new problem appear? It will be fixed again Q1 2024. Surely a further co-incidence?
Q1 2024 is 23 days away.
AMS, Hebei, Aftan, HMS, Diamonds everything delayed, everything suddenly appear to be aligned (no pun intended) to begin Q1 2024. A set of unhappy co-incidences? Or a clever scheme? Whose scheme? Does Kazera Sosei even exist?
To delay one opportunity may be a misfortunate, but to delay several seems like carelessness. Seems? Convincingly careless. It’s an intriguing story.
But maybe I’m just tired on a Friday evening after a busy work week, a little cynical. The disappointment tugs at you inviting you to join in the cynicism you read elsewhere. Stockopedia calls this the worst sucker stock. Am I just being fanciful, maybe there is no hidden agenda. Just the usual challenges of getting mining projects is a snakes and ladders process that takes time and patience.
What if AMS just see the opportunity as I do - 49.9% HMS is incredibly high number. 2m carats of inland diamonds is an incredibly high number. £138m of Lithium and Tantalum Royalties are an incredibly high number. High numbers mean high profits.
CEO of KZG Dennis Edmonds seems very relaxed in videos. Not the face of a guy terrified for his future. Not a guy gutted about his lost money. A doomed Cassandra. The guy spent £40k of his own money on KZG shares earlier this year and has lost £15k in a few months (on paper). Why does he appear relaxed and confident? What should we read into that?
Whether it’s scheme or innocent co-incidences, as I see it, either way my calculation is I stand to gain either from a takeover bid or from the deep value as these holdings develop. They’re well funded with a good wodge of KZG cash. They will be cash generative too. They have now a supportive and expert shareholder in AMS. So today’s news is good news. And the year ahead should be better. Q1 2024 can’t come soon enough.
This is not advice.
Oak