Each one in plain English, with the numbers worked through for a shareholder.
8 Aug 2014debt financing▼ BadMajor
On July 22, 2014 Geovic signed agreements with Tangiers Investment Group, LLC under which Tangiers committed to buy up to $3.0 million of Geovic common stock over 36 months, in requests of up to $100,000 each at 85% of the lowest daily volume weighted average price in the five trading days after a request. Sales depend on an effective SEC registration. Geovic also issued Tangiers a $44,000 4% convertible note due July 22, 2015 for $40,000 in cash, convertible at 50% of the lowest trading price in the prior 20 trading days, and must issue commitment-fee shares equal to 2.5% of the $3.0 million. For shareholders, the filing's terms mean new shares would be issued below market price (85% for the stock purchases, 50% for the note conversion), which would dilute existing holders; this is an inference, as the filing gives no share counts.
The Toronto Stock Exchange told Geovic on June 2, 2014 that it has decided to delist the company's shares, effective at the close of market on July 3, 2014. The TSX cited failure to meet continued listing requirements on financial condition and/or operating results, working capital and capital structure, compliance with the listing agreement, and disclosure. This resolves the review opened May 1, 2014 against the company; the filing does not say what happens to the OTCBB quotation (GVCM), which the press release still lists.
The Toronto Stock Exchange notified Geovic on May 1, 2014 that it is reviewing whether the company can stay listed, and gave it until June 3, 2014 to show compliance or face delisting within 30 days after. The TSX says the review concerns the related-party promissory notes issued in 2013 and the first quarter of 2014: no prior TSX approval or disinterested shareholder approval was sought, the key terms were not announced, and it does not consider the interest rates commercially reasonable. Geovic says it will make written submissions to the TSX. This puts the TSX listing at risk because of the related-party notes described in the October and November 2013 filings.
This amended filing repeats the January 21, 2014 auditor change (Ernst & Young dismissed, Haynie & Company engaged) with fuller wording. It adds that Ernst & Young's reports for the past two years were not adverse or qualified, apart from the going-concern doubt in the 2012 report, and that there were no reportable events. It also attaches an updated Ernst & Young letter dated January 31, 2014. No change to the substance.
Geovic dismissed Ernst & Young LLP as auditor on January 21, 2014 and engaged Haynie & Company for the fiscal year ending December 31, 2013. The filing states there was no disagreement with Ernst & Young, and notes that its 2012 report raised substantial doubt about Geovic's ability to continue as a going concern.
Geovic issued a further $100,000 of one-year notes (due October 31, 2014) to Richard G. Buckovic and director Paul D. Rose, again at 200% annual interest. These notes also must be prepaid within five business days after the Jiangxi Rare Metals Tungsten Holdings acquisition of Geovic's 60.5% Geovic Cameroon stake. This continues the related-party borrowing begun in September 2013.
Geovic issued $120,000 of one-year promissory notes (due September 30, 2014) to Richard G. Buckovic, Norman C. Rose and M N Rose Credit Shelter Trust; Mr. Rose is the father of director Paul D. Rose. The notes carry interest of 200% per annum and must be prepaid within five business days after the previously announced acquisition of Geovic's 60.5% interest in Geovic Cameroon by Jiangxi Rare Metals Tungsten Holdings Group. This is the first debt in the record and shows a pending sale of the Cameroon stake to Jiangxi, which the earlier context did not mention.
Geovic ended its Denver office lease early (effective July 31, 2012, versus October 31, 2013), paying $155,000 and forfeiting a security deposit of about $14,000, and moved to 5500 East Yale Avenue, Suite 302. The filing says the aim was to cut future cash expenses and keep controlling operating costs.
Geovic furnished the NI 43-101 technical report on Nkamouna and Mada (dated June 2, 2011) and restated the reserve figure in US reporting terms: 68.132 million tonnes of proven and probable reserves, the same figure as in the April feasibility study. The filing says the mineralized material estimates (as of October 14, 2009) are unchanged from the 2010 annual report. This completes the technical report open thread and adds no new reserve change.
Geovic said the final Nkamouna feasibility study (by Lycopodium) was received and accepted by it and by Geovic Cameroon, resolving the thread that slipped to end-April 2011. It shows proven and probable reserves of 68.132 million tonnes, initial capital of $617.2 million, an after-tax NPV of $669.6 million at an 8% discount rate (Geovic's 60.5% share $405.1 million) and a 22% after-tax IRR. The refinery is dropped from the plan, with a mixed sulfide product to be sold instead. Financing is to be secured later in 2011, with construction planned for early 2012.
Geovic said the updated Nkamouna feasibility study will not finish by end of 2010 as planned, and is now projected for end of April 2011. Initial capital plus working capital is now expected around $600-$650 million, versus a $417 million estimate in the September 2008 study, excluding a refinery that would cost at least $150 million more; deferring the refinery is being considered. This continues the earlier project delay and the mid-2010 update timing given in October 2009 has slipped.
Geovic reported that, after a 2008 drilling program of 2,045 holes, estimated mineralized material at Nkamouna and Mada combined rose 97% to 120.6 million tonnes. This is non-reserve material (includes existing reserves), not proven reserves; updated reserve estimates are expected in early 2010 and a Feasibility Study Update by mid-2010. GeoCam is now described as 60.5% owned.
Geovic replaced its auditor Ernst & Young Canada with Ernst & Young United States, at EY Canada's suggestion, because the company's head office moved to Denver where EY US has an office. The filing states there were no disagreements and no adverse or qualified opinions in the prior two years.
Geovic announced it filed its third-quarter 2008 report: cash rose to $73.3 million, helped by a $15.2 million contribution from Cameroonian minority shareholders in GeoCam. It said debt and equity financing and construction for Nkamouna will be delayed because of turmoil in commodity, capital and credit markets, reversing the mid-2008 construction timing in the 2007 plan. The company says it does not expect to need the equity markets in the foreseeable future.
Geovic reported the Nkamouna feasibility study, prepared by Washington Group International, delivered as promised in the October filing. Compared with the 2006 pre-feasibility study, it shows pre-production capital of $398 million (up from $129 million), after-tax IRR of 33% (down from 77%), and higher annual cobalt (9.2 million lb) and nickel (7.0 million lb) output. GeoCam plans a further optimization study to cut costs, with major construction starting mid-2008 subject to debt financing, board approvals, a water use permit and a land lease.
Geovic said its 60%-owned Geovic Cameroon (GeoCam) expects to release the Final Feasibility Study for the Nkamouna cobalt-nickel-manganese project in November 2007. The study assumes processing 2,000 tonnes of concentrate per day, 33% above the 2006 pre-feasibility study, and capital costs are stated to be significantly higher than in that earlier study. Production is targeted for the second quarter of 2010, with a construction contract to be awarded by December 2007.
