There's been a number of people speculating the
"countdown" to the settlement announcement has begun. Its reasonable
to say with Bolivia prepping its 'people' via various newspapers that
"they have to pay up"...that its not far off as per what was left as
a message here: Five companies ask the state $ 1,835 MM for expropriations (Oldish
article from 23rd October 2013)
The most comical of which is Evo Moralez's assertions early
last month. Yes Moralez actually asserted that a business part owned by the
Spanish Agency for Air Navigation (AENA) for the nationalization of its
subsidiary in Bolivia, Bolivian Airport Services SA (SABSA), and that instead
of paying for nationalising, the owners should instead pay the Bolivia!
Ok, its acknowledged that SABSA had received
subsidies to develop the airports, but likewise they had taken on the financial
risk and developed assets that Moralez is strangely remiss of his acceptance
that Bolivia can't do anything major. Its quite clear that Moralez' actions suggest he wrongfully entices companies
"with the promise" of protection to then only nationalise them once
they've achieved the objectives because Bolivia are incapable of it under his management. I base this on the
premise that if Bolivia were capable of developing these assets, including those
owned by Rurelec etc...they would not need to 'encourage' investment in their
country to later nationalise them. Or am I missing something there....
Bolivia, ironically are only damaging themselves with their conduct, albeit, with the legal 'expertise' being developed its likely Bolivia will now have to pay more and more in terms of 'fair value compensation' than they have previously. If correct in this view, Rurelec's award is likely to be the upper levels of what has been validate/evidenced during the process.
Bolivia will 'no doubt protest' over the level of the award, afterall, it's not because these businesses were so purposeful they were essential to the "nationalisation plan." One wonders why Bolivia has to nationalise anything if a) it's worthless b) never likely to make a profit and c) on the basis of a+b never likely to make a return why nationalise them? Perhaps there's a good case for Bolivia actually 'realising' they should pay fair value rather than this pathetic assertion the assets are worthless.
Lets wait and see, however I don't envisage news in October with the clock ticking, willing to be wrong!
Thanks again Fraser- it seems clear that Mr Morales likes to use 1st May (International Workers Day) each year to nationalise a firm or two and that he doesn't see the damage this does to his country from the viewpoint of the rest of the world. As you say, hopefully the court rulings that will start to come in shortly may help to redress his strange attitude to outside investors in his country. Keep up the good work. The Leggie.
ReplyDeletePS- Have you followed Nautilus Minerals (NUS:TSX)- they have been awarded US$118m recently against PNG but PNG have not paid up to date so whilst the company is still working with PNG on this issue, they may be facing the consequences of non payment shortly. Very interested to see how that one plays out.
Hi Leggie, thanks for that. I have followed Nautilus Minerals (NUS previously AIM listed), I was an investor but it travelled so far it would have been silly not to sell then it all went ‘wonky’. In hindsight this proved the theory of taking off the table at various stages into a rise works. My sells funded my position in Iofina…(LSE: IOF)
ReplyDeleteOne thing people need to work through is the valuations and a very good case is the http://www.cdr-news.co.uk/categories/arbitration-and-adr/featured/sidley-austin-wins-rusal-arbitration that is a good starting point and work back. Rusal Arbitration. You'll note the defence is very similar to that used by Indonesia with corruption claims and counter claims including illegal activity.
Going back to NUS, monies were due on the 23rd October, I'm unsure if they've been paid: http://www.nautilusminerals.com/s/Media-NewsReleases.asp?ReportID=606405
For me, it was one to avoid from an investment basis because the targets/objectives were missed in my view continually. From an investment case on the arbitration it would have been more appealing....albeit not for me as I cannot be everywhere.
It shall be an interesting month ahead, certainly for Rurelec, possible CHL news (but don’t hold your breath) and OXS just ticking a long…
A good weekend to you!
Thanks for the Rusal link Fraser. It is one of the cases I have used to form a benchmark opinion too, so I agree it is a good indication in this respect.
ReplyDeletePNG failed to meet the 23/10 deadline set by NUS, but they are in constant dialogue and a payment would help to derisk the Solwara 1 project (in PNG territorial waters and their most advanced target) as PNG would be just paying up for the 30% stake that was agreed a few years ago to bought by the state, and hence if they become a 30% owner, Im guessing they would be more "friendly" to the ongoing progress! I bought after assessing the arb claim here, but I may hold if they pay up, albeit the first revenues are 3 years out as they stopped the vessel build when the arb claim was originated. I presume PNG will face international sanctions if they don't pay, so Im still betting on the US$118m being posted shortly.
Best wishes.
The Leggie
Morning Leggie, yes it covers a multitude of issues which have similar tones pertinent for other cases. I would encourage people to read the ruling on Churchill to gain an understanding of their case and the calamity that was an "appeal court ruling" that found in the favour of the East Kutai Regency. Suffice to say it was a farce. Read it here: http://churchillmining.com/library/file/Supreme%20Court%20Decisions-%20Web%20Version.pdf
ReplyDeleteRe: NUS, I was unable to invest on various levels due to my commitments elsewhere,. It was nice to see the post arbitration spike for NUS, which I assume you sold some on? Derisked at least....NUS is worth around $180 Canadian….which if you put in their cash which I estimate to be around $70 & add in PNG’s would take it to $188M which values the licenses at ZERO. That’s a strong investment case, albeit there are risks to sea floor mining which I don’t think people fully appreciate. Being fully funded at least reduces these risks aka the dreaded Dilution…
More recently I have been focused on Longing Iron Ore (closing now) and shorting pawnbrokers LSE: HAT and ABM for various reasons, albeit HAT appears more resilient and their balance sheet can be improved. You will note that the Chinese Iron Ore Futures are down 5+% in 5 days currently and looking to continue the trend with the over supply. Something I may discuss on ML today pending time.
You should leave an "@" Ian I’m assured won’t publish.
Atb Fraser
Thanks again Fraser- yes- sold some on that spike and I do agree that the mechanics of lifting hundreds of tonnes of material from the seabed are technically challenging to say the least, but I occasionally allow myself to dream and hence the NUS stake! Im sure if it is viable, someone big will pounce (perhaps one of the heavyweight shareholders) as I don't expect NUS to become the worlds most profitable miner in the coming decades. :-))
ReplyDeleteMany metals getting interesting at present, some at pivot points imo- see you shortly.
Cheers. The Leggie.