Triple Plate Junction, (AIM:TPJ) has completed a strategic review of its activities in Papua New Guinea ('PNG'), Vietnam and Zambia. It was hoped that the gold prospects in Vietnam and copper production in Zambia could both yield substantial returns to shareholders, however this potential has not been realized. TPJ is cash constrained and therefore must concentrate its resources on PNG where it has the prospects of the fastest return on investment.
PNG
TPJ's great strength in PNG is the fact that almost all the cost of the continuing exploration activities are being paid by the Company's joint venture partners, Barrick Gold Corporation and Newmont Ventures Limited ('Newmont').
Barrick has recently completed expenditure of AU$5m on its joint venture areas with TPJ thereby earning it an 80% stake in the area. TPJ has indicated to Barrick that it is not intending to pay its share of the next work program and will dilute its interest in the JV from 20% to 13.72%.
The Company's joint venture with Newmont is progressing and as the cost is undertaken by Newmont, Newmont's interest in a number of the Company's exploration licences and licence applications in the Morobe area of PNG is increasing.
Further to TPJ's announcement dated 24 December 2008 the final conditions relating to the issue of 17,000,000 new ordinary shares of 1p each in the Company ('Shares') to Newmont, pursuant to the agreement between TPJ and Newmont dated 23 December 2008, have been satisfied. The new Shares have been issued at $0.073 per Share, and the subscription funds have, with the agreement of Newmont, been used to offset exploration costs borne by Newmont, on the Company's behalf, in PNG. Following this issue, Newmont will have a 10.07% interest in TPJ Shares, and holds a further 17,000,000 warrants in the Company. This JV envisages Newmont potentially spending up to US$15m over the next few years to earn a 70% interest in the Wau-Morobe licences.
Application has therefore been made for the admission to trading on AIM of 17,000,000 new Shares, and dealings are expected to commence on 29 September 2009, at which time the Company shall have a total of 168,769,912 Shares in issue.
Vietnam
The Company's activities have been centered on two exploration licences at Pu Sam Cap in NW Vietnam. The Company was granted the licences in 2005 and they were the formation asset of the Company in a joint venture with Newmont Vietnam Pty Ltd. Since that date some US$4.6m has been spent on exploration of these areas without establishing a commercial resource. Under Vietnam's Mineral Law, the licences have now expired, but the Law provides that they may be re-issued for a further two years. If the application for re-issue is granted, an estimated expenditure of approximately US$3m would be required to take the project through the next licence term without certainty of continuity of tenure beyond that point.
It is also not clear whether investment in exploration and mining in Vietnam is as secure as previously perceived. Recent moves in Vietnam against an unrelated tungsten project have caused particular concern. The Company is therefore currently considering how it can minimize its exposure in Vietnam in view of these uncertainties and the Company's present financial constraints.
Zambia
The Company invested in a smelting plant and some mining of copper activities in Zambia as a means of supporting the continuing exploration activities being carried out in Vietnam and PNG from the cash flow that the mine was expected to generate.
Regrettably, this cash flow was never forthcoming as a result of a number of factors:
*
The supply of copper ore from the Democratic Republic of Congo ('DRC') was stopped overnight mid-way through the construction of a smelter. Whilst this smelter was intended to ultimately beneficiate copper from TPJ's own mines, its design and purpose was to smelt the imported ore for cash flow during the initial stages.
*
The area that the Company believed it had an exclusive licence to mine was contested and it took two years for the Company to successfully establish its rights, through the Zambian legal system. This meant that during the period of record prices for copper the Company had no production.
*
When the area was finally granted and a mining operation commenced, particularly severe weather conditions brought the fledgling mining operation to a halt, and it has never reopened due to severe cash restrictions at TPJ.
Regrettably, at the operating level in Zambia, matters have deteriorated to an alarming state where miners and others have seized equipment and restricted access to the Company's pit site. Outstanding creditors to the Zambian subsidiary now total some US$550,000 and in addition the working capital requirement to restart operations is estimated at more than US$400,000.
The Board has taken the view that, in the current financial climate, finding the finances to continue operations in Zambia are beyond this Company and as a consequence have decided to withdraw from any further activities in Zambia and to sell the subsidiary, Triple Plate Junction (Africa) Limited ('TPJAL'), to the Company's Zambian-resident former director Geoff Walsh for a nominal sum of £1, together with guarantees to take over all liabilities and contingent liabilities as well as forgiveness of unpaid salary from TPJ ('the Disposal'). TPJAL's net assets as at 31 March 2009 were £1,308,000, and in the year to 31 March 2009 generated a loss of £2,360,000 on revenue of £122,076.
Related Party Transaction
Geoff Walsh was, until 25 August 2009, Chief Executive Officer of TPJ, and is therefore classed as a related party under the AIM Rules for Companies. The entering into of the Disposal with Mr. Walsh is therefore classified as a transaction with a related party for the purposes of the AIM Rules. In accordance, therefore, with the AIM Rules, the directors of the Company, having consulted with the Company's nominated adviser, Arbuthnot Securities Limited, consider that the terms of the Disposal are fair and reasonable insofar as the Company's shareholders are concerned.
It is not clear whether the Company's remaining activities will be sufficient for it to maintain a listing on AIM with all the associated costs. During the forthcoming months, the directors will be examining whether to raise funds and expand or change activities, delist, or cease trading.
www.investegate.co.uk/Article.aspx?id=200909241100015991Z
PNG
TPJ's great strength in PNG is the fact that almost all the cost of the continuing exploration activities are being paid by the Company's joint venture partners, Barrick Gold Corporation and Newmont Ventures Limited ('Newmont').
Barrick has recently completed expenditure of AU$5m on its joint venture areas with TPJ thereby earning it an 80% stake in the area. TPJ has indicated to Barrick that it is not intending to pay its share of the next work program and will dilute its interest in the JV from 20% to 13.72%.
The Company's joint venture with Newmont is progressing and as the cost is undertaken by Newmont, Newmont's interest in a number of the Company's exploration licences and licence applications in the Morobe area of PNG is increasing.
Further to TPJ's announcement dated 24 December 2008 the final conditions relating to the issue of 17,000,000 new ordinary shares of 1p each in the Company ('Shares') to Newmont, pursuant to the agreement between TPJ and Newmont dated 23 December 2008, have been satisfied. The new Shares have been issued at $0.073 per Share, and the subscription funds have, with the agreement of Newmont, been used to offset exploration costs borne by Newmont, on the Company's behalf, in PNG. Following this issue, Newmont will have a 10.07% interest in TPJ Shares, and holds a further 17,000,000 warrants in the Company. This JV envisages Newmont potentially spending up to US$15m over the next few years to earn a 70% interest in the Wau-Morobe licences.
Application has therefore been made for the admission to trading on AIM of 17,000,000 new Shares, and dealings are expected to commence on 29 September 2009, at which time the Company shall have a total of 168,769,912 Shares in issue.
Vietnam
The Company's activities have been centered on two exploration licences at Pu Sam Cap in NW Vietnam. The Company was granted the licences in 2005 and they were the formation asset of the Company in a joint venture with Newmont Vietnam Pty Ltd. Since that date some US$4.6m has been spent on exploration of these areas without establishing a commercial resource. Under Vietnam's Mineral Law, the licences have now expired, but the Law provides that they may be re-issued for a further two years. If the application for re-issue is granted, an estimated expenditure of approximately US$3m would be required to take the project through the next licence term without certainty of continuity of tenure beyond that point.
It is also not clear whether investment in exploration and mining in Vietnam is as secure as previously perceived. Recent moves in Vietnam against an unrelated tungsten project have caused particular concern. The Company is therefore currently considering how it can minimize its exposure in Vietnam in view of these uncertainties and the Company's present financial constraints.
Zambia
The Company invested in a smelting plant and some mining of copper activities in Zambia as a means of supporting the continuing exploration activities being carried out in Vietnam and PNG from the cash flow that the mine was expected to generate.
Regrettably, this cash flow was never forthcoming as a result of a number of factors:
*
The supply of copper ore from the Democratic Republic of Congo ('DRC') was stopped overnight mid-way through the construction of a smelter. Whilst this smelter was intended to ultimately beneficiate copper from TPJ's own mines, its design and purpose was to smelt the imported ore for cash flow during the initial stages.
*
The area that the Company believed it had an exclusive licence to mine was contested and it took two years for the Company to successfully establish its rights, through the Zambian legal system. This meant that during the period of record prices for copper the Company had no production.
*
When the area was finally granted and a mining operation commenced, particularly severe weather conditions brought the fledgling mining operation to a halt, and it has never reopened due to severe cash restrictions at TPJ.
Regrettably, at the operating level in Zambia, matters have deteriorated to an alarming state where miners and others have seized equipment and restricted access to the Company's pit site. Outstanding creditors to the Zambian subsidiary now total some US$550,000 and in addition the working capital requirement to restart operations is estimated at more than US$400,000.
The Board has taken the view that, in the current financial climate, finding the finances to continue operations in Zambia are beyond this Company and as a consequence have decided to withdraw from any further activities in Zambia and to sell the subsidiary, Triple Plate Junction (Africa) Limited ('TPJAL'), to the Company's Zambian-resident former director Geoff Walsh for a nominal sum of £1, together with guarantees to take over all liabilities and contingent liabilities as well as forgiveness of unpaid salary from TPJ ('the Disposal'). TPJAL's net assets as at 31 March 2009 were £1,308,000, and in the year to 31 March 2009 generated a loss of £2,360,000 on revenue of £122,076.
Related Party Transaction
Geoff Walsh was, until 25 August 2009, Chief Executive Officer of TPJ, and is therefore classed as a related party under the AIM Rules for Companies. The entering into of the Disposal with Mr. Walsh is therefore classified as a transaction with a related party for the purposes of the AIM Rules. In accordance, therefore, with the AIM Rules, the directors of the Company, having consulted with the Company's nominated adviser, Arbuthnot Securities Limited, consider that the terms of the Disposal are fair and reasonable insofar as the Company's shareholders are concerned.
It is not clear whether the Company's remaining activities will be sufficient for it to maintain a listing on AIM with all the associated costs. During the forthcoming months, the directors will be examining whether to raise funds and expand or change activities, delist, or cease trading.
www.investegate.co.uk/Article.aspx?id=200909241100015991Z
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