Chairman's comment is nothing but just a bunch of bs. He can say whatever he wants but market rarely lies the trades going through speak in volume of the truth.
CHAIRMAN’S LETTER TO SHAREHOLDERS
The successful planning of a large enterprise is the result of a number of factors. One key
factor is the understanding of the market and the changes that take place each year.
China is the largest consumer of phosphate fertilizer in the world representing 27% of
global consumption and is growing annually by 10%. A three-year slump in fertilizer
prices has now come to an end with Chinese prices advancing significantly and has
resulted in new enthusiasm within the industry.
A new phosphate cycle has begun and Spur Ventures Inc. ("Spur") is well prepared.
Throughout this annual report, the President will address a number of areas where
significant progress has been made. New product ideas, new off-take agreements, and
memoranda of understanding with sulphur and ammonia suppliers will be detailed.
A key factor in the development of a large project is patience. In 2001, more than most
years, patience was required. The economic slow down brought on by the tragic events
of September 11, 2001 were not easy to digest. Large corporations rethought plans to
expand internationally, which affected the ability of the Company to conclude a financing
plan or, indeed, conclude an operating agreement with a major fertilizer company.
In collaboration with Jacobs Engineering, Spur responded to these changing conditions
and asked Jacobs to consider a number of reconfigurations that would increase
operational cash flow. The resulting model not only greatly increased cash flow, but also
reduced the overall capital costs improving the projects internal rate of return. These
results are very encouraging and have helped in the renewed interest in the project.
An international financial group, Triennex (Pty) Ltd. from South Africa has been retained
to complete a project financing, including the necessary equity component, required by
Chinese law. Triennex specializes in financing infrastructure projects in developing
countries and utilizes credit-enhancing programs, which eliminate the risks – country and
economic – for the lending banks. By mid-May, 2002, Spur will learn the terms and
conditions of these facilities. Needless to say, Triennex will work very closely with
Jacobs Engineering who will now develop further engineering models and arrange for an
operator who will operate the facility in the initial stages.
It is important to recognize that the Yichang Project itself will be financed and lenders
will have recourse to the collateral provided, our 90% interest in the Yichang project. As
a result, Spur Ventures will not issue shares for the project other than in the initial stages
to ensure that all details required are in order. This will avoid substantial dilution to our
shareholders. In fact, the overall project financing is expected to be in place by
September 2002, after which our alternatives become much more interesting.
First, once it is recognized that the project is proceeding, fully financed, a number of
large industry participants will view the project in a different light. A sense of urgency
will be implied to industry participants that want access to China’s fertilizer industry, as.well as realizing the tremendous economic potential of the Yichang project. The
prospects for a joint venture are enhanced, and this route is the preferred choice of your
Directors.
Second, the compelling economic returns projected by Jacobs Engineering will allow us
to proceed alone utilizing professional operators, as mentioned earlier. The rewards for
shareholders will be much higher, but so may be the risks.
These alternatives will result in an exciting six months for the team of management and
Directors. Important decisions will be made having a very large impact on the fortunes
of the Company. The decisions will not be made hastily. Shareholders are asked for
their continued patience. The additional patience should be rewarded handsomely. Your
Directors are very aware of our lagging share price and feel confident with a little more
patience the true value of your Company will be realized by the financial markets.
"Robert G. Atkinson"
Chairman
April 20, 2002 |
