Triple Plate Junction Does A Good Deal With Newmont in PNG, But The Zambian Venture Looks A Loser
By Charles Wyatt
minesite.com
Aim-traded Triple Plate Junction is one of those odd companies that manages to survive in the nether world below the radar screens of investors. It does not appear deliberately to avoid comment and contact, but that is what it achieves. The company made an announcement in the dying days of 2008, but not, as you might expect, using that timing to brush bad news under the carpet, but rather releasing it then because that was the way the cards fell. Apparently the mighty Newmont has decided to subscribe for 17 million shares in Triple Plate at a price of US$0.7367 per share. The decision to price the deal in dollars is an odd one, but maybe it makes things easier for the bean counters at Newmont. The equivalent price in sterling on Christmas Eve, the day of the announcement, was 5p, but investors will have to keep an eye on the exchange rate when doing their sums.
Clearly some investors had previously lost faith that this deal would emerge at all, as in the previous week Triple Plate’s shares fell 27.8 per cent to 0.65 p per share, giving it a market cap just short of £1 million. Even now, with the deal out in the open the shares are still only 1.88 p per share, and that is a country mile away from 5p per share. So why did Newmont agree to pay such a premium for its involvement in the joint venture with Triple Plate Junction on exploration licences and licence applications in the Morobe area of Papua New Guinea? Presumably a price was agreed a few months back, as talks droned on, and Newmont, very nobley, stuck with it. Chief executive Geoff Walsh is now based in Zambia, apparently without a telephone. We sent him an e-mail but he’s not replied. So what his opinion is about it all remains a mystery.
A look back to an article by Minesite in September 2007 shows that not much has changed: “Even now tracking down Mr Walsh is no easy task. He spent most of August this year deep in the Zambian bush, checking out possible new additions to the company's African portfolio. But in this day and age the wonders of email and satellite technology mean that he is at least contactable. And no one can say he isn't putting in the hours - living in the bush for a month is a long way from the cosy haunts in Westminster favoured by his chairman, Ian Gowrie-Smith.”
It was while reading this excerpt that something clicked in the brain of old Minews. When Triple Plate was founded, its name was based on the fact one of its original licences, Pu Sam Cap, lies right on top of an area in the north of Vietnam where three palaeo tectonic plates meet: the Burma-Malaya plate to the west, the south China plate to the north and the Indo China Plate to the south. So then, when did this asset in Zambia appear which seems to occupy so much of Mr Walsh’s time nowadays? A look at the website is no help at all as the company is described as “an aggressive gold exploration company. Its geographical focus is in South East Asia. TPJ is exploring for gold in Vietnam and Papua New Guinea, both countries that have the potential to host world class gold and copper-gold deposits.” No mention there of Zambia at all.
Delving back into history it appears that Triple Plate acquired a couple of copper leases at Ndola on the copper belt in 2006 and built itself a smelter with a couple of electric arc furnaces. The aim was to make the jump from explorer to producer and Mr Walsh reckoned it could be done in less than a year. He estimated total costs at US$1.6 million, while payback was expected to take only 12 months based on production of 160 tonnes of copper per month. If the Ndola property matched the dreams of Mr Walsh it would pay for most of the rest of the exploration taking place in Vietnam and PNG. Dreams are one thing, practicality another and the company has seemed strangely shy of updating shareholders on this African venture.
In the preliminary results for the year to end March which were announced in September 2008, Ian Gowrie-Smith reported, “We are confident that the installation of the Dense Medium Separation plant which is now nearing completion, will overcome the main hurdle that has frustrated previous attempts to obtain a positive cash flow out of the Ndola smelter. During the past year we have never managed to obtain a consistent supply of suitable feedstock for the smelter in sufficient quantities to make blister copper production profitable. The DMS plant we are currently erecting is designed to produce more concentrate than we are able to consume in the smelter, allowing us to stockpile some concentrate for the wet season and sell high grade copper concentrate on the open market. We have also mechanized the mines with the purchase of an excavator and articulated dump truck. These enable us to move many times more ore than we have been able to do on an artisanal basis and should help to provide a consistent supply of ore to the DMS plant.”
Doesn’t exactly sound like a company maker, does it? So that may be why, after the glory of the Newmont announcement on Christmas Eve, the company chose to announce its interim results on 31st December 31. And all Mr Gowrie-Smith could bring himself to say at that stage was: “Although the company has faced several difficulties bringing its Zambia facility into production, operations have now progressed with the commencement of small ore sales in November. These sales should increase rapidly as the newly acquired and installed concentrating machinery comes into production”. Not a word about the copper price or profitability, but investors can make an educated guess in this regard as copper, which averaged US$8,000 per tonne in the first half of 2008, is now tottering at just below the US$3,400 mark.
So where does all this leave Newmont? Its share subscription money is going into the Triple Plate bank account with the intention that it should be spent on exploration in Papua New Guinea. There is no mention, however, of it being ring-fenced. This arrangement leaves the possibility that some of it might disappear up the chimney of the smelter at Ndola. It is doubtless very unfair to suggest such a thing, but recent announcements from Triple Plate beg a number of questions and Mr Walsh is not around to answer them. In fairness we were offered a chat with Peter Wright, the finance director, but the signs are that Geoff is the only director that really knows what is going on in Zambia. It’s just possible, of course, that Arbuthnot Securities, the firm’s broker, knows too. |
