MBF Group
As a result of the several-day visit to the countries in the Balkans, we held many working meetings – both with entities with which cooperation has already been established, as well as completely new ones. In the case of the former, due to their ongoing commitments, signed contracts and the general situation in the coal market, no guarantees have been made to us that would allow immediate augmentation of supplies from mines based in Bosnia and Herzegovina. Regardless, they have been invited to further talks as early as May, where, after the first acceptances, the Company would have a chance to be included in the list of the so-called “new” companies. key customers, which would automatically entail an increase in allocation, and indicates a willingness to continue cooperation.
In the course of our discussions with entities in the mining industry, we were able to obtain contacts to entities that mine or have coal in parameters similar to those required by us. This is undoubtedly an added benefit, as it will help us monitor the situation in real time and negotiate further to obtain more supplies. Significantly, there are significant resources in the Balkans, and the raw material from the region is usually classified as hard coal or lignite, and its quality varies depending on the specific mine and seam. The object of possible contracting will always be raw material corresponding to the supply contracts signed by the Issuer.
In addition, due to the positive recommendation given by our local partners regarding the Company and the contracts entered into by the Issuer, on February 6, 2023, signed a framework agreement on cooperation in consulting and organizing coal imports from the Balkan area. The agreement with Area Group D.O.O., based in Montenegro, guarantees the possibility of diversifying the place where raw material is purchased and received, while at the same time enabling the Company to be operated and represented by people connected with the region and familiar with its business and economic environment. The Agreement sets out the framework for operation and cooperation between the Parties, where the common goal is to contract and import hard coal for the Company from mines and from contractors based in Bosnia and Herzegovina, Montenegro and Serbia.
In accordance with the commitment made, the management of Area Group D.O.O. will immediately proceed with the work of undertaking discussions and negotiations on our behalf. In connection with the arrangements made with the counterparty, the Company’s Management Board does not exclude the establishment of a special purpose vehicle based in Montenegro or Bosnia and Herzegovina, which would take care of the Issuer’s interests and control the execution of deliveries on an ongoing basis. The establishment of such a company will take place jointly and in consultation with Area Group D.O.O., which has undertaken to work as quickly as possible to bring about the signing of contracts with entities that meet the Issuer’s supply requirements (raw material price, transportation price, logistics, lead time).
At the same time, we would like to inform you that we have granted a personal power of attorney to the management of Area Group D.O.O. to act on behalf of MBF Group SA in conducting discussions, negotiating and determining the content of commercial contracts in the field of trading, purchase and sale of goods, including in particular, but not limited to hard coal.
Most importantly, regardless of the agreements signed and the talks held, the most important point is that even assuming the most negative scenario of a raw material shortage (quite unlikely), this does not affect the current supply status of the signed contract with the Lithuanian entity. Our goal is to fill it 100%, but a smaller amount will also be very immensely satisfying. For the moment, our goal is the maximum, and that’s what we’re sticking to, that’s what we’re striving for. Sky is the limit 🙂
Regardless of the Balkan direction, the company’s managers are holding talks on all possible supply directions. All that matters most when it comes to delivery and contracting is the quality of the goods and the final price including transportation. Offers from Colombia, Kazakhstan and South Africa are being considered on the “corporate table.” In guaranteeing full security of supply and the interests of our company, the employees of the issuer and the final customer and payer from Lithuania work in solidarity. We will transmit all price-generating information via ESPI stock exchange announcements.
