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The SP is around were it was 1 year ago. If we ignore the 50% jump a few weeks ago in anticipation of the Opt. survey being completed, where does this leave us?
There was profit taking and the price deflating since the end of March, which means it is definitely not overbought, rather it is oversold, which it is a good foundation for the SP to jump if the news are positively received.
Downside, as I have said before, could be just 5-10%, towards the SMA200, if we have delays or a horrible RNS?
https://twitter.com/JohnHar49505586/status/1526154301701234690?t=xTMgJsr2m4XHl4VxDG1BsQ&s=19
Some nice buys going through already (but showing as SELLS!).
10 trading days left (to 31st).
There may be an element of fear, so some people may jump ship if the Mkts tank in the US; however, it's mostly the cryptos and tech that will "burn" whereas on our S/H Register it's mostly long term holders who understand the potential rewards.
Most of us are sitting tight and waiting.
No one with any knowledge of this company and it’s potential will sell until the news is released and even then would hold for future rewards. MM plan of lowering the SP to unsettle the Pi’s on virtually no selling of note may now have to be reversed.
Already the SP is down from 1.80 to 1.20 i.e. 33% in just 6 weeks.
SMA200 is at around 1p so I would guess that downside risk is around -10-15%.
US markets may have another 10% to fall but it won't be in a straight line, and it may be over the next 2-3 months.
On the upside, if the EPC is around 1.5 bln to build (as per last RNS), and offtake + royalty agreements cover the 4 year development cost (big if), then the potential is very substantial.
Whatever happens, on 22 April KP2 re-affirmed the 60 days max, counting from April 1st i.e. by end of May the EPC will be announced. Soon after the Co's acceptance and the financing too, as per the same RNS.
DYOR
Thanks to Paul, Phil and LT for those comments, which were very useful and re-assuring.
I think I am jaundiced a bit by my investment in Zioc (in the same country) which has a similar high quality resource that China and other countries desperately need (iron ore) and for which prices have risen dramatically from a few years ago. But there has been zero progress in getting it out of the ground - even when a major like Glencore has a 50% share.
I'm hoping KP2 actually gets to the spades-in-the-ground stage soon, as a major project getting underway might be what the ROC needs to kick start mining in the country. At present there seems to be a huge reluctance to do anything there.
RNS on 6th April 2021 said:
" The Company has signed a non-binding MoU with Summit which outlines a roadmap to optimise, fully finance and construct Kola via a mix of debt and royalty financing.
· Summit and their technical partners SEPCO Electric Power Construction Corporation ("SEPCO") and China ENFI Engineering Corporation ("ENFI"), who has been subcontracted by SEPCO, will work with Kore to undertake an optimisation study to reduce Kola's capital cost with a target of less than US$1.65 billion ("Target Capex").
· Summit will work with potential financing partner BRP Global Limited (together with the above technical parties, the "Summit Consortium") to, subject to completion of their due diligence and achieving the Target Capex through the optimisation study, present a financing proposal on behalf of the Summit Consortium based on debt and royalty funding for 100% of the Kola construction capital costs.
· Under the proposed financing structure, the Company would not be required to contribute to the capital needed to build the project and would retain a 90% equity interest in Kola.
· The MoU was signed in the Minister of Mines offices in Brazzaville with the Minister and his key staff present. Under the proposed financing arrangements, the RoC Government would retain their 10% shareholding in the Kola project.
· The Company will contribute approximately US$900,000 to the optimisation study costs. SEPCO will cover the remaining 50% of the estimated costs of the study."
I'm reading from this that the finance agreement is part and parcel. But like you Mitch984, I could be wrong.
Mitch,
Being invested for 5 years already I can imagine why you would think that this is going at snails pace. I however think that we are close to take off. Not many projects of this kind have a consortium who are prepared to get the financing at debt and royalty. Normally the shareholders are diluted to oblivion.
Secondly this is a win win for both parties so a bit of incentive to get this over the line for each party. The Financing is only a proposal because Kore reserves the right not to accept the terms. I would imagine that if Kore decides not to accept , that it will be because they believe that they could source the money cheaper somewhere else. They are not going to reject the proposal just to sit on their hands for another 5 years wondering how to get the Potash out of the ground.
All in all, I am quite optimistic and will be accumulating as fund permits.
I can see why you are cautious Mitch but the devil in the details is the OFFTAKE agreements (potential, at this stage).
What has substantially changed in the last year or so, which makes the project more attractive and necessary is:
1. Potash prices more than doubling;
2. War in Ukraine - nobody expects that sanctions against Russia and Belarus (40% of global production) will be removed in the foreseeable future; even if they did, in 2-3 years, their old clients would prefer to rely on other suppliers.
But after 5 years, waiting for another 3-4 weeks is nothing - hope you get your rewards.
Firstly let me say I have been invested in KP2 for over five years and fully agree with everyone's positive view on the potential of the project.
However after the Consortium submits the EPS (Engineering, Procurement and Construction) proposal in a few weeks, we need to remember that the profect still has to be financed.
Yes, the Consortium are expected to provide a "financing proposal" some time following acceptance of the EPC, but lets not forget the word "proposal".
At no stage has there been any indication that the Consortium will come back at that stage with an actual agreement on the finance. RSNs have glossed over this a little - it could be that the Consortium are only expected to come back with a list of possible ways the project can be financed. And that would leave us no further forward than the past five years - when KP2 itself have been looking for an entity or country to finance the project.
I hope I am wrong, but after many years of false dawns on this project - and with the ROC itself having a track record of nothing happening quickly (see ZIOC) - I am not sure we are as close to the reward time for shareholders as some have suggested.
Like I say, I do hope I'm wrong!
I hope you are right...perhaps the MMs are being cautious in general with all the USA turmoil i.e keep the spreads high and lower than normal Bid prices, irrespective of Buy Volume.
BTW, I bought 500k @ 1.25 yesterday, no problems. And now someone bought 806k (nice round 10,000!), seemingly without any issues.
Definitely we will have the EPC proposal in the next 5-10 working days the latest, and given the ongoing coordination with Mgt, possibly a very quick acceptance of the EPC terms and the financing proposal soon after. So, within the next 4 weeks everything could be wrapped up.
Don’t believe there is a large sell later, I have tried small buys over the last week and within 30 mins it’s matched with a sell to keep the SP down, I call that manipulation in my mind. I expect a huge retake if the plant is built which does look likely. A 100 x today’s SP
Or, they have a pending SELL order (rather big) on their books and hence the big spread and low Bid price.
Looks like the MM are trying to unsettled PI with small sells to lower the SP. They know a big announcement is imminent and want your shares.
LT,
I am just being conservative in share price as if we do get to production I expect significantly more than that.
I am just covering all eventualities even if the Financing group takes 50% royalty.
Phil,
As financing discussions have been ongoing for the last 2 years, at least, you are probably right.
Regarding the 20x, I think that in an average scenario you are being too conservative.
But we will know soon.
GLA
Disclaimer:
Forgot to add this to my post, so that everyone should do their own research and base investment decision on any thing I say.
I have a fair few of these and will be sitting on them for the next 4 years. My hope is that I will get at least 20X my money.
I do not think financing will be an issue with the consortium. (I expect a lot of the money to come from China. ). The only haggling bit is if Kore management will accept the terms of their financial package.
Financing is to be based on debt and royalty, so if it cost them more to get the money from the banks then they will build in more royalty percentage.
Sorry, to add...
1.5 bln will be spend over 40 or so months so it is quite possible that good offtake agreements might cover all, or most of this cost. So, it all depends on these details, hence the mkt's expectation of the EPC and financing proposals.
SFnk,
The consortium will probably borrow from banks anyway (1.5 bln), in part or in full.
And for a 4 year project (appx), long term interest rates rising might have an impact.
Of course, interest rates (bond mkts) have been rising since December, plus a potash project might be more attractive to banks than lending to tech companies. So, these issues may already have been taken into account by the consortium.
I was under the assumption that the consortium would be providing the funding rather than a bank?
If this is the case I can't see a problem with financing for that reason. (Not that there are not other reasons)
Just bought 500k at 1.25 - 2 months from April 1st will be up soon.
My only worry is if this market turmoil can scupper the financing part of the EPC proposal.