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MyIPA - I actually agree with a lot of what you have said so thank you for your contribution.
Admit I have become fixated on today's RNS as I would have expected a confirmation of an extention rather than a discussion. But as you say, the timellines suggest otherwise.
Anyhow, let's hope we speak again soon with some positive news.
I assume FSDEA not financing the whole due to risk management. Why need to if you can get another bank to - then you can lend your money out to do other things. Are they not already financing some $89m powerline upgrade or something?
Agree nonbinding is toilet paper. Surely that's not what is coming. Problem is all these mining stocks is they need the financing. Until then. doesn't matter what news, it's undervalued these days compared to what it would be in the past.
Beyond me.
As for the remainder of the finance. That comes down to the terms. A non-binding term sheet is toilet paper.
So it then comes down to project value against those terms, 60p ish was mentioned but that mayhave changed based on terms. Also pre need to keep the uk lights on and those bod incentives flowing.
Another raise? The bod loan back to themselves? This won't last until 2026 when the mine produces.
Lots of factors with limited important details omitted imho
"I just find it hard to believe that the FSDEA (Angola Sovereign Wealth Fund) puts in $80m and that ABSA Bank (Amalgamated Banks of South Africa) would never finance the remaining (reduced) capex requirement of $120m."
Agree Angola are ALL in as it would be extreme egg on face if not by now. Why they don't fund the whole project is beyon
Ah ok - which bit of vagueness in particular? timelines? I think today has helped with those. Agree this is not a main financing announcement, but an update on what would otherwise have been a loose end no doubt detractors would have whined about. It is good an update on the status of this was presented in a timely manner.
Qusetion: Why are you fixated on there needing to be a specific end date for an extension? 27th June 2023 stated it would be paid back as part of the main financing because the 15m is part of the whole capex - so on main financing I assume the FSDEA stumps up the remaining $65m and then ABSA stumps up the $120m (I assume both in tranches based on whatever agreed development timelines). So this main financing, as the timeline is uncertain for completion, means it couldn't have been set in stone anywhere. Initially 8 months. then 9 1/2 months, now what, 11 months end of May? ABSA Bank is not in Angola and is separate, so probably even more due dilligence required than if it was using a bank in Angola.
Anyway, spent enough time thinking about this and how it affects my investment. Will await finalisation of main financing.
The FSDEA, bluntly, is financing the $15m of works currently underway - which is an improvement in the infrastrcuture of Angola. It's a win/win. It's also hard to believe the FSDEA would let this project fail by not stepping in if needed.
I just find it hard to believe that the FSDEA (Angola Sovereign Wealth Fund) puts in $80m and that ABSA Bank (Amalgamated Banks of South Africa) would never finance the remaining (reduced) capex requirement of $120m.
Difficult for me to determine a percent as the company has been so vague. At the moment it is a high possibility as today's RNS does not confirm an extension or main finance.
MAA86 - what % chance are you attributing to that scenario? For me it is much less than 1%.
The financing is just the $120m, right, as $80m (inc $15m) already comes from the FSDEA:
"ABSA Bank has been mandated to arrange a US$120 million project debt facility which together with the US$80 million funding will fund the mine and processing facilities into production."
Appreciate it's been going on for 9 months, however this isn't a back of the envelope agreement it's a serious one with likely many layers of governance, legals, politics and so on.
Today's RNS, for me, solidifies the timeline of this financing to within 7-8 weeks (period from 28th Feb-19th April), likely much less than that because it is rare that a 2nd extension is longer than the first extension.
So that puts us what, between say next week and the end of May for the finalising (as stated in todays RNS).
Almost there.
Gah. '< < 1 %' meant the entire string got erased. Awful site this. cut the rest of my answer too. one sec
MAA86 - what % chance are you attributing to that scenario? For me it is
FSDEA loan to be repaid as part of the equity deal which is included in main financing. If main financing does not land then FSDEA will not release more equity and in theory can then seize the asset to cover the £15m loan. A bit worrying but that's my understanding.
So to clarify - the FSDEA were not expecting to be paid back today but at point of main financing (which I assume in Feb was thought to be completed by today), subject to some further detail probably, and have agreed to this in principle (probably some extra interest payment or some such no idea).
Sorry 27th June 2023 RNS not August (did it from memory):
"FSDEA has agreed to provide an initial US$15 million loan facility as part of a US$80 million investment (which is subject to due diligence and the finalisation of investment terms) and which will be repaid out of the larger facility, for the US$200 million staged development. "
So, in any event, the FSDEA are not expecting to be paid back until the main financing is completed. Hence, imo, FSDEA have agreed to this extension during those discussions.
Happy to hear opposing theories...
MAA86 - that's not quite what they said:
"the Company is pleased to report that discussions have been held regarding the extension of the loan facility to coincide with the anticipated finalisation of the main financing. The Company will make an announcement as soon as these arrangements are finalised."
The agreement is that the loan has been extended to coincide with the finalisation of the main financing. Whenever that would be. This is a good thing. In addition, the lender would then not expect, imo, the financing timeline to be longer than the extension already given (from 28 feb to today). And as at that point the extension thought 19th April acceptable, then surely we are within a relatively short amount of time for the project financing, especially as no next date has been given..
Also if you look at the August 2023 RNS it did say it would b repaid as part of the main financing package in any event.
Good to go from here imo.
An excellent appraisal Lizard and the update regarding the FDSEA repayment is corroborative of your view that funding will coincide with the draw downs required to meet the construction timeline. Surely, no justifiable argument to the contrary !!!
Thank You Greek Lizard.
Very informative.
Take issue with the statement regarding managements expection of the share price. What does he expect when everything is "last minute.xxx". I think it's deliberate. PA has previously hinted he wants to flush out retail investors. Let's hope somebody like the "Iron Lady" is hoovering up.
Welcome to the world of PRE.
Confused with this latest RNS. Loan deadline was today. The RNS states discussions have been had but does not confirm if it has been extended leaving shareholders in the dark. And why leave it untill the last date to update the market. The naysayers are going to have a field day.
Given the amount of preparatory work, headworks, etc which has been detailed by the company and there being ample free cash on hand, obviously, the Board is comfortable with the current state of affairs, knowing the ASWF has pledged support in the form of a $15m loan, additional equity and is part of the debt funding syndicate.
I believe those who have spoken to PA have been told that the share price is not where management expects it to be.
Obviously, the Board has every confidence that the ASWF will fund the project's ongoing construction until the debt funding is finalised later this year, when needed, as per the construction timeline.
Those who have questioned management have been told that the debt funding will fall into place when needed and, importantly, it is anticipated that
offtake pricing will be with an ESG premium and done at a time when ndpr prices are trending higher, up 30% on recent lows, which will invariably
move the share price, with better economics to support the debt funding.
With all this war mongering and the need to replenish and build armaments apart from general industry, we all are aware, especially with the Uk Government’s recent upgrading of economic forecasts for the UK, the Government will be very keen to secure the vital ndpr refining at Saltend.
The company is in talks with both the UK & US Governments!
The future for Pensana is assured, in my opinion.
As to the share price, I am expecting the market makers to sell their recently acquire cheap shares into the announcement, so arm up, and buy on the opportunity while the shares are at a 5 year low IMO , knowing the market makers (MM) will be shaking the tree, frustrating the MM’s by buying, will send a clear message and they will likely change strategy and move to accelerate an upward trend when a higher share price will be surely be long overdue!
As far as the construction timeline requirements go, only $5m is said to be needed for May, the larger requirement for June’s construction payment would suggest that May / June for FSDEA equity piece to fall into place to keep abreast of the published timeframe, seems viable to me.
There appears to be no need to take the equity piece until the funds are needed and closer to when, I assume, the debt funding terms sheet becomes binding.
it really depends on where your faith comes from....
"the longonjo earthworks and civils contractor, grupo nov, have mobilised to site. ground clearing of the area for the main construction camp has been undertaken. the fabrication of the construction camp buildings by bushtec progresses well at their plant in south africa and is on schedule for delivery to site in jan 2023"
now....
"grupo nov has completed the civils and services connections for the initial section of the 316-person modular construction camp. the us$1.3 million camp has been fabricated off site and is ready for shipment from johannesburg to site during march 2024"
we had the same half ****d shifting sands with saltend in 2022.
Lewis you have been know to raise some good reasons why shareholders should feel timely announcements have not been forthcoming, having said that, the company has detailed to the market a construction timeline, where earthworks are progressing into May and are funded by the $15m provided by the FSDEA / ASWF. The timeline details that civil works will commence in May, with an additional cost expenditure of $5m forecasted for May. Also, detailed is that the accommodation block is in modular form and will be dispatched from South Africa, so obviously, you should not be troubled by the fact that construction of buildings on site is not happening. Given the amount of preparatory work, headworks, etc which has been detailed and there being ample free cash on hand obviously, the Board is comfortable with the current state of affairs, knowing the ASWF has pledged support in the form of equity and is part of the debt funding syndicate. I would agree, that the share price is not reflective of the true value of the company notwithstanding that the Board has every confidence that the ASWF will fund the projects ongoing construction until the debt funding is finalized later this year, when needed, as per the construction timeline.
You've gone from mentioning a price of 15p a few weeks ago to 5p today. Sounds like your looking for a cheaper entry..
Yes, because of the economics. There's no difference here. Seriously, put an objective view on this. If it was your money, would you finance this Project as of Today?
The stock is priced at the project value level, but that is worthless at this moment except for what is left of 15mill Angolan injection.
Fair sp value today 5p and that is being generous.
Lewis
We both know a nickel mine is very different to a rare earth mine construction. HZM was not the only nickel mine closed in construction, several others got mothballed and you probably know why.
Tony,
None of your points are going away anytime soon and to be honest this is where you need good, trusted leadership. If the economics are good and the return is there over 2 years, the risk is lowered. I'm not seeing any enthusiasm.
The best you can hope for I that the non binding term sheet includes a progress clause where the work on site ticks the boxes eventually. Guessing the recent site visit didn't show enough progress (a building or two may help, not just mud and power lines).
However, the management need to be honest with the shareholders, they will be forced to eventually.
Half assed director buys won't cut it, or support the sp ahead of the next raise to keep the lights on and pay back the directors loans (with no transparent terms)
Ironically, finance is just the start of the challenge as per HZM who's mine cost was underestimated by 100%.
TT - I can only agree with you on HMG's utterly disastrous priorities management.
But, see here for an emerging view that NdPr price looks like it has bottomed and is now on upward trend, reflecting the real underlying economics of global supply and demand:
https://www.youtube.com/watch?v=0iaqPeD1GUM
I don't see any significant shift in technology to alleviate climate change - it's still overwhelmingly wind turbines, solar panels and EVs on a massive scale, especially within China itself.
It wouldn't take much of a Chinese screw-tighten on REs to make the West see just how much it will have to pay if it keeps waffling along on supply chains security.
Lewis you know what the hold up reasons are likely to be.
1. Current depression on rare earth prices as China dumps on the global market.
2. Net Zero progress has slowed down because of inflationary impacts which hopefully are stabilising.
3. Interest rates have not declined yet.
4. Liquidity regarding banks on new projects that are not backed up with an on-going source of income despite off take agreements.
5. Poor political leadership as they are happy to have supply chains still reliant on China supply despite they are needed for their own National defence.
6. Geopolitical in that the mine is based in Africa and not within USA or the EU.
China would finance the mine build in full tomorrow if they received all the rare earths produced from the LJ mine and no supply was sold to Western countries.
What makes me feel ill is that the UK wasted more money trying to send a few people to Rwanda than the entire cost of the Pensana mine project and probably most of what was needed for Saltend. Tony