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Hi Tony,
Every indication to date has been that the Company prefers to raise CAPEX by Debt financing rather than Equity. The numbers that were provided in the PFS last year indicated that Revenue would easily cover debt repayments. From memory the Project had a Pay back period of 1-2 years,. With the Commercial Debt Interest rates at the level that they currently are it would not matter if they strung repayments out over ten years !
shareaction
We do not have a handle on the profit after debt repayment (principle $25M) and debt interest. Someone else may have a figure on tax due to Angola government and royalties etc and the discount against normal tax rate during the debt repayment period. From that we have a low case to high case earning range. If the market is unimpressed the BFS does not stimulate a share rise. If it does the BFS gives a higher equity valuation and the company as you say raise against the higher value if they choose that route. So if the share goes higher it would drop after the raise. The company then successfully build their mine.
Not sure. If they do not do a capital raise they may take out a bond.
Tony, Any views on the timing of the capital raise for the 15%?
I assume the planned 85% of total project cost debt finance will be given only AFTER the equity for the remaining 15% (or USD30m-USD50m according to Atherley https://www.youtube.com/watch?v=lZzMhJSYIkk&ab_channel=CRUXInvestor 39:40) has been successfully raised. And if so, how soon will the bank need it to happen? We obviously don't want it to happen until the share price has fully "matured" to minimise dilution.
Hi China
Thanks for your views. The only thinking missing from my maths is the net income from the revenue per year after debt repayments, interest, taxes as well as all the company costs. The bankability doubles the share up if the percentage of revenue giving net profit was say 30%. Thanks for the copper site as well. Tony
In an interview a few months back PA said that they have commercial financing lined up and only needed a further 30 million of investment. Does the new investment of about 8m mean that 22 would need to be sought now. If this is the case and the BFS is as expected which should boost the shares then 22m would represent a very modest dilution to get us to a fully funded project.
If this is incorrect I am sure that someone more expert than I will put me straight
And they were not even in Production at the time !!!
If you are looking for a consensus of opinion I suggest you have a look at the Hot Copper page for Pensana PM8.
My own Personal opinion, is that I would like to see us somewhere between $3-4 and rising steadily. I know it sounds highly speculative but I think we can get a double up from the BFS and possibly another one when the start of construction is announced. The World needs to fill a critical shortfall in NdPr. As far as I can determine Longonjo is the only New mine that can be brought into production before 2023 capable of denting that gap. Shortages create price rises ! so who knows where the SP will end up ? Have a look at Lynas's chart from 2009-2012 to see what a REE shortage can do !!!
Chinasyndrome
Where do you see the stock price by the end of the year. I appreciate its only an opinion. Trying to decide do I add a bit more now or wait.
Tony
What started out as a promising day on the ASX up 5% in the first twenty minutes, turned into a Brokers fishing expedition as they drove the price down to flush out the few remaining Day Traders for more shares to transfer across to the LSE in which they were quite successful managing to soak up just over a million shares by close.
Pensana's Registry must now be getting very tight, and won't loosen up as Investors grab as much as they can whenever they can.
RNS:
https://www.investegate.co.uk/pensana-rare-earths--pre-/rns/issue-of-equity-to-angolan-sovereign-wealth-fund/202009251728052064A/
The Angolan Sovereign Wealth Fund has agreed to buy a further 13,500,000 ordinary shares to be issued at 50.21 pence per share, raising gross proceeds of approximately US$8.6 million.
I don't think the discount of around 12% is unreasonable for a company at this stage, all in all a very reassuring placing!