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Berenberg Bank posted a Hold recommendation with new target of 3000.
De Beers may be a greater risk than Woodsmith. Diamonds are something that we can live without and better diamonds can be produced in a laboratory.
Fertilisers and soil conditioners will be needed in increasing quantities as we try to feed a rapidly expanding world population.
I know which asset I’d prefer to invest in.
OR
I I did mention on the BHP site that massive heat pumps could be installed along the mine shaft and could be leased to the local electricity companies to provide funds. The further we dig down, the warmer the environment becomes so it makes sense to turn the heat into something valuable that will cover expenses.
The costs involved of completing Woodsmith are significant, and it would be easy to argue either way regarding whether to pushback or accelerate completion.
what cannot be disputed are the fact that the crop studies have proven to be superb, the mine has been designed to be extremely efficient, there’s at least 50 years production at 13mtpa and there’s little more involved than pelletise and sell the raw material.
I think the mothballed option is to appease shareholders by increasing dividends.
Interest rates have risen sharply since AAL bought Woodsmith. Investor expectations have risen too.
Had Interest rates remained low for a few years longer, there would have been no thought of mothballed.
Having given it due thought, I don't think Woodsmith will be mothballed at all. Talk of such nonsense is just AAL attempting to raise BHP's offer price to better reflect long term value of the business.
OR
My view is that AAL didn't complete adequate due diligence on SXX or were swayed by Fraser on his spin. SXX Standards were probably significantly less than AAL (along with some errors?) in their design. AAL takeover resulted in the imposition of their own standards increasing Capex but was this estimated adequately?
I find it difficult that they didn't specify and/or estimate correctly and as part of that process they will have developed a detailed cash flow forecast and agreed that with the board. On that basis what happened since those approvals?
Share price collapse and with increased energy/materials/resource costs along with borrowing costs greater than originally forecast.
This ultimately means increased costs for the project and the need to reassess the project. It happens in businesses where circumstances change. The answer I'm puzzled about is, why the strategy to delay if the product is 'that good'. What is an accelerated completion date and income generation v a slower approach to completion. Is the RNS a holding statement to test the market place or wait until they have a partner.
It's a watch this space for me.
I think the value of mothballing is it is an admission that the board made a gross error in taking the development on without the funds to do the job. They now recognize their incompetence and are pleading for someone else to buy the company before existing shareholders give them the push. The sooner the better, either way.
I do not agree with the 'low grade' assumption.
The point is, that it remains in the soil longer than the competition.
It always has to be about the price.
At this stage, with much of the tunnel drilled and the shafts progressively reasonably well, I don’t see much value in mothballing Woodsmith other than to appease shareholders with short term higher dividends at the expense of long term value.
OR
So, the many crop trials proving otherwise were hogwash and the off-take agreements are worthless?
OR
To summarise the current position:
BHP has made AAL a conditional offer which AAL have refused.
AAL have set out a plan which almost EXACTLY mirrors the offer conditions.
ERGO, AAL have NO problem with the conditions ONLY the PRICE.
AAL ARE , IN EFFECT SIGNALLING A WILLINGNESS TO ACCEPT A DEAL AT A HIGHER PRICE.
THUS THE ONLY QUESTION THAT REMAINS, IS ,ARE BHP WILLING TO RAISE THEIR BID?
We shall soon know.
Polyhalite is a low grade fertiliser that was always going to struggle to find a mass market.
Unbelievable that AAL did not see beyond the "Sirius" spin.
Personally I don't think the offer / proposal stage is over just yet...the game of who blinks first has begun !!!!
IMO ....that looks like a big after market BUY to me.....!!!
The statement on Woodsmith is no further capex for the next 2 years, save for £200m in 2025 for "critical technical studies", followed by "syndication". First, how could such level of further technical study possibly be required this deep into the capex process? The statement today is just clear code for, "it is in the bin now unless someone else wants to come in and put their money down the hole to take it any further". How on earth do you buy the asset in the first place, let alone commit the further capex AAL.L has done since, only to arrive at that decision? It is astonishingly poor business leadership in my view.
My description of it as a "money put" is not intended to be disrespectful to anyone, especially former Sirius shareholders. It is in my view fair and apt description for a project whose required capex and timescale to production have been proven so wrong, so many times, and by such magnitude. And which now arrives at this decision.
Sorry but I profoundly disagree there was anything clever about today's overall announcement - it was amateurish, panicked as regards timing and reeks of desperation by people trying to save their own skins. AAL.L made an utterly disastrous announcement last December on reducing output and capex. The Board clearly perceived that that would be received by the market as a positive, instead it caused the share price to plummet 20% in one day. That is an utterly intolerable event for an FTSE 100 share; you just cannot ever have a company of that standing give an update to the market intended to be a positive and it instead induce that level of instant sp fall. It left the company a sitting duck. The CEO should have resigned immediately.
Wonder if the 65m at 17.12 was a buy or sell?
I think what they've done is show BHP that they know the company needs streamlining and it's still worth more than their second offer.They are fronting it out that they are prepared to go it alone. BHP want AAL and AAL know it. Very clever in my opinion.
Money pit ? Wish it was a massive opencast quarry rather than an underground mine with ludicrously long tunnel. Could start operations far quicker on a much lower capex.
We don’t know that the bidding process is over. If it reaches circa £30, this will almost certainly be cause for greater consideration, particularly from IIs.
It's been two very grim days sadly. This is not acting in the best interests of shareholders as the board is required to do, it is clueless people trying to save their own jobs. Their responsibility was to maximise the value of a bid, all they have done instead today is lower the ceiling.
This is just the BHP proposal with two variations, with terrible optics overplayed on it - i.e. a stark admission that the company in its present form is done. This is just:
a. dump De Beers and valuable met coal assets rather than an impaired SA asset Kumba (with nothing to be returned to shareholders on divesting the latter - proceeds just to be used to "reset the balance sheet"!); and
b. bin the Yorkshire money pit.
And you would have to wait years to see if management do actually extract any meaningful upside value out of all that. It is sheer bs that this plan if implemented will lead to a massive re-rating by 2025.
With the BHP bid you just dump on market and run now, leave BHP and anyone who wants to wait for the takeover to be implemented to find out what Amplats, Kumba etc. are worth when de-merged.
I would take anything that BHP offers now and flee immediately.
Woodsmith is pretty irrelevant to the valuation. Plenty of value to realise without it. At least 4000/ps
I agree that it has taken BHP's approach to wake Anglo's Board and management from their inbred complacency. The result is the self break up of the rambling empire, leaving a core that will be an easier and compelling takeover target for BHP, Rio or Glencore. There is a lot of value that will be released from this, including on the spun off Southern African assets removed from Anglo's dead hand. Target value > 4000.
If there were no market, they wouldn’t have bought it in the first place.
But presumably there is no market for the product, otherwise they would not mothball the mine.
Yes, they ought to be throwing everything but the kitchen sink at getting Woodsmith completed and operating. They will get chump change if they dispose of it now, versus a one century money spinner, if they get it finished.