Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Did I hear correctly that the JPM bond deseas being sold in 12 month old data?
If so with the new data to be put forward and the construction risk being reduced day by day, I can see why Fraser is sounding fairly upbeat in his call this morning.
Still a perilous 6 months ahead. No doubt it will bring a whole new breed of investor on board with increased volatility as we go.
Much work to do. Did you mention aquifers GK?
I wonder if those were discussed as being a major risk a while back? Hmm, lol. And here we are!
GK - 606 posts on here today (some of them mine) and yours is the only one with any real insight and intelligence.
Good work. it will get buried with rubbish - but everyone should read GK's post.
Thank you Gaias Kidney. That makes a lot of sense.
Is what I get from today. Certainly not dead!
Fraser states (rns/wcast) that the primary consideration that has made lenders reluctant to take the IBs below the strictured JPM 15% was the risk associated with the main shaft sinks. He says he has worked hard to try and convince lenders of the thorough assesment of the line of shafts and that they have the best in the business to do these sinks, however it is not enough for them. With that and the now new situation it seems reasonably probable Sirius can avoid for some time yet (and maybe at all) having a partner come in offering build finance in return for taking a large part of the project.
It looks like the build will be reprioritised accross the board with almost total emphasis now put on getting the shaft sinks past the high risk geos. This will be in particular the high pressure aquifers at ~1000m down. Even in the best of sink rate circumstances this is 1y+ (2y prob) away so the project needs to be bridged with finance beyond what they presently have (~$100 -150m) and beyond six months. How much?
I would also think they will continue with MTS drive 1. Costings (from prospectus):
Service shaft $284.7m,
Production shaft $246.1
I would anticipate by now ~10% of that is now sunk cost, so an outstanding cost remaining of ~$480m.
MTS total cost is $1498.6m. This includes the drives plus associated shaft/portal development at the 3 sites. From that and the good progress already made with drive 1 from Wilton I guess the ongoing cost to take D1 to the half way point (it is not feasible to stop the TBM) between its start and LB and construct a cavern there would be around 15 to 20% of the total - sub $300m.
Add ~20% for other care and maintainance and the total over next year or so ~$850m. But if you refere to fig 16.6 in the SRK report looking at the breakdown of build capex for year '19 & '20 it may be that $850m for just these aspects is an over estimate.
If this bridging and sinking can be done so as to get this to a debt market investable position is not doable then it's likely they go to the partner financing which will hurt present SHs. But it is worth modeling future earnings using present estimates of project earnings ahead (that have not changed) whilst adding in say a one year delay to build completion and say a, bight the bullet, 2/3rds handover to a partner.
It remains investable with still worthwhile upside...........but obs speculative.
I remain on balance positive just about.
GK. Don't mention the J curve!