Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Thanks for the link - it was enjoyable listening compared to reading this chatroom today - not quite so gloomy!
The 30m per day instead of the expected 17.5m per day in the toughest terrain en route sounded spectacular and truthful. The refinancing sounded less positive but it could not be anything else could it? If there was solution that is readily available there would have a very different RNS this morning.
I am not expecting to be here long enough to enjoy the fruits of this project, but I'd like to think I hadn't wasted so many years on SM and that my boys will benefit greatly from my perseverance. When I bought it was going to give my wife and me an adventurous retirement, that dream has been a continuous nightmare for a while!
it is TLOU time now, ASX is open - TLOU means elephant - I hope it will be a healthy colour!
Scorcerer, great summary of the webcast that pal. wonder whether shaft isolation and funding might include a debt package via convertibles with one of our existing sovereign wealth investors, Qatar or Norway?
Can someone refresh here the capex figure required for the main shaft only?
"So, the money needed for the MTS, surface facilities and port infrastructure etc. is currently carrying the same risk premium as the money for the main shaft (because it carries the same risk of loss for as long as the main shaft remains under construction). Once the main shaft is completed, the risk profile of all the remaining spend will drop dramatically, but the current construction sequencing doesn’t allow the company to take advantage of this, because of the plans having everything running in parallel."
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And shouldn't they be taking this into consideration like...years ago?
KOH
For anyone who remains invested here, if you have not done so already, then I would urge you to spend the half hour that you might otherwise spend reading messages on here listening to yesterday’s webcast from the Company:
https://siriusminerals.com/latest-news/news-stories/sirius-financing-development-update-webcast-september-2019/
The webcast sets out the company’s position very clearly and explains the reasons for the action that the BOD has now taken. As unpalatable as yesterday’s news was, and regardless of what you think of the nature of the stage 2 financing arrangements, it is clearly the only sensible thing that the company could have done in the current market conditions to give themselves some breathing space to evaluate and pursue alternative financing options. The alternative was to simply keeping on going and cross their fingers that the bond markets might open up again, but they could only do that for a month or so before running out of money, which would have been suicide given the current political and economic context, so they’ve opted for the safest option in the circumstances.
While it’s true that the change in approach may still not sort the problem, or may lead to further dilution or a much worse deal for shareholders than what was previously on the table, that is by no means certain. Quite the opposite in fact - the intent/expectation of the BOD is that the re-profiling of the project plans to reflect the progress made to date and look at ways of addressing the key risk that the bond issuers ultimately baulked at (the risk associated with sinking the main shaft) will open up new and different ways of financing the project that could ultimately benefit shareholders.
I know that feels like a very big ask, given where we are, but the problem with the financing isn’t that the money isn’t available, it’s about the degree of risk that the lenders are prepared to take for the return that they get (or even their absolute risk appetite, regardless of the return). The design of the project and Stage 2 package simply doesn’t reconcile that at the moment, but that’s because all of the construction risks are bundled up together, because everything is being run in parallel. So, the money needed for the MTS, surface facilities and port infrastructure etc. is currently carrying the same risk premium as the money for the main shaft (because it carries the same risk of loss for as long as the main shaft remains under construction).
Once the main shaft is completed, the risk profile of all the remaining spend will drop dramatically, but the current construction sequencing doesn’t allow the company to take advantage of this, because of the plans having everything running in parallel. The trade-off is obviously that the parallel build activity gets the project to production quicker, but significantly raises the financing risk (and associated costs).