RE: Top up time8 Sep 2018 11:31
Silverfox. Well the market isn’t pleased with the news. Here is one article from the market people. They call it seriously embarrassing and a significant set back. We can argue all day long about the long term future but it’s hardly an attractive proposition currently. It loses trust in the board. It keeps a dark cloud hanging over for months, because every rise will look suspiciously like they are ramping up for dilution. The last time sxx needed dilution the sp artificially went to the 45p region or whatever it was. Within days of the dilution it was below 20p. Some poor investors have been sat on that loss for 2 years or they took a huge loss at the time.
“One of the worst things to happen to a mining company and its shareholders is the need to revisit calculations for building a new project.
“Constructing a mine can be costly and it certainly isn’t unusual for miners to lift their capital expenditure requirements by a million dollars or so during advanced development stages.
“However, when additional funding requirements are a nine figure sum, you’re looking at serious embarrassment and this is exactly the situation facing Sirius Minerals.
“The company, which is hoping to build a large polyhalite mine in Yorkshire, says it needs an additional $400m to $600m which is mainly connected to the higher costs from its transport system tunnel.
“This is a substantial setback for Sirius which believes it could create over 4,000 jobs and generate £100 billion for the UK economy over the next 50 years.
“The path to building a mine is rarely smooth and Sirius has already overcome significant challenges such as getting permission to construct a huge project in a national park.
“Its management team will undoubtedly have a stressful time near-term while they address the funding issues, but we don’t appear to be at the stage where the market doubts that its mine will be built. The key question is by how much existing investors will be diluted in order to get the money. And that is exactly why the share price has been hammered on the funding news.
“The market hates bad news on cost blowouts and there is now the fear that Sirius could dilute existing investors. Either by raising the new money on the market at a much lower share price than has been seen this year or by bringing in a strategic partner who would buy new shares in exchange for cash.”
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