Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Here's my take on a potential 'ideal' way forward, followed by alternative plans A and B.
First step is that Sirius will do a completely revised plan to include the following, where viable:
Massive acceleration in production, utilising the TBM mucking system, virtually whenever tunnel is complete. Plus road. Could get us to 4-6m tonnes per annum comparatively quickly.
If at all possible with regards to health and safety, only one shaft initially would be dug, which IF ALLOWED, would allow access for crews and skips. Suspect there would have to be separate emergency exit but hope there's a way round it by form of separation within the shaft.
Two TBM's only
Funding would be staggered again. New first raise would be to get to the stage of being able to produce.
1a) Investor bond. Offering say 10-12% annual interest (repayable after 2 years but could be rolling) and 1 share per dollar. Raise around $3-500m. 500m new shares. Most crucial part/hurdle is to be able to 'guarantee' that repayment would take place.
1b) Strategic partner would come on board with around $3-500m for between 5 and 12% royalty. Or less with shares included.
1c or 2) Public offering. Between 8 and 10% return over X years for absolutely anyone. With a great marketing plan and again, a guarantee that the money would be safe, this is a viable option. If anyone can crowdfund for absolutely anything, why not something like this for something actually meaningful? British company based in Yorkshire, tax returns, GDP, yadda yadda. 1% in the banks or this for so much more return, with (hopefully) only a tiny risk attached. Peer to peer lending on a grand scale.
2 or 2b) Once tunnel/shaft(s) completed to a degree that production is imminent, access the debt markets.
Minimal dilution, win win for absolutely everyone and hopefully fit out could still happen while the mucking conveyor is still operational. Even if it's split into half the time fitting out and half the time with conveyor operating.
It's certainly a far more imaginative option than just to try to get a white knight saviour. Also, I've found it bizarre that so much conjecture is that any partner will be a predator. Does the relationship with Gina not prove that it's absolutely possible to have a genuinely mutually beneficial arrangement that's structured to be fair and equatable. Personally, I hope for Fortescue or/and Andrew Forrest to enter the fray. Not sure Gina would be thrilled but hey, there's a ready made relationship already there.
ALTERNATIVE PLAN A
Quite simply, see if the JPM plan can be resurrected but with the above 'Investors Bond' used instead of the previous to access the revolving credit. Maybe the $500m would be enough or maybe they'd insist on getting the CB bonds amount too. But if this is acceptable for Sirius and JPM, why the hell wasn't it used as a full or partial raise for the 500m after the August 'pause'?
ALTERNATIVE PLAN B...........
Ant, there are many of us in the same boat. Or in my case, a rusty old canoe with holes in. I spread my eggs across multiple baskets (GKP, Weatherly, Range and others) and until the last few months, wished I HAD kept in one basket. However, having taken some out when the price was around 11p, I'm keeping the majority in here as taking out what's left wouldn't help my current mindset. A few thousand quid but still with massive regrets and sleepless nights...I may as well throw the last dice! Ha, maybe we should set up an SXX helpline, for those that would benefit from a chat with fellow sufferers?
Oh and don't let the douchebags get you down - there's always some p.o.s. who takes joy in kicking people when they're down. The price of an anonymous bb, sadly.
Tex2374 - I would have hoped they'd have contacted anyone that had even HEARD of Sirius Minerals before Tuesday, never mind just their 'big players'. However, now that the proverbial fan has been hit, maybe these two might be convinced that it's worth reconsidering. As unless Gina wants to develop it herself, she 'inherits' just a hole in the gound and possibly, given the terms of the parkies agreement, a hole that's been filled in!
But anyway, just giving a small handful of examples of those who absolutely have a vested interest in the project succeeding, that's all. I'm hopeful there's a few more - and surely of more interest should be the (re)development plan?
My take on a possible avenue:
The whole development plan will be revised and fast-tracked. There would only be two tunnel boring machines used and once completed, the fit-out would be delayed whist the TBM's mucking system, possibly in addition to a temporary method, would transport up to 6m tonnes per year of polyhalite to accelerate commercial production. Thus the company would have a significant cashflow much earlier than projected.
In order to get us there, one or more of the following -
Gina would lend some more in return for an increased royalty.
ADM would come in as strategic partner, again for royalty and/or equity to cover costs till revised production.
Qatar/Norges would partner, again with royalty plus equity.
DMC will offer to complete shaft but defer payment in return for an incentive.
Strabag will offer to complete tunnel but defer payment in return for an incentive.
Either of the last two would also make things a damn site easier to raise funds too.
I think that Strabag and DMC could have a huge say/impact on any solution. What do they have to lose by carrying on with the projects till completion, with say only wages being paid by Sirius? Moreover, what do they have to lose if they pack up until finance is sorted? Strabag - 2 more drives have been commissioned - has any of it actually been built? Staff are already earmarked for the project for both companies- do they have something equally as pressing that they could be moved to? Would be a huge leap of faith for both but surely there are incentives (profit share for example?) that could be offered. The absolute realities is that neither company wants any form of slowdown or delay. And as mentioned earlier by brokers, re the TBM"....offers the potential to use the machine's mucking system to transport up to 6m tonnes per year of polyhalite during tunnel fitout, which would accelerate commercial production." Maybe it's time for more creative solutions?
From yesterday's Proactive Investors
"........and offers the potential to use the machine's mucking system to transport up to 6m tonnes per year of polyhalite during tunnel fitout, which would accelerate commercial production."
I know we're clinging to any possibility but surely this scenario is very vaid. And obviously begs the question "Why hadn't the BOD considered this long ago as a viable way to get early earnings". It will certainly hamper the fit out but hey, product sales are far more pressing
Just offered all my shares (over 600k) and was offered 10.8 immediately. I've never been able to get takers for more than £30k in the past (sadly, haven't sold too often) so the fact they seem to be desperate for a lot of shares MAY bode well.
If there happens to be any shortfall in the bonds sold, Sirius could theoretically take out a loan and if allowed, use it to make up the difference, or failing that, to buy bonds themselves.
Then after a month, repay the loan and, if applicable, sell the bonds in the open market at some point in the future, when funds are needed.
The organisation loaning the money are absolutely guaranteed their money back (plus fee of course) as there would be almost a billion in the coffers and all that would happen is that the next round of bonds would be brought forward, given the 'shortfall' in the current anticipated funding amount.
Simplistic, I know. But absolutely possible.
There isn't a Sainsbury's IN New York! Jeez!
Why would you assume that Strabag, JPM, ADM, Gina et al would ONLY buy bonds IF they had a dilutive sweetener attached? The first three lose out massively, as do our high level investors IF the bonds aren't sold. So as I said, it's absolutely in their interest to buy them, no strings attached.
There seems to be a lot of black and white thinking on this board. All or nothing.
There were clearly not enough takers for the bonds to go in the 'first attempt'. The seniors apparently were on holiday so it was most likely the lower rung managers on duty for the roadshow presentations and given the turmoil that week, just many weren't prepared to stick their necks out. More experienced heads will look calmly and rationally at the bonds, based not on the tantrums of a Potus but on the long term fundamentals, hopefully in the first week back from holidays. However, IMO there would have been plenty of organisations that would have been happy to buy, just clearly not enough of them.
So even if there is a shortfall in takers, there's a lot of organisations with heavily vested interests that surely would be prepared to stick their hands in their pockets.
JPM is the most obvious. I'm not one for believing that if they don't get the bonds away, it will harm their reputation. But their professionalism, the amount of work already done plus the fact that it was their idea in the first place will mean they will try to shift these, at all costs. Talking of costs, from memory, they would be getting over $100m (correct me if wrong) in fees for this whole part of the project. Can anyone really believe they would risk losing huge fees for the sake of potentially the same amount. Buy $100 million bonds, collect full fees, sell $100 million of bonds.
Strabag have a vast amount of resources, time, manpower and money committed to this project. Again, it's absolutely in their best interests to see SXX fully funded for the build. Where do they deploy the workforce? Projected profits drop significantly, as does cashflow. Again, buy bonds and then sell them on the open market, given the fact that there would be more interest in said bonds on a fully funded project.
ADM has a whole marketing plan based on Poly4. They have a very healthy balance sheet. For reasons above, surely there's a very good chance of them buying some too.
Gina - would getting the assets be a huge boon or a massive headache? She'd still have to get it built and then find a seller. Or operate it herself. But will the contracts with Sirius be binding for her? Surely it's much easier money just to keep things as they are and enjoy profits for absolutely no further time, resources or effort.
So, again IMO, there's so many other players out there who would have a win win by buying bonds. And that's not even including hi worth investors who have massive amounts of shares bought at much higher prices, who would stand to lose it all but not spending a bit more.
I actually raised this very point on here 4 days ago (smug smug) but suggested 10k bonds. Have already emailed the idea to JT Starzecki. Got to assume they've already thought of it but hey, no harm in emphasising!
TBH, if Sirius asked me for a loan of 5k for two years with absolutely bugger all interest, I'd snap their hands off, if it meant that we could riase the money for the bond.
Surely, under the 'alternative funding' required for the $500m, it's not beyond the realms of possibility for the company to offer 'alternative bonds' to the general public or/and private investors. Each being $10,000 (£8200 approx). In the current absence of decent interest rates, surely the required 50,000 bonds would be snapped up at a guaranteed 10%pa? Or am I just being too simplistic?
# Trades 1,510
Vol. Sold 7,221,857
Sold Value £982.89k
Vol. Bought 14,460,932
Bought Value £2m
And yet, 2% down!!
Sheps posted - "I learnt a very expensive mistake a few years ago from acting on the behaviour and posting of people on this board even trusting a most respected at the time poster on here".
Would you care to elaborate on the situation and poster? My gut tells me it's not too disimmilar to my experience
Phoned them on Friday. They are apparently waiting on instruction from Sirius so no indication when it will be sorted.
I think the time to have made an offer was early April. With all the uncertainty, a low-ball offer could easily have been snapped up as there was a distinct possibility we weren't going to be able get ST2 financed.
Indeed sheps. TDT - A nasty parasite that's delighted in anti sirius sentiment. Amazed he hasn't changed his nom de plume over the years as many are aware of his duplicity and attempted manipulation. Very intelligent guy - makes him even more dangerous!
Once again, feeling very underwhelmed on the release of funding info. Really thought that Fraser had more 'mates', especially given his expertise in mining fundraising. Had hoped that another royalty partner would be found with around 1% offered for each $80-100m. And really thought that given the headaches they've caused, there would be no more convertible bonds. At least I know that it's almost certain that my initial investment (some 8 years ago at 14.4p) won't go down the crapper like others have.....but yeah, as previously mentioned, feels like lost years. Ha, and to think I had got an offer of over 50p for 11% of my holding in 2016....and didn't press sell.