Member Info for Cherokee101

You read it here. But the next rate move in the US will be down before up. Mark my words.

Central banks have yet to grasp how debt, demographics and tech disruption (3 Ds) will impact inflation and growth. The old cycle is over. Inflation is dead in the West.

Duracell

Under "stage 2 financing" in the RNS is states

"The company is working towards having agreed commitment letters as soon as possible".

So we are still within the Q1 range and nothing to worry about... yet.

Following a walk in the park, I asked my buddy in the City to have a read. He had a look through the update and said there isn't actually much to be disheartened about, aside from the cash burn level, which hasn't necessarily progressed construction much further. He further noted that quarterly updates won't usually reveal price sensitive information, so he asked me - "what precisely are you more concerned about now, than before the update?". Well that's a good question... I couldn't really put a finger on it, as nearly all of the milestones are still the same. 1. BoD still waffling about? check 2. Committement letters and financial close by end of Q1 19? Sort of check 3. Construction ok? Check 4. European ToP in final stages? Check 5. IPA guarantee? Some changes, still could be 1.5bn depending on structure I guess the primary negative is running out of cash sooner than expected, but if we just relax until financials are pinned that will be OK. Nobody said this would be easy. Once the build is done I do hope the BoD is shaken up. Oh and one other thing to Alan G - every time there is some negativity, to simply shout the credentials of the project at the top of one's lungs, doesn't mean anything. If there is no money for the mine, or if PIs get shafted, then I couldn't give a rat's ass about 100 years of Poly4. I, probably unlike many here, am in this for a tasty profit.

So yet again, the usual people are out defending Fraser at any cost, telling LTHs to shut their eyes and get some fresh air.

True investors, whilst not focused on short term noise, should absolutely be focused on critical project factors, and grill the person in charge.

The conference call has clearly highlighted a cloud of mystery, which is the worst thing for investors. CF needs to be more transparent, if we need to take our medicine, let us take it.

I really believe in the product, but this BoD going to thr 11th hour, is laughable. Why tell us Q1 19 in the first place? Why not tell us end of 2020...

The RNS too, saying construction is set to be on time... well, I'd like to believe it but 2 major 2018 milestones have yet to be concluded (main service foreshaft and lockwood shaft sinking).

My guess is brace yourself for the eventual mining industry slogan "over time and over budget".

Proactive have already started the ball with a negative headline. Share price not going to enjoy this week. If we can hope for the best but expect the worst, we might be alright...

Milo, I agree with your post. But I would say the majority of queries which might be deemed as negative, have been warranted. My biggest issue with the BOD has been and continues to be their terrible communication. The biggest mistake they made was telling the markets everything was fine and dandy all along, both in terms of "time and budget", then suddenly the word "budget" was removed from subsequent updates. It transpires all wasn't as well as first implied. So a little bit more honesty and transparency wouldn't go amiss, we're big boys and girls, we can handle balanced news!!! Along the same lines the quarterly reporting dates are all over the place. Aside from that, yes it is a wonderful project with excellent financials and will benefit Britain for decades.

Alan,

It is CF's intention to acquire £3bn of "senior debt". Then that's it, the rest will be one or more of the four options he laid on thr table, with a bullseye on his buttocks.

Now, for some of the others on this forum, who jump when the shares go up with the rest of the market, need to understand the concept of beta.

Jonesrichard The the reason the share price hasn't recovered might be due to fear and excessive pessimism. But on balance, we literally have 4 very different options for the way ahead, all of them bringing a unique scenario to the table. The two extremes of diution on one hand and strat partner on the other.... it's a statistical nightmare which many would rather not gamble on. My own gut tells me to stick but no more purchasing. And trading this share is a mug's game, one RNS could make you boom or bust in a morning session. IF we do have a favourable stage 2 scenario with no dilution, then there is no reason we cannot reach mid to high 30's if not much higher (as greed takes over). If we get a dilution, then you will have more selling, as this is a PI stock, and PIs have no concept of what "priced in" actually means.

Alan, for ever Dana there are hundreds if not thousands of failures.

I would always point people back to Enron, a Global mega company, and constuent of thd S&P 500, whose share price made many millionaires.

Then one day, it turned out to be a giant ponzi scheme and it came crashing down.

Take SXX one day at a time. Stage 2 "might" be all debt (apart from the 400-600m which Fraser himself said he didn't want as debt really because it would mess up the balance sheet).

But it might be dilution too... given the lack of transparency, we simply do not know.

I would love you to be correct and if you are, I will buy you a virtual beer.

Offer TS our apologies if stage 2 comes good?

That noodle should have prepared us earlier for MTS issues. Every quarterly report said "on time on budget" until one midway this year where it just said "on time". Some hawk eyes on here picked that out.

Then weeks later and everyone is bailing out, and oh guess what ,a leak in the pipes as people cry of dilution.

Regardless of how stellar this project is, and what they have achieved to date, a touch more transparency wouldn't go amiss.

KOH

Thanks gor clarifying.

But with respect, saying that dilution is a certainty, is also conjecture at this point. None of us know what the hell to expect, hence the share price bumbling around.

I said the company will enact share buybacks "should the profitability be in the expected range".

If successful, the company will produce cash in excess of divis and debt. So it should follow that share buy backs are initiated (if nothing more than for making the directors even wealthier).

Whilst I personally believe we will get dilution, it is not certain.

Good luck.

KOH,

Just to be clear, I am of the opinion that we will get hit with dilution, hence why I have stopped topping up now.

Secondly, I have voiced concern over other deeper issues, such as the competence or lack thereof, of our finance director.

My point was just to contend your point.

Your point "shareholder value will be lower forever".

My point "not true. Share buybacks will most likely be initiated at some point over the next 15 to 20 years".

If the project fails, then I will be annoyed, but my lifestyle will not be impacted.

KOH -

You asked for my reasoning on my apparent certainty behind my suggestion of share buy backs.

You will note my sentence in the brackets, IF the company managers to produce the profitability range forecast, then share buy backs will be par for the course.

Why?

Because almost every massive, cash generative company has initiated share buy backs at some point.

Why?

Because directors need to create shareholder value, and there are three primary ways to do it. They can increase EPS through reinvestment, share buy backs or dividends.

This company will make enough cash to pay its debt, pay dividends, and once debt is low enough, it will initiate share buy backs.

If the company never reaches peak profits, then the investmenr thesis will have been incorrect and I will take the lesser of capital growth and dividends.

KOH, no, they won't be worth less "forever".

They will be worth less until the company enacts a buy back program. Which is highly likely at some point in the future (should the profitability be in the expected range).

Milo.

The two most important lessons I learned in finance.

1. Bull markets do not die of old age (or on a whimper)
2. Volatility is not risk

The US consumer is ridiculously robust (highest confidence post 08, wage growth coming through, spending at cycle highs, borrowing stable).

The major issues are not the known knowns of Brexit and trade wars (as the tariff impact had already been calculated by economists in 2017).

The greatest problems will arise from unknown unknowns, and my bottom dollar is on corporate debt. Once rates reach 3% in the US those zombie firms are going to die very painful deaths.

Great buying opportunity on 20 year view. Trump, Putin and the motley crew will be long dead by then. Fill your boots, switch off your tvs and have some fun. This is the 65th wobble this cycle, and the 3rd major correction in 8 years. It is healthy. Good luck. SXX still a hold for me at this time as I await some crumbs off the table from TS. C'mon chuck us something!! Are you breathing Staley???

Most chairmen of the Fed have to feel the markets for a year or so. Same with Yellen when she came in.

One day its "we're far from neutral" the next it is "we're close now".

He is new and flexing, but his concentration on inflation ks unwarranted. We are in a new age and price inflation has gone.

Just to touch on shares not behaving appropriately. There are some shares that are down 30 to 40% on literally no news YTD. And some have been sold off on good news. Our sell off on the back of the additional capital required has spooked investors (mostly PIs) and without sell side coverage (proper stuff not that Liberum rubbish) we just aren't on any meaningful radars. Uncle John and Grandpa Bob in this forum aren't going to shift it with their pensions. Second to that, all fund houses worth their salt usually prohibit investment into non cash generative companies -it isn't worth the career risk. So, until we get material good news in the form of a decent stage 2 proposal, we are going to languish here like bottom feeders. I must say, the construction speed is impressive, and the agronomy trials are excellent. ToP ducks are in a row...... I just hope the Ozzy dudes don't screw us all. Sigh.

So, my banker friend told me that GAM's absolute return bond fund held some of our convertibles. That's the fund GAM liquidated a month back (on the back of dodgy management). I wonder if the bonds were sold on or absorbed back by the company.

The volatility of this share increased when we got sucked into a World index. For some reason we are listed in a US global tracker fund. The majority of buyers are US citizens.

All according to Bloomberg.