The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
beingreasonable You beat me to it by 1 minute. Not much phosphate news about just now. Hope SKR BOD are involved in discussions with the bigger companies as we need some backing for the start of the basic engineering in H2 2013. The only known cash to expect is the final payment from the 1st earth moving contract which should arrive anytime now.
As you say mrshoubs " Basic engineering is planned to commence in the 2H 2013" , so they have timed the comprehensive presentation to be of great benefit to any suitors or financial backers. Let's hope that they have made all the bigger companies aware of the of the updated presentation as our CEO is often in touch with them.
http://www.sunkarresources.com/userfiles/files/Chilisai%20Phosphate%20Fertilizer%20Project_June%202013(2).pdf New presentation for June on website.
The main obstacles have been overcome,(1 to 4) 1) revised SUC-just needs to be ratified 2) DFS completed 3)Resource result much better than expected 4)Earth moving contracts providing revenue for everyday expenses. Balance of 1st contract of $5.81 million due Q2 Balance of 2nd contract of $8.4 million due after Nov.2013 completion. Also-- *)Dar sales providing some revenue but needs to be vastly increased. *) No director sells which shows they have confidence *) listing on KASE but no visible benefits from it so far. *)The BOD are in touch with the big fertiliser players on a regular basis according to feedback from the agm *) from one of the recent business Aktobe meetings--quote--For our part, we will maintain and even willing to help in the promotion of your products, but you yourself also need to work on that, - said Archimedes Mukhambetov *)One of the world's lowest extraction costs for the phosphate due to the shallow deposits. *)This assessment also supports our view that Sunkar can become one of the lowest costs producers of phosphate fertilisers in the world."(from RNS Number : 1062F) *)Resource deposit well positioned for supplying fertiliser hungry neighbours such as Russia and China on a good infrastructure system. *)Dedications of the BOD to see the project through to maturity. *) Only around 36% of shares in free float as at 19/02/2013 Downsides Capex costs higher than original figure Falling fertiliser prices No off take agreements so far. Difficulties in furthering DAR revenue and attracting finance from J/v's.partners or selling the company. Media coverage is limited as only Halyk reports and they don't even give a sp. forecast now.Troika and Idmin(Industrial Minerals) don't cover SKR now. The above are only selected points. There could be many more so please feel free to add the the lists.
Rest of summary On Resolution 5 there was much more debate. Resolution 5 allowed company to issue 33% of the share capital on a pre-emptive basis. One private investor took issue with this and suggested this should be in the region of 5-10% with 33% being the upper end for an M+A company. The legal chap was fairly clueless it had to be said and there was probably 15 minutes spent debating this issue and the investor asked for this to be withdrawn but legally it couldn’t be. Charles de Chezelles looked fairly hacked off this resolution had been included and put a big cross on his paper. He was really annoyed at the EGM last year that they sold 51% so cheap. The investor also suggested SAPC could issue this 33% to itself and ultimately buy the rest of the company on the cheap. While the resolution was ultimately passed it definitely was a shot across the bows of the directors. I managed to speak with Teck, Nurdin and Serik before and afterwards which was more insightful. They also seemed positive the ways things were progressing and Serik in particular was working hard to make things happen. He wants to see the project through and has been doing it for 7 years. If it stops now then he will never have another big project. He travels a lot, is well known within the industry. I asked him to update the website with what he’s doing but he suggested it’s either irrelevant or he cannot. Said they will put more info about DAR sales on website tho. The most interesting thing he did mention was that some of the major names in the industry and concerned that the project is coming to fruition. Given the US anti-trust laws regarding phosphate or potash, there is definitely attention for our Sunkar! He also spends a lot of time talking to people in US and gave the impression he has the mobile number for CEO’s of major US fertiliser companies. With regard to further earthmoving contracts he indicated they have been asked to apply for more projects. Also a possibility of road building. He said this was dull but the margins were good. The plant should be built fairly quickly and there will be no issue gaining planning permission. They know most of the technical expertise in the field so in good shape. So all in all, glad I went. Left feeling positive, boxes are being ticked and believe the management are hard working, trustworthy and honest. We are ticking the boxes and the project seems to be now getting the attention it deserves (despite the share price). Still a risk but the management seems to be doing a good job.
So here are my notes from the AGM that took place today. Present from Sunkar were Charles de Chezelles, Nurdin Damitov, Serik Utegen and Tech Soon Kong who chaired the meeting. Also represent at the front were representative of auditors and legal team. A small amount of private investors were there, plus Bankside and a couple of brokers. Having been to number of Sunkar AGMs and last year’s EGM this was a somewhat drawn out affair with questions being asked on a number of the resolutions. On the first resolution, the submission of accounts: Q. Will the company remain a going concern? A. The company is in a lot better position than last year with $2m in the bank currently following first payment of the second earth moving contract. Building of the railroad to China also of great benefit as to when the plant is finished. As the plant gets closer to completion, they hope to pre-sell phosphate to generate further funds; Q. How do you expect to raise money going forward? Will you call on SAPC for more money? What’s to stop them asking for another 10%? A. They are looking at structure for investment whether that is in the form of 1) JV, 2) Equity Partner or 3) selling whole thing. If there is any news they will disclose it to the market. Couldn’t say any more. Don’t anticipate any funding issues and nobody wants any further dilution. Q. How involved are SAPC given they are not at the AGM? A. They call every two weeks to see how DAR sales etc are progressing, and spend half-a-day a week looking at financing/ project finance etc. Q. From accounts, none of the areas of revenue are generating any profit. Why? A. They had to make an outlay of $1m for the earth moving initially and the accounts reflect they only received that first payment. Now would show a profit. They are currently utilising 75% of their equipment. On DAR sales, the problem has been the application of the rock and they are looking at the technical aspects of making it into a powder for ease to the farmers. Also looking at leasing machinery to farmers but this will involve an outlay of $100,000 per machine but each machine would use 25,000 tonnes of flour. They are mining the minimum to be SUC compliant but stockpile will be used the first year the plant is complete. They can supply to Southern Russia as cheapest, and also to Mongolia, Baltic Sea and Turkmenistan. An issue with the subsidies in Kazakhstan is that you have to apply for the subsidy the previous year with the fixed price. Speaking to Tech/Serik afterwards, the earth-moving is part of the strategy going forward until the plant is complete. They are only looking to sell 40,000 tonnes of DAR this year because of the application issue but the buyers have been those who are more discerning types and those who purchased last year. On Resolution 5 there was much more debate. Resolution 5 allowed company to issue 33% of the share capital on a pre-emptive basis. One private investor too
Found this on- http://www.aimsoiree.co.uk/sunkar-resources.php Steve‏@stepholiver101 28May #Sunkar Resources had a lot to say at #IFA fertiliser conference in Chicago #phosphate #Kazakhstan #takenoutbychina Can anyone find out from him what was said at IFA by SKR as I can't access twitter.
Apart from the expected prepayment from the 2nd earth moving contract in the next few days and the final payment of the 1st contract payment due before Q2,there is no other expected news on the horizon. We have overcome all the major obstacles such as SUC,DFS,Resource finalisation etc,but what we need now is some interest from potential partners and hopefully our CEO has started the ball rolling with some useful contacts followng his attendance at the IFA in Chicago last week.
I see our CEO was participating in the IFA Fertiliser Conference in Chicago last week. All the big boys there too, Agrium, Mosaic, Yara, Potash Corp etc, worth having a look at list http://www.ifa-chicago2013.org/Portals/9/2013_IFA_Chicago_participants.pdf My comments- Good find 2bozmo. Notice that our CEO was there from 19th to 23 rd for the 2 day event so hopefuly he spent the rest of the time fraternising with possible partners. The world wide list of attendees was massive so there was plenty of scope for highlighting SKR's potential to useful contacts.
We are due for the 2nd contract prepayment due in 20 working days. We are now into the 13th day,so it shouldn't be long. The ist contract final payment is up to Q2 which should be in before end of June. Throw in some DAR revenue as well which would be very nice.
I have queried the 58sp with someone before and it turned out to be a very old and out of dae t valuation. The last Halyk valuation was just over 8p a few months ago.
The trend is continuing. last 6 trades are buys totally around 218k. Looks like we will not fall back this time after news.
Our view The announcement is positive for the stock. However, the more important for the company now would be the receipt of funding to develop Chilisai project, which is unlikely to be resolved in the near term given the size of the required investment and current macroeconomic environment, we believe. Our recommendation on the stock is currently under review. Halyk have still not given their Analytic report on SKR cotaining their opnion on the sp. valuation. Surely they now have enough info. to provide this.What are they waiting for now. http://www.halykfinance.kz/en/site/index/research/news:83239
Hope the trend continues tomorrow following the last 22 minutes of trades when there were 5 trades totalling almost 450k.and they look like buys. Another RNS this week on the contract prepayment and an update from Halyk should help to give us another boost. We are gradually running out of future known RNS's. The expected ones are- *prepayment of 2nd contract. *payment of remainder of 1st contract. But it is the unexpected RNS's such j/v,funding,director buys etc that will be the catalyst for further progress.
the prepayment for the 2nd earth moving contract this week. They said within 20 working days. Tomorrow is the 11th working day in Kaz,so we are getting close now. ps- the 1st prepayment was paid after 7 days
Initially they said they were waiting clarification from SKR Then they e mailed someone on ADVF* that it would be during week. Not heard anything else since.
http://www.halykfinance.kz/en/site/index/research/er:77223 Halyks wepage on SKR has not been updated for a few days now. They used to update the sp on a daily basis. Hope they have not forsaken us. They should have all the clarificationsneeded from the results to update their Analytic report on SKR
Whilst it is quiet and we wait for the next news,here is a list of recent facts. NAI DYOR When SKR had been in discussions with potential j/v partners prior to the sp suspension,there were quite a few uncertaincies, so it is no wonder that there was no interest,but the situation is now completely improved. These improvements are- *Loss of US$9.2 million (2011: US$10.1 million). Group net cash inflow in the year was US$0.3 million (2011: net cash outflow - US$1.5 million). *Detailed Feasibility Study ("DFS") completed, demonstrating robust economics and attractive IRRs for the Chilisai Phosphate Project (the "Project"). *New resource update for 100% of the Chilisai licence area (the "Licence Area") estimates a 130% increase *Signed second earth moving contract valued at approximately US$12 million * Subsoil Use Contract ("SUC") amended to 300,000 tonnes per annum for 2012-2014, 5 million tonnes per annum for 2015-2017 and 10 million tonnes from 2018. *The injection of $12.8 million by SAPC, sales of DAR and phosphate rock and the commencement of the earth moving contracts have allowed the Group to stabilise its financial position during the year and to complete its Detailed Feasibility Study, the results of which were released in February 2013 demonstrating the robustness of the Chilisai Phosphate Project. *The Government has previously shown support for the Group's development plans. The Group's projects to establish a phosphate rock business and to develop a world scale phosphate fertilizer complex have both been included in the Government of the Kazakhstan's State Development Program. *The Chilisai deposit is the only DAR supplier in Kazakhstan. The closest foreign DAR suppliers are located in Russia, in Kursk, Moscow, and Kirov regions. *The Group has received a letter of support from JSC "Interfarma-K", a company owned by Almas Mynbayev, owner of SAPC (see note 31), stating that JSC "Interfarma-K" will, subject to the agreement of mutually acceptable terms, provide financial support to assist the Group to meet its liabilities as they fall due, which we believe should remove any likely requirement to seek other external sources of financing in the short to medium term. *Over the years SKR will have been corresponding with most of the big players,therefore they will have the links and contacts available to pursue any J/V opportunities. The above points show most of the improved changes with very little downside. The only downsides I can see is if the management do not acheive sufficient DAR sales and that they aren't successful in attracting a partner or buyer. So all in all,the future of SKR looks promising.
Here is another long term contract. Organisations are looking ahead to secure future supplies,so who knows,it may happen to SKR. Also,why didn't IFFCO approach SKR.It is much nearer than Peru and their production costs are probably higher than SKR's IFFCO secures long term Phosphate contract from Vale-Peru. Indian farmers have an agreement with Vale to supply phosphate rock over the next 5 tears. link-http://www.indmin.com/Article/3205098/Channel/19523/IFFCO-secures-long-term-phosphate-supply-from-Vale.html
This is encouraging posted by Faza on advf* they are very bullish about DAR sale I have seen they ordered many 50 KG bags 270 000 pieces and 1000kg bags 50991 pieces this year My reply to his post. That is a lot of DAR if they can get orders for them.So lets hope that they can get some significant sales. Some more media coverage for the RNS. StockMarketWire.com - Sunkar Resources narrowed its full-year loss to $9.2 million, from $10.1 million, and said it is in position to progress the Chilisai Phosphate Project. http://www.stockmarketwire.com/article/4593096/Sunkar-Resources-narrows-FY-loss.html full article Here is another. http://www.rttnews.com/2115892/sunkar-resources-fy-loss-narrows.aspx