Member Info for Cranleigh

One aspect of today’s announcement that I don’t think has drawn any comment - the potential benefits of STRABAG being responsible not just for delivering a nice, shiny new tunnel, but also all its fit-out.

I could envisage that will at a minimum avoid the potential for disputes had different contractors been responsible for those two packets of work - “your tunnel’s not straight/leaking etc” vs”I told you not to drill holes like that in the liner, now look what you’ve done” etc etc.

And at a maximum, expedite the timely completion of the fitted-out tunnel; no need to wait until every last metre of the tunnel is finished, inspected and accepted....and certainly no delay to mobilise the fit-out crew and get all their kit delivered.

What do any tunnelling folk on here think?

Milo, $3bn is not seen by the company as a total “debt ceiling”, but an “appropriate level of senior debt financing” - see the Investor Presentation.

That leaves room for some subordinated debt, specifically mentioned as among the possibilities for meeting the anticipated €4-600m contingency requirement.

I would be surprised if they couldn’t raise a lot of that sum via subordinated debt and completion financing, without recourse to giving away a slice of sales for ever to a strategic partner or issuing more shares.

Not just for us, but also for some of our potential customers and partners.

Thanks, Golfer.

Clearly we may get additional TorPs (from page 17 of the November Investor Presentation, Europe looks slated for 1.8mtpa at peak) which would eat into that "excess".

I think stock-building by clients and usage seasonality would not be factors for us - our sales to clients are what the TorPs are all about, and no doubt clients have taken those considerations into account when committing to annual total offtakes from us.

And with all the impressive crop trials, I would hope we don't have to wait until 2023 to see demand from new customers!

Not sure if that question is addressed to me, Myo?

As I said below, I make it a total of >9.3m tonnes excess across years 2-4, but I don't think we have knowledge of the detail of the TorPs in terms of the rights of customers to take additional or earlier volumes, and on what price basis.

Even say half of 9.3m tonnes at TorP discounted prices and the other half available to be sold to new customers at market-dictated prices would be a huge upside.

Myo - I guess it depends partly on what you interpret as "Production year 1"...and how good my new glasses are for interpreting the production ramp-up graph.

I make the production tonnages suggested by that graph, with Year 1 starting September 2021, 0.4m, 2.9m, 6.8m and 10m for years 1, 2, 3 and 4 respectively - sounds like a modest ramp-up to this non-miner, and certainly looks to leave room for additional sales beyond the contracted levels from year 2 onwards - something like 1m tonnes available in year 2, 3.3m in year 3 and over 5m in year 4. An important upside opportunity IMHO.

Interestingly, the sales graph shows a peak total contracted volume of around 7m tonnes in year 7 - less than our "aggregate peak" volume of 8.2m probably due to the shape of individual TorP offtake curves - ie some build to their maximum level faster than others and/or fall away due to their term coming to an end before others.

Does that coincide with your thinking at all?

Euroclear reckon almost 12% of our shares in issue were lent out on average in October - a heck of a lot of shorting by bondholders, it would seem.

https://my.euroclear.com/apps/en/monthly-stock-loan-data.html#month=eq:10&year=eq:2018&limit=20&search=1&order=asc:abbreviation

prescient, Crocqman!

Even worse

That would be awful.

You would be down to only 1.4m shares.

Sounds good - lump sum contract, in line with last capex estimate and fits within overall project timing plan.

Just the MTS fit-out contract to finalise procurement....with Strabag or ANO?

Good local information, Kmsquared - thanks.

Myo, you’ve lost me there with your “soon to come private rail connection” - Hornby Dublo?!

Could have sworn I read somewhere that we were digging a tunnel....

Oy, Scotty, the way TorPs have built up, we may need that for a customer!

Myo, I should imagine that the secure storage would be for those crazy PIs who think - despite helpful warnings to the contrary from Crummy McCrumface and others - that the company will deliver on Stage 2 and that this share is wildly undervalued.

Do the drawings show it to be large enough, or will we all have to stand?

Relax - no bond conversions have happened (would you convert at these levels??)!

This morning’s RNS just reflects the number of Milestone Award shares issued this month, see the 4 October RNS.

Repetition, but under Stock Exchange rules the company has to report at the end of any month in which the number of voting rights has changed.

"None of the banks, government employees negotiating the terms of the funding support or even the company directors have as much of their wealth invested in this as some of you do."

I wish I had even a fraction of Messrs Fraser's (123.7m shares) and Scrimshaw's (43.5m) holdings!

I sincerely doubt any participants on this bulletin board have anything like that much invested - whether you state it as "fact" or not! Dispassionate, my elbow.

casapinos,

I would be amazed if after a successful Stage 2, $3.5bn debt (presumably assuming the $4-600m is subordinated debt) represented over 2 times our market cap as you assert.

Why ever would our share price not be say 50p in the short-term after Stage 2 is in place, and then rise as the build progresses, the debt increases and earnings come closer?

Assuming completion of the acquisition of 30% of Cibra, that all CBs convert and adding Gina's shares (the $50m worth) we will have some 5.8bn shares in issue...so 50p would mean £2.9bn or, at 1.28 cable, $3.7bn market cap.

Which would mean peak debt only 1 times (not your 2) our market cap...... if the SP were bizarrely only 50p by the time we reached peak drawings.

We shall see, but I think (English understatement) you are being unduly negative on this ratio...assuming, of course, a successful Stage 2.

Good luck getting your re-entry target.

I think some of you are awfully cynical.

It is really very altruistic and generous of casapinos to bring these risks to our attention, in case we hadn't noticed them.

Obviously he meant to add that:
- the lenders will only be lending $1.5bn on a commercial risk basis (the other $1.5bn to be government-guaranteed)
- it will be drawn down as the build progresses, risk reduces and value rises
- the fact of securing Stage 2 will surely (?!) lead to a substantial uplift in our market cap
- they will have first call on the assets if we go belly-up with a part-completed mine, ready to be sold on to another player
- they have insisted on our transferring a lot of the build risk to contractors, at an oncost to us
- they are expected to require us to find $4-600m above the build estimate as a contingency amount
- they have now more than the volume of TorPs they initially required (and prospectively Europe to come) to give comfort about earnings once built.

Understandable slips of memory, surely?

Singapore.

Can't get out of my mind the picture of an infant Scotty desperately defending his sand drawbridge. 20 years later - just swim across the bl...ding moat!

Page 17 suggests we have a TorP for Europe of the order of 1.8mtpa close to signature, hopefully on an enhanced, margin-sharing basis something like the Brazil one.

But surely that will be enough volume committed at early-bird pricing?!