Member Info for Cranleigh

Conversions, Scotty? The 21 Jan 14 RNS spoke of “at least 500,000 tonnes per annum” for 5 years with possible renewal for another 5 years. The expanded one of 19 Aug 15 tripled this to 1.5m tonnes pa for 7 years, with two potential 5 year renewals. Now it seems that 1.5m tonnes is a figure that we will ramp up to, if I am reading it correctly.

Foster, I’m sure that all the potential lenders will have had sight of all the company’s agreements, including all TorPs, under the protection of Non-Disclosure Agreements, and therefore known ADM’s identity. That is standard practice in the due diligence process accompanying such negotiations.

Was it really 100 years ago, Scotty - doesn’t time fly?! Loving this announcement - what an endorsement ...”blue chip of blue chips”. Congratulations to the Sirius team!

Myo, that can't be the explanation for these trades.

Each bond can convert to 650,195 shares, not 350,195...and the number is not "fluid" as you state, but only could differ by the odd single share due to rounding, depending on the number of bonds converted by a given holder at the same time.

I don't believe there is any provision for adjustment of the conversion rights in the event of dilution, and circumstantially this seems unlikely as when new shares and share options have been issued since Nov 2016 when the CBs were issued, there has been no mention of any such adjustment.

A little way to go yet, DGR...#100 has a current Market Cap of £4.6bn, and to get automatic entry to the FTSE 100 would require (at today's Market Caps of the constituents) some £5.5bn - or SXX at around £1/share after all CBs converted and Gina's $50m contributed.

MTS, MHF plus road alterations. And in a sense you could argue that the entire project is transformative for the port, helping to revive it and attract other users. Before the list of categories you quote comes the word “include” in the Act, which I think gives some flexibility of interpretation.... And after all we are pre-qualified, due diligence has taken place and 2 of our NXDs are well experienced in Government processes, one with current responsibilities in trade. I would let this sleeping dog lie.

Thanks Myo. I bet they are being conservative there not only on timing of first production but also on speed of production ramp-up!

Don’t agree. The company have indicated they are looking for 6-7mtpa in TorPs to satisfy the lenders’ requirements...presumably on a peak volume basis. I would be surprised and disappointed if those TorPs didn’t build from say 3mt in Year 1 of production, in which case we would be in profit from Year 2 - without any non-TorP sales being taken into account.

About 0.5mtpa if my guess of Fixed Costs at c £35m pa is right and at $145/tonne average price (c$100/t contribution after mining and processing costs and royalties).

So tonnage above that would start covering interest costs...and once they are fully covered (?c$250m pa, so requiring say 2.5m tonnes more, for a total of 3mtpa) contribute to profit before tax.

You try the maths.

Ascot, you weren’t really the “someone” I had in mind!

Someone must have missed Basic Economics 1.01.

The company has Fixed Costs - in 2017, some £16m "underlying" (Annual Report p35). Allowing for that being a year in which a lot of the admin/marketing/construction management team was being assembled, and that there is probably more to come even after the "construction" folk leave, I would guess at production our Fixed Cost base might be say £30-40m pa.

And it has Variable Costs to mine and process Poly4. The 25 April 2017 Prospectus p93 estimates those at $32.6/tonne at the 10mtpa production level, at 2016 prices. To that you need to add other Variable Costs, notably royalties (to landowners and Gina) for each $ of revenue.

Those are the elements you need at hand, plus a pricing assumption, before you can attempt a break-even analysis or assert what an extra 6mtpa (or perhaps 600tpa pace Scotman!) will bring to the bottom line.

Cheap at the price - better to calculate % of joint assets now than when SXX gets past Stage 2, let alone close to production!

Myso, at the current USD/GBP rate of 1.32, the sweep-up conversion price from 19 Dec 18 onwards is 40.8p.

$350,000/1.32 = £265,152 / 650,195 shares per bond = £0.408.

Unless the heat has got to me too!

Mysotis,

As you are happy to be corrected (!), the additional 0.1% shorted by Och-Ziff represents them selling 4.7m shares, not 14m, into the market.

And the remaining 1,221 bonds represent 794m shares, not 850m.

Reported (>0.5%) shorts represent, as you say, 25% of outstanding bonds.

But under the 0.5% radar are IMO something like the same amount again. Evidence for that? Euroclear's figure for average lent stock for the month of June was 7.98%. And before 27 June, ShortTracker reported, I think, 4.04%.

I don't see a magic number for hedging or conversions - each holder will have their own policy and criteria. And the date for any possible forced conversions is months away.

We are pre-qualified, and with subsequent progress towards an IPA guarantee as stated by the company on several occasions. The word “includes” in the definition of projects that may be supported under the Act is probably key, and allows wiggle room to include support for projects of national (and regional) importance. IMO best to let sleeping dogs lie on this one!

You certainly can....they update the number of shares in issue in the "Significant Shareholders" section within Investor Information: https://siriusminerals.com/investors/shareholder-information/significant-shareholders/

No change shown since 28 June.

Reported shorts >0.5% have held steady at 4.17% since 27 June per ShortTracker, equivalent to 301 bonds out of the 1,221 outstanding.

Euroclear, which reports total stock lent for all reasons (but I would guess mainly shorting) gives monthly averages of 8.23% for May and 7.98% for June. This captures those shorting below 0.5%, so is IMHO a better indication, and suggests around 576 bonds shorted (if all shorting is by CB holders).

I personally would expect some conversions if the SP gets to the late 30s, but not before - those who refused the April incentivised conversion offer are presumably looking to do (?much) better than that.

Went for the “laugh at” option you kindly offered, SL, albeit over just toast.

“So, why has the company said that?” Perhaps because it is true?!

As a lender I would like a good range of solid TorPs with high “or pay” prices on good early-year volumes with financially solvent counterparties and the contracts under English law etc.....AND evidence of future probable demand on top of that (the agronomy results and our basic economics should reassure).

Why choose between the two you propose when both are available?

There is a reason that the collective noun for bankers is a wunch.

“The co may only be signing a finite amount of deals then announcing them to the market in an offort to keep the huge proportion of free float share holders here sanguine and therefor the sp at a favourable level.“ Good bottle of red last night, SL?! How many times do you need the company to state that a certain level of TorPs - and no looser form of sales commitment will do - is necessary for funders of the up to $3bn to make their loans? Makes sense - a guaranteed quantum of cash flow to meet the interest bill and repayments; after all, what are a few holes in the ground worth?

Yes, AscotMatt, wouldn’t it be wonderful if for each TorP they disclosed...the Take price formula, the Or Pay price formula, the year-by-year volume commitments, the payment terms etc.... NOT!’