Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Theo,
I think you need to put your reading glass on.
“The company has no cash, agreed?”
Wrong. Not agreed. See announcement: “s at the date of this report the Group has approximately US$0.2 million of cash”
“ It has no firm or reliable opportunity to raise any cash in the short term, agreed?”
Wrong. $210m funding package subject to Investment Committee approval - that meeting could be convene as soon as early next week.
$10m funding additionally possible in immediate future from the African fund (I assume this is the Angolan SWF who are the ultimate backstop here). See announcement: “the Board has further engaged with an African based resource fund on the back of the Strategic’s exclusivity period having recently expired. Their potential investment in the company for an amount of approximately US$10 million would be used to address the immediate-term liquidity requirements“
“It will have dozens of creditors, HMRC for payroll taxes, probably wages in a few weeks time, plus of course some biggies, agreed? If the company is not solvent the directors have to call in administrators. It’s not discretionary.”
Fortunate the company still has $200k then while we wait for IC approval next week.
Theo,
What you’re saying is outright disingenuous. Read the announcement. It tells you who the creditors are:
a) Yorkshire Water for moving a pipe / drain system which was a condition of planning permission;
b) Wood Group, who Pensana have been working with for 2 years now
Not exactly the Apollo or Blackstone credit teams here, is it. These are entities with which Pensana has a long relationship and who have an interest in maintaining a positive working relationship. Yorkshire Water isn’t going to send a $500m rare earths project into administration over the weekend. I don’t know what’s going on behind the scenes, but I expect management is keeping them appraised of the situation
Please stop posting objectively incorrect speculation. Please stop posting at all, unless you are prepared to base your posts on the very clear RNS which was put out this morning and not mislead people into selling in a blind panic.
Excerpt from announcement for reference:
“As a result of the timing mismatch between financing and operational activities, the creditors as reflected at period end were significantly higher than cash available. This was in main due to costs associated with the Yorkshire Water pipeline that was relocated at Saltend and the ongoing Wood engineering design processes.“
- The backstop here is the Angolan sovereign fund. They are prepared to invest at least another $10m. The company will at least be able to clear its debts. They’ve put a lot in, this project is good for the country and the government backs it strongly. Not sure if they’d let this just go bust
- The process with the strategic investor has not yet run its course - they are at the final stage of investment committee approval. Frankly wouldn’t be surprised if this was an attempt by them to cause some panic and get in at a lower price. By the sound of it they’ve done their DD, they knew they had exclusivity and nobody else is in the picture. This only benefits them if they make the decision to go ahead. We just have to live with it
- The company’s handling of the financing process has been really poor. Delay after delay to get their “green bond” through, then they gave up on that. Serial misrepresentations of no dilution too. The salaries management gets are enormous, as are the options. I would think it’s likely one of the strategic’s conditions precedent would be a substantial cut to what management is getting.
I am not selling just yet. The next 1-2 weeks will be crucial, but I’d like to wait it out at least until our strategic has made its decision.
Looks legit. Story from the website of the Angolan natural resources ministry Mirempet:
https://mirempet.gov.ao/ao/noticias/eua-apoia-projecto-de-terras-raras/
There are only 475m shares - a small 30 cents dividend would only require $143m - tiny in the context of a business which has proved capable of producing $600m EBITDA every half year
I would estimate 20 cents - 40 cents for the next dividend, which I strongly believe will be announced in March - see some of my previous posts for the math
Reposting a post I made from yesterday in light of the big increase in activity here today:
Starting to think net debt will be c. $2bn and extremely close to or under the 2.0x figure the CEO and CFO have touted to resume dividend payments
- Net debt as at 1H 2022 $2.8bn
- $345m increase attributable to revaluation of Russian rouble-denominated debt at c. 50 roubles to the dollar as at June 30 (a strengthening in FX by 1/3 from pre war levels) - this has now completely reversed to c. 70 roubles to the dollar at 31 December
- $500m cash expected from sales of inventory and operations by the end of the year per CEO / CFO on multiple earnings calls and the investor presentation
- 2H 2022 EBITDA will be higher than this $500m cash figure - not all of your EBITDA goes to free cash flow. Say $600-$700m EBITDA for 2H 2022
- Add this to 1H 2022 EBITDA of c. $420m and you get >$1,000m EBITDA for the year (pre war it was as high as $1,600m, On a LTM basis at 1H 2022 I believe it was c. $1,200m)
Tldr: I see a path to c. $2,000m net debt in the next results on the basis of inventory sales and rouble weakening for revaluation of debt as at the balance sheet date of 31 December. I also don’t think c. $1,000m EBITDA for 2022 is beyond the realms of possibility. That gives a leverage ratio of c. 2.0x and a path to a dividend payment in March
Starting to think net debt will be c. $2bn and extremely close to or under the 2.0x figure the CEO and CFO have touted to resume dividend payments
- Net debt as at 1H 2022 $2.8bn
- $345m increase attributable to revolution of Russian rouble-denominated debt at c. 58 roubles to the dollar as at June 30 (a strengthening in FX by 1/3 from pre war levels) - this has now completely reversed to c. 70 roubles to the dollar at 31 December
- $500m cash expected from sales of inventory and operations by the end of the year per CEO / CFO on multiple earnings calls and the investor presentation
- 2H 2022 EBITDA will be higher than this $500m cash figure - not all of your EBITDA goes to free cash flow. Say $600-$700m EBITDA for 2H 2022
- Add this to 1H 2022 EBITDA of c. $420m and you get >$1,000m EBITDA for the year (pre war it was as high as $1,600m, On a LTM basis at 1H 2022 I believe it was c. $1,200m)
Tldr: I see a path to c. $2,000m net debt in the next results on the basis of inventory sales and rouble weakening for revaluation of debt as at the balance sheet date of 31 December. I also don’t think c. $1,000m EBITDA for 2022 is beyond the realms of possibility. That gives a leverage ratio of c. 2.0x and a path to a dividend payment in March
A couple of news articles from 66.ru and vedemosti in the past few days which strike me as relatively positive from a shareholder perspective stick them into google translate:
https://66.ru/news/business/252487/
https://www.vedomosti.ru/economics/news/2022/06/03/925002-pravitelstvo-odobrilo-vremennuyu-otmenu-ndfl
Looks like CEO Tim George is speaking at Junior Indaba on 2 June -
https://www. juniorindaba. com/delegates/ agenda-1-and-2-june-2021
It’s not worrying that they haven’t released Quarterly Cashflows.
That was an ASX requirement.
Not being listed on the ASX, it is no longer a requirement
The company reported interims on 30 March for the 6 months ending December 2020 and had US$7.6m cash on its balance sheet.
Operating cash flows for the 12 months to June 2020 were US$(2.4)m.
I think they can last a while yet.
Feel it’s worth noting:
1. Company hired an ex-Anglo Corporate Finance Manager based with the cfo in South Africa in January
2. The Chinese have been sniffing around this since July 2020 (Pensana signed Head of Terms for an 85% $200m 8-10yr EPC finance agreement with China Great Wall (????????) with credit insurance from Sinosure. It’s clearly been getting some interest from an early stage.
3. These projects are not financed overnight. Every cash flow over 20 years is modelled out to the last dollar. Facility agreements, covenants, DSCRs need to be negotiated.
4. We know the company has had discussions with industrial players like Volkswagen and Volvo
5. Nobody else is in the same fully permitted position as Pensana right now and proposing as extensive a presence across the value chain.
Personally think a lot of people here should cease their braying missives and learn patience. The share price has risen enormously in the past 6 months. It is just a matter of time till we get more news. The supply narrative remains positive, nothing has changed on that front, and the world needs more of these projects.
Longonjo thorium content at 850ppm is quite high, no? Found this Rift Valley Resources set of drilling results...
https://investorintel.com/markets/technology-metals/technology-metals-news/rift-valley-resources-limited-initial-drilling-programme-commenced-longonjo-ree-project/
I’ve seen the resource base but just find it odd how cagey the company is being on declaring a proven / probable (nb in the technical, geological sense of the words) mineral reserve. Perhaps I’m wrong, but I haven’t seen it anywhere to date in any documents.
I note the SRK study is only a *resource* estimate, still no reserve declared
some interesting public comments made: https://newplanningaccess.eastriding.gov.uk/newplanningaccess/applicationDetails.do?activeTab=neighbourComments&keyVal=QMXKUXBJICX00
i do feel release of the 2 studies / combined business plan would address a number of these points. Will holding their release until ASX delisting delay progress of the planning app?