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Huge dilution then with a convertible bond offering involved as well. Disappointed is the dominant emotion
Quarterly update from 27th September referenced financial close in Q1 2019. That information was in the public domain when the Jupiter report was published
1st October according to this:
https://citywire.co.uk/funds_insider/investment-trusts/investment-trust-factsheet.aspx?FundID=3044
When was the report actually written? I assume that much like company financials it’s for the period ending June 2918, and was written somewhat later than June?
I’m sure the due diligence team of the FI would have been privy to the nature of these discussions. Only strengthens my confidence that a reasonable funding deal should be forthcoming. If it’s stays at these prices, I will be hoovering up some more
2.5 MTPA! Far more than I was expecting. What another huge endorsement for our product. Thrilled with that, although does I suppose dispel the theories that it was tied to ST2 in some way
In regards to sowing the seeds of Plans B, C etc, I’d be very surprised if these weren’t formulated right at the start of the whole process. I certainly can’t see our BOD having forged ahead with only one plan without knowing they had a fallback option all along- surely that’s just basic project management? And project management I think is something these guys excel at- albeit with a couple of dodgy timescales presented to us over the years!
Quite so Roulette. We’ve been on the bad end of leaks several times prior to this so here’s to this motoring north- a lot further north
What is best for the shareholders in the eyes of the BOD Is an interesting question. I always refer back to CF’s comment as ‘the greatest driver of value is project delivery’.
Viewed in that light, IMO the use of ‘attractive’ and ‘flexible’ in relation to the alternative financing proposal means just that- it will allow the project to move forward without having to delay any aspects of the development. I’m sure it could also (and I hope that it does) refer to getting rid of an unwieldy 3 tranche structure in favour of something much simpler, but my gut feeling is that it predominantly refers to the schedule not being compromised.
As a result I’m now preparing for a bigger slug of dilution than I’d previously accounted for, backed up by JP Morgan comments speculating that the lender (it may of course be them) will want a big chunk of equity. My thoughts on this are that maybe 1/3 of the total debt will be convertible. My hope, if this occurs, is that Sirius would be able to justify a pretty high conversion price (maybe as much as 50p), given the reduction in project risk to NPV that a successful financing would bring, that would hopefully minimise the effects of this kind of deal.
In summary- I’m anticipating a greater degree of potential dilution to existing holders but, in return, we get a project that is delivered on time and ultimately unlocks the real value for shareholders- a value close to the NPV of the project and progression to dividends.
Is it possible to calculate how harmful a big delay to our construction schedule would be in terms of offsetting this against accepting a bit more dilution at this stage? Intrigued if anyone has thoughts on this (or any of the above!) Still cautiously optimistic that CF and TS will blow my concerns out of the water...
Hi Myo,
Yep, I’m a subscriber to the belief that ADM are involved again in this one through their part owned European co, but only time will tell. I can’t remember the first time a quarterly update referred to European discussions as being well advanced but I certainly haven’t lost any sleep over it post the Cibra deal! Hopefully a transformative month ahead
Fraser said on the most recent webcast the delay is nowt to do with Brexit (or words to that effect!)
Seems to have been ‘well advanced’ for at least a year now though
Disappointed that there does indeed seem to be a leak.
However, I see nothing negative here- to change tack so suddenly surely implies that the deal that’s been offered is superior? There also seems to be confirmation that the new proposal is going to be 100% debt “contains an alternative senior debt structure to completely replace that structure”.
Unless those that were in the know yesterday know a lot more than we do, I.e. it’s a rubbish deal, I see no reason for this to have fallen
Ah- thanks PAAA, that makes that somewhat clearer!
Am I reading that correctly that around half of the shorts are attributed to just one company (Castellain)? That surely skews the perception of what the wider market thinks
Hi SL,
I've listened a few times and it's pretty clear to me the make up of the $4-600 million remains a complete unknown (to us at least) at this stage- I think there is reference to pursuing all of the options as previously outlined?
That said, given the fact that this sum is to be spent first, can we conclude that 'completion finance' is now off the table, as surely it no longer fits the bill?
Good post Milo. I think there's a lot of scaremongering that stemmed from the Audit report about SXX simply folding if we fail to raise ST2.
Given the timelines of ST2 and the need to have finance in place prior to current funds running out, I'm wondering why we couldn't simply raise another lump of money (if needed) through equity issue to allow operations to continue until such time as ST2 comes around? Seems to be far more damaging to current holders if project timelines slip rather than stomaching some more equity issue now to 'tide us over' and allow the build to continue.
Would be interested in other's thoughts on this? Though i'm still holding out hope that ST2 will come in on time to make this unnecessary
Lots of flak flying around about CF, but i've barely seen a mention of the Finance Director in relation to the ST2 issues?
TS received a hefty pay rise and bonus (as did CF) and it's on him, rather than CF, that my current scrutiny lies. CF surely has a much wider role to play here as CEO beyond pure finance and construction wise things seem to be going pretty well. IMO it's Staley that needs to come up with the goods here and is the one who is potentially fallible....I remain to be impressed by him, and I hope he proves any doubt I have wrong.
Think the quarterly updates will be viewed very differently once our path to first Poly is clearly defined I.e., when stage 2 is out of the way! I’m very much looking forward to the day when excellent construction progress will begin to be the driver of the price and will hopefully act as a big reassurance every quarter. I don’t think people will be questioning their value then...and I feel they did get rid of them, I would hope to see Myo become officially employed as a project updater! :)
Will be a very interesting webcast at 9.30. IPA definitely involved, staged indeed last week! Let’s be grateful that Gina was prepared to bring her 250 million payment forward...
https://siriusminerals.com/latest-news/news-stories/our-new-tunnelling-machine-is-anything-but-boring/?fbclid=IwAR3Zf5eHy3syIhIvvLH5zNKQsX10SEkEZcrHyAIXIjYBi0YlNx22rB61edk
Certainly doesn't sound like they're slowing things down...