Member Info for GaiasKidney

AS I recall it, at the last AGM I attended (2015, not felt the need since), CF first referred to a 'J' curve.....and specifically in relation to his expectation that the significant rises in the valuation of the enterprise will only follow with the development progress and derisking of the project bringing higher certainty and proximity of earnings returning to investors.

It has also been very obvious from many, many years back that a project like this cannot be short or even medium term in inception through to production. With that I remain surprised that so many seem to think they 'deserve' their investment here to be paying them handsomely in any shorter a period than the time it has to inevitably take for this project to actually deliver any positive cash flow that would even start to pay back the huge but necessary outgoings required to construct this phenomenal undertaking.

To date share investors in this have contributed around 10-15% of the full costs to take this to an earning asset. Aisi it would have never been possible for share buying investors to cover any way near the full cost. So from that this has had to be also financed by other means (that was also first described by the co in 2015). Those are lenders (there is no one else in this game), that they had to cover so much will also slow full return value coming to share investors. That I think is still some 6-8 years off.

However because that full value is a very large number when compared to today's valuation, increasing levels of certainty of that coming are now not that far off arising from a finalized finance deal and surpassing major build risks. That should generate significant value gain before that 5-7 years pass.....but not today, over 2 to 3 years.

Defining what is LTH here can only mean sticking at it for a similar time that this project itself takes IMO....Otherwise you are just short term speculating......and this being high risk, risk ending up in large paper loss positions at times.

Suck it up.

Have a good weekend.

GK.

IB 'hence 15 - 16p' is and will remain for some time, the market 'shock' mindset re +2bn of issue at 15p Scotty. Little more.

Time to heal.

GK.

Inevitable success with this bond? Please read.

https://uk.practicallaw.thomsonreuters.com/1-505-0428?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1

Then spell out how it may fail.

I look forward to that........

Tomoz.

GK.

Will they, won't they? Is this what is to be the daily 'frenzy' now? Funny.

OK I'll say it, they won't. This project is dead. The co have destroyed it. The deal is unobtainable. Or….......?

The appliance of some thinking about what's ahead, not the past may help.

GK.

DMS

These are the remaing 2023 convertibles issued in 2016. $137.6m in value.
There are also 'New CBs' - $400m worth exp 2027 and $106.6m of 2027 CBs issued to 2023 bond holders in exchange.

None of these are the $500m of 'junk bonds' soon to be issued. They will not be CBs but instead plain coupon bearing bonds. That coupon (the interest rate) and the duration (year they expire and the principal is paid back) are yet to be detirmined. Market conditions will have a say there.

GK.

Oil Bloke your Tue eve:

"Any idea when we’re getting more dilution or next open offer..."

I omit the ' :-) ' as I am sure you would like a serious answer. That answer is never. unless they very severely muck up this build. Of note there has been no errors or delays or cost overruns of any significance so far on this build.

Why does it have to be a severe problem only and even quite major cost/time delays would not result in a need for raising cash from more issue? Because the co have access to $4.4bn* of debt funding to spend before there could be any prospect of a further need to go to the market for any money.

The present plan has around $1.5bn being spent by the time the shaft sinking gets to first polyhalite. That still leaves a very large cushion of available cash in the coffers when this major project risk is overcome. That in turn would mean it would then be far easier to re organise existing debt to reduce costs and/or be able to borrow later on if required rather than raise cash from issue for the later build if costs go up.

So basically never.

* I'm sure you know how the co will have access to this figure of debt.

ATB.

GK.

PS: first bond sold in Sept. Some think that won't go.........So sweet. I do like a good story!

Don't expect to hear much regarding this initial $500m bond until the co get near to their self imposed deadline - September end. The deal with JPM for the credit line runs until end Oct and requires this first bond to be sold for it to become available. However the co will not be requiring the cash from this bond sale until near then so there is little point in going for an early bond sale as interest on it has to be paid out from the issue date.

The bond selling process only takes a week or two and all participants always want it to be quick as during the offer period conditions may change risking having to pull it. It will start with the issuing of the offer and prospectus via RNS Aiui.

Let's just hope they don't fail on this and then have to go elsewhere eh. Where would that be?

ATB.

GK.

PS; they won't!

Hobo. Need? No. Public have always been welcome.

Pre and post chat with investors and BoD gives you more IMO. Get to understand them.

ATB.

GK.

Hobo. Need? No. Public have always been welcome.

Pre and post chat with investors and BoD

Afternoon Lives.

Re TBM advance rates. 17m per day at this stage can only be seen as a net estimated progress rate derived from many factors that presently have large varibility within them. Think of 17m/d as an indicative target based on a set of best guesses...though reasoned guesses.

SRK expand on the many variables that are used to come up with this avancing estimate that Sirius have placed out there as perhaps a target:

"12.4.3 Tunnel Advance

The rate of tunnel advance is dependent on the time it takes to complete the excavation and ring build cycle. The excavation cycle assumes that there is an efficient system to deliver rings and remove spoil where there is no gap between incoming and outgoing deliveries. Cycle times are also affected by shaft winding times and sufficient time considerations relating to tunnel construction out of a deep shaft should also be made.

The TBM cycle time is specified at 30 minutes per ring (3 m per hour). Assuming no breakdowns or other delays, achieving a cycle time of 45 minutes (20 minutes to excavate each ring length and 25 minutes to build each ring) is reasonable. It is understood that the tunnel will be driven 24 hours per day, seven days per week. In a 12-hour shift, allowing two hours for personnel to travel to the face and back, the tunnel could advance about 20 m per
shift. However, taking into account planned maintenance, unplanned breakdowns and delays to spoil removal and segment deliveries, this rate of advance is unlikely to be sustainable, particularly as the distance to the tunnel face increases as the tunnel advances. In order to sustain production rates, other passing loops will be required to allow sufficient numbers of locos and wagons into the tunnel – the number of locos will be critical for tunnel production in either case.

Planned maintenance and other non-excavating time includes probing ahead, tool changes, bringing in additional transformers, ventilation bagging extensions and rail loop erection. In the programmes presented to date (SM L1 Schedule and Entire project 19.9.18), the advance rate for Drive 1 appears to be about 18 m per day (6 rings per shift) and includes an allowance for learning and team establishment. Tunnel advance rates for drives 2 and 3 are about 23 m per day (excluding the build and launch period from the underground launch
chambers).

These appear to be a reasonable long-term average albeit that if significant delays occur due to ground risks, breakdowns or logistical issues, then this rate may reduce. If the significant hazards identified above arise, for example large groundwater inflows which cannot be controlled by the pumping equipment or squeezing ground trapping the TBM, tunnel advance might be delayed for significant periods which are not allowed for in the
current base programmes."

GK.

Ah yes Mr Jia, WW.

That takes me back! 2012?

The Carnallitic Marl has been a real pig for Boulby from the outset. It is very difficult to change your liner once you have done it. This is where Clark's experience is of vital value to Sirius and DMC.

The plan for that zone today. SRK sec 9.6.2:

"Type D: 500 mm thick C70/85 fibre reinforced drained concrete lining with 1375 mm thick geofoam compressible backfill for use where extensive ground movement is expected.

The liner design is to be finalised, use of C60/75 concrete is currently being investigated. In areas where high water inflow in the Sherwood Sandstone Group or squeezing ground in the Carnalitic Marl

120 mm Spheroidal Graphic Iron (SGI) Tubbing segments will also be installed. Behind the tubbing C70/85 concrete will be installed."

Here's hoping that will put the sneeking creeping rotten marl in it's place.

GK.

Evening Lost.

The 'market' imo is composed of multiple groups with multiple thinking.

Only a small group I expect presently see the first bond as highly likely to be secured and got away with ease by the co. A conclusion that perhaps comes from taking the time to go into depth on what is actually being proposed, what is available out there so as to able achive that aim and what the consequences ahead for the co if they fail and hence the motivation for the co to not do so.

I expect, as is so often the case, there is a far far larger cohort of the 'market' that still has recent 'events' very prominent in mind and so have a coloured view of the hurdle of the placing of this first bond and so see a further risk of similar scale, so will wait for resolution on it before acting.

So from that imo the Cran schol AND the Scotty school are both correct and ..............your sumation re the 'market' ......errr...is not!

Slice of cake? ;-)

GK. Risk (judged risk) taker's share.

To add some context with:

"...Sirius would be completely free to pay out as much distribution as they so chose"

and Sharewizz your:

"I'm not expecting dividend for first 4 'full years' of production,.."

That may be the outcome.........but it may very well not be.

I expect the mine to be bult to 13mt/y nameplate capacity with no halting of the contruction once 10mt has been reached. I also think the Cru predictions on product pricing achived through time for Poly4 and coarse product are not unreasonable. With that and if the build of this mine keeps to the planned schedule, it may be the case that the groos revenue figures that SRK have modeled for the years after full 10mt/y is reached - 2024 - come to pass. They estimate for 2026: $2.3bn through to a steady state of $2.8bn/y from 2030.

If say Sirius have to service $3bn of bonds at say 10% giving a debt servicing of $300m/y and are also paying off that debt at a further $300m plus adding in the other obligations, I would think it would be very probable that within two years of the 10mt/y production level an appeciable dividend could be paid.

But let's get the mine built first - the money provision structure is in place, just the geotech hurdles now. With sucess value will out.

GK.

Sharewizz:

" Financing costs will have to be met before serious dividends can get underway, this is a little covered fact,...

This is in no way a "fact", so let's cover it with reference to the actual facts. Since is that what you seem to want to get over that you know about .........and imply others don't?

With St2 Sirius have a 'Commitment Letter' with JPM, there is also a 'Term Sheet' connected to that. The terms agreed include the setting up of a 'Revolving Credit Facility' (RCF) for up to $2.5bn, where there are within it strong and costly incentives for Sirius to reduce what they borrow for the Capex need from that facility by instead selling bonds to the market. Indeed there is a 'Cash Sweep' term where if the RCF is still in force by the time the mine is in production and earning then the co have to pay off all profit from operations to pay down the RCF (bar cash to be used to expand the mine), but the large and escalating excess costs with keeping the RCF going makes it improbable Sirius will keep the RCF going. If they have finished the build and are earning what would be the logic?

With instead bonds sold to market and the RCF ended - the likely and (incentivised from the terms) outcome - Sirius would be completely free to pay out as much distribution as they so chose after their other priority commitments, eg debt servicing.

Ref pps 274/275 of the Prospectus for an outline of the terms.

ATB.

GK.

2023 bonds terms. Conversion price adjusted down in proportion to dilution. So incentive to swap to 2027 not great.

GK.

Haha. I think the 'incentive' will be the most attractive yield...........and for anyone interested in getting exposure to these bonds when they come I believe there are many 'junk boutiques' out there where they would be made available (from the secondary market) in smaller amounts than $208k?

GK.

Instead:

'the [proceeds from the] new convertible bonds will not be released to the [company]... until that process has been complete'?

Gk.

Now then Myo

"Where does anyone think we are in this.."

'1' has been going on for some time, but informally.

'2' mid Sept as the co has flagged the end of Sept to have the bonds sold out.

Between the two dates I expect 'jawboning' on how well 'expressions of interest' are coming in but nothing that wil be official or RNSed. That will only come with the release of the $500m senior bond prostpectus.

Plenty of time for those who like to fret about things to wibble on ;-))

GK.

Bonds by their very nature are priced at a balance of risk vs reward.

With the co getting (if they get) this first $500m bond away they then have some $900m of cash as the NCB money also becomes available to the co. Also the $2.5bn RCF is then available to draw on.

The build has two major risks ahead: the connecting of the MTS tunnel plus the main shafts safely reaching the ore level. With the above financing in place the co should have cash resources to complete these major risks assuming the build goes to plan and that funding will be a long way from being exhausted.

The balance of risk/reward for the takers of this first $500m bond will revolve around a judgment call on the success of these aspects of the build. I expect they are DTRing as we speak and coming to a acceptable number for the yield they will bid on.

GK.

Best to look at the market out there for the rating of bonds that it is thought these will be marked as by the agencies and then marketed as such. The co have placed an upper limit of 15% on the coupon they are willing to pay and Fraser has flagged to the press he thinks they will be 'B' rated. Commonly described as 'junk'!

GK.