Member Info for GaiasKidney

Morning Myo.

It wil be no surprise to me if they also proceed beyond 13m to the ultimate capacity for this mine of 20m. Combine that with what the co and SRK are modeling on the mix of spot and contract price and some 'interesting' figures come out. However if the co take the mine this way it does push the eventual payouts further out somewhat.

Getting back to near term (little doubt the majority obsession for most in this.. and those looking) I think this will be pulled to the IP by 2.2bn coming on and how long that takes to wash out. 'Floors' won't get a lookin imo (a bit of an 'SL'-esk 'construction' that? ;-)) ). However once the St2 pain is passed I reckon build progress will drive a vast improvement in sentiment, pushing the sp towards a realistic prortion of NPV/sh.

See how it goes.

ATB.

GK.

Hi Verde

It's also worth looking at the 'Alternative Production case' (sec 17 of SRK, fr p572). This is Sirius not halting the build when the 10mt/y capacity is reached but instead taking it to the 13mt/y production level. Involves some $367m of further Capex - expected presently to come from cash flow - but from 2024 and by 2030 revenue/y becomes some $700m/y higher for the 13mt/y operation.

Since they already have TorP over and above 10mt/y I think this is what Sirius will now do. Worth running the rule over.

ATB.

GK.

JPM underwrite:

"J.P. Morgan Cazenove has agreed to fully underwrite the Firm Placing and Placing and Open Offer of approximately US$400 million."

GK.

Morning Mr Chilled.

"If the institutions have brought the shares for a long hold - using their expertise and insight - we can, I think, be sure that we are onto a long term winner here"

Oh I do so hope we're not again all believing we have to rely on them. Nor - this time - do I think we should do. I think there is a large cohort of PIs as well out there who also have 'expertise and insight' and will be making their decisions soon enough on value at risk here as this moves into the end game. I think they in large part will take the expected surpluses that come on post 23/5 at the expected soon to arise, near 15p.

Both groups I reckon will come to similar conclusions now with this project but there will be a large spread on the thinking. Near all will see there is now minimal chance this is not built, but will be aware there is still further risk of more cash calls before this earns. I think PIs will be more adventerous there compared to many of the IIs who will only touch 'investment grade'.

So as to whether there will be any difference ahead as to this being a 'winner' for the sp (not the project, I give that a given), it will all come down to if there is further cash to be raised. If that's the case then the base of who's holding will be important - more IIs would mean more sp stability and so any issue would go at a better price. Conversly a high proportion of PIs holding (as has pertained) and the prospect of further issue to complete the build will supress the sp for a lower issue price if much of the ownership base runs rather than holds. But wiil the new cohort of PIs be as flighty as previously?

The other great opposing positive with this is that if Sirius do have their sums right and if there is no further cash requirement (there is a decent contingency in place) prior to earning production then the upside for those new in is very high. NPV/sh, with 13mt nailed, even with full known dilution, is a big multiple above where we are today. That's where it would go.

Very much worth the speculation........A window that will close soon enough.

ATB.

GK.

Hi Roobans

Anticipated capex cash burn for this year is around $800m, the co have around $450m at most at pres available to spend in the coffers. I think this bond will have to be offered by no later than Oct. The $400m new CB money then also gets released.

The set up with the RCF makes it very expensive if the bond does not go by Dec, but then again so will scaling back the build.

No reason to think either will be the case however...........barring catastrophic incompetence.

GK.

Production shaft = 13.2mt/y.

T.

To get to 20 another shaft.

Check out 'alternative case' from SRK, prospectus.

GK.

Hmm..Lost.

6-7%? They will be cockahoop. It will be a very poor show if it goes at 15% though.

Usual auction structure is what I anticipate. Done 1000s x before.

Opinion, recent:

https://www.ft.com/content/7b05963a-6dba-11e9-80c7-60ee53e6681d

Rating scale, p3:

https://www.caves.co.uk/wp-content/uploads/2015/10/b-guide-to-bonds.pdf

Junk market:

https://www.ft.com/stream/35c2a69a-544b-4702-b4cf-869bbe748135

GK.

Corrections:

'Proportion'

$900? no ~$500m. CBs are escrowed.

GK.

Hi. Sunny, sunny days.

Churn: I would expect 1/2 to 3/4 of the 2.2bn new issue to get churned into more 'sticky' hands post 23/5, maybe some 20% on the first day or so. I don't think many who took this placing are investors in the project, they are Stags.

With this strong action just, there is real market interest, far more so than with post St1. Whether from short term chasers or investers seeing where the game ends? Debatable, but regardless it says the Stags will have little trouble offloading. If disposal vols are in similar prortion to that with St1 you are looking at sub 8 weeks for the overhang to clear I reckon. I would not expect more than a few pence above the issue to hold before then.

Bonds. 1/ why would Sirius issue this first $500m bond before their present $900m runs low? They would have to pay the coupon on it from the issue date. September. Not before. 2/ Why would there be any problem with issuing further bonds later if a) they had got the first succesfully away and b) the mine was further progressed? There won't be.....unless they've stuffued the build..........then we all go back to placing pugatory!! Ho, ho. ;-/

GK.

Would have been crippling Scotty. Astonishes me that that option was being put forward as having any prospect of giving a better outcome ahead for the PI that what has been done.

Hangus Monkey for Fraser I say........Bound to get the sp up...............SH1T CREEK.

Morning Thornback.

All your list of 'suspects' are still lurking or 'low leveling' around I reckon, Sirius is just far too addictive! And how do you know SL isn't sneaking around here in dark glasses and trilby? Keep your eye out for vaguely european sounding drinking salutations. :-))

To me this last week has shown a more positive reaction to massive volumes of imminent new issue than was the case with St1 some 2 1/2 years back. Then there was no rise between the announcement date and the new shares trading date, instead the sp languished at some 10% above the new issue price until the new shares arrived.

This time around there is strong trade and a 25% rise between the dates. Two things occur from this: that that the co underpriced the deal, deciding that getting it away, as cash vanished, as being far more important than squeezing down on vol of new issue? And/or the market out there is already seeing a far better value prospect from this project now (fully financed, bonds will obviously go, being built, 13mt nailed) than they did then, and when looking at this price, regardless that 2.2bn of new issue landing in a few days is bound imo to press the sp back down to at/near the 15p issue price?

So perhaps a large part of this rise is instead a bit of short term opportunism? Combination most likely. Whatever, there will be an overhang, but from these last few days activity it looks like the clue is there that it will not last as long as 2016/17 and once washed out the breakout will be strong towards a fairer perspective on remaining project risk here.

Looking good.

GK.

Evening.

Last time around, St1 with some 1.9bn new shares, approx 1.6bn were churned in the first month including ~400m on day one.

Though there are many reasons to think how this progresses post this issue will not be the same as with St1, it will never the less I think be informative to see how fast these move and so give a steer on how long any overhang endures. I'm giving it about 9 weeks then this breaks out.....Regardless the Sept lock on the $3bn. That this has 13mt/y written all over it now will be irresistible imo.

OOs &EOOs. Signed up today, asked for extra ~9% above the OO allocation to bring it to a round number. Don't expect anyone to get more than that. Any of the 208m Placing that is not clawed to OO goes to IIs that will have a propensity to flip. Don't let 'em I say.

GK.

Hi.

There's a lot of chatter on whether Sirius can get these proposed bonds away so to be able to release the CBs and the $3bn. IMO there are only very limited circumstances where they would be unable to.

How's it done?

By far the most common route is to offer the bonds to potential subscribers via a bookbuild auction. The steps are;

assess the market to judge the price (ie coupon to offer) duration (ie say 10 year) and the vol (in this case for the first $500m);

publish the bond offer with a period for the bookbuild and the date and time of the following auction, will also include indicative price of one bond - usual in UK is £100, coupon - say £9 per year per bond, maturity - say 10y (ie Sept 2029 and principal is paid back), size of offering - in this case some ~3.8m bonds to raise ~$500m in proceeds;

open the book where subscribers make an offer around the £100 price that they decide it is worth bidding for, the issuer will have set an unpublished minimum price they will accept and will keep the book open until the offer is oversubscribed with bids, usually wanting to gain subscriptions of at least 1.5x the offer size;

if that has succeeded the auction takes place where the co selects all the bids from the highest downwards until the requirement is reached and then informs the winning subscribers, they have an option to withdraw in which case the issuer goes further down the list to refill;

auction closes, winning subscribers get escorted to the back office and pay up, JPM gets fees....more fees? Oh yes!
---
Reasons it could fail? A shock of some sort meaning the offer gets pulled, eg Trump nuking Pyongyang or Tehran or some other little irritant perhaps?....Or Woodsmith's contractors accidentally tunnels into the North sea....could 'appen!!

Agreed Verd

I also noticed that the conveyor between MHF and port seems to be back on and the hairbrained (IMO) notion of trucking 1, 2m + tonnes over the first year or so to port because they couldn't 'massage' the figures enough to make the AF(6th Sept) look respectable (said ironically), so instead said it will be postponed and paid for from earnings............is now, sensibly, dropped.

The 13mt option, is chewed over by SRK sec 17, described as the 'The Alternative Production Case'. extra costs less than 10% of the 10mt capex figure. Gross revenue topping then leveling at $2.88bn/y for some 40y. That would be nice.

GK.

Hi Milo.

Tnx. Yes, it's never easy!

My strat over last few months has been to build a far bigger stake and also added through this St2. Av now on that build up amount is ~4p above where we are now. In scheme of things I expect a 'hold' will provide 10, 20. 30x 4p above here. with the usual caveat that there are remaining uncertainties but they are now reduced. Regardless it's a hold imo.

ATB.

GK.

PS: from the prospectus there is useful insight to be gleaned re the powerful incentivisation that is now baked in with all the players here: the co, the financier, the contractors and indeed if holders want their divi they better get the co to sell those bonds - no bonds, no divi! Incentive.

Now then.

Looking at all that has been put out by the co over the last few days and examining the structure of the RCF, particularly the level of repayment demanded and mine earnings that will be protected from that. Then add in that TorP is now well above 10mt and the co are further pursuing deals, then it now very much looks a certainty that the plan is to uninterruptedly continue construction beyond 10mt to take the nameplate to 13mt.

For those few left who do actually think there is upside ahead here perhaps looking at what a 13mt/y production level will provide ahead to an investor here now is the correct approach?

Must admit I'm not in the school that sees a six+ bag as failure mesen!!

ATB.

GK.

Re your 22-52 of last eve:

"And yes, I lost money too...."

So are you saying there that you are presently out of this share?

I'm just wanting to clarify where you are coming from at present. TIA.

GK.

Hi Alexios.

I see you are casting around the boards trying to get what people think as to whether this is funded to production now. I suggest go to source and come to your own judgement.

The prospectus (I'm sure you can find it!) is a good place to start. P178 has the further capex to mine completion. Running from end Feb this year to completion = $2762m plus they add a contingency of a further $467m. As at end Dec '18 the co had £230m ($300m) in available cash that would have run out by end this quarter without the recent money raise. With the debt facility offer as per recent RNSs there is a further $3825m.

Will this be enough? One we ponder.

Despite it all if this goes as to their plan (and I expect it will close enough) then when this shaft digging hits the ore I expect this sp far far closer to a three figure number than a one figure.

ATB.

GK.

Evening Skelper. Welcome to the thirteenth floor window ledge.....Bit less crowded now!

".. there is one problem and that is the obvious massive overhang of 15p shares to be cleared .."

Analysing 'then' and 'now' might shed a bit of light.

Then, ie the Stage one placing - 11/16, that added about 90% onto the issue from previous and coincidentally it took some 90 working days for the resultant overhang to clear. Then in March '17 there was a strong rerate.

With 'now' many factors a different, but also many are the same. This placing added around 45% to the issue. So maybe this overhang can clear more quickly? End July?

Worth watching the volumes ahead post 23/5.

Regardless of how long I'll be taking the OO. Why let another flipper have it?

GK.

Dcell

I think we've had what we are going to get on that within the prelims.

Must admit I'm not begging for RNSs at present!!!

GK.