Member Info for GaiasKidney

Compare and contrast.

Fraser 22/1:

"The plan is basically to work towards the commitment letters across those tranches to enable us then to move forward, raise finance and finalize the additional capital of $400 million to $600 million in whatever form that comes into the company and then move to financial close of the debt structures later on."

"later on"

27/2:

Item 1/ "US$400- US$600m financing closed [and simultaneously according to this timeline]. Item 2/ Lender commitment letters received"

'1' was to be 'later on' from '2', not now.

May mean nothing.................May mean something very significant?

GK.

Myo

" ..things will move extremely fast .."

Oh yes. Zero seconds in point one of that timeline.

In my mind that collapsing now excludes certain options previously mooted for possible cash sources for the AF. Ref 2/11/16 and 24/11/16.

We'll see!

GK.

Also of note and a question to pose is if both CLs are delivered/announced and the AF are to be closed simultaneously and there is to be (presumed) no AF publicised raising process commencing before CLs arrive, what is the AF structure to be?

GK.

Morning Thornback/Cherokee.

A little more from this pressy, but not alot.

This Stage Two financing is an 'all or nothing' Capex raise to complete the build to production and so positive cash flow. Deliberately structured like this by the co so as to permanently remove the prospect that Sirius will need any further funding before earning from this mine can arise and build up. Of course the caveat has to be added that cost/time overrun on the construction from the bankable feasibility model cannot be guaranteed to be excluded.

This 'all or nothing' structure is what Sirius have worked on with the Commercial Bank Lenders from the get go. The CBLs have now conditionally commited $1.5bn. But 'All' is not just about getting all the money, it is also about the CBLs being shown that all the other parties involved are in agreement in terms with Sirius that they will provide all the balance of the total $3.4 to 3.6bn requirement and for them also they only sign off (close) once the CBLs are to commit. All or nothing from all parties.

Until this happens there is nothing agreed and so nothing to announce.

The CBLs Commitment Letters (hoped for) announcement when it comes will then officially show to the Market that 'all' is in place. This, as Mr C correctly defines, is what 'closed' is - the sign offs, the commitment. So not only then is the Additional Financing closed (as appears in the timeline simultaneously with the delivery to the co and the announcing to the market of the delivery of the CLs) but that all the other Tranches (1, 2 and 3), at that first point in the timeline, are also closed.

Sirius will draw on this agreed money when they require it during the construction (the Additional Funding pretty much immediately, the other tranches in sequence as per the other points on the timeline). This drawdown progression can also be seen within the cash flow (grey) in the next slide before positive cash flow starts to dominate as production commences.

A transformation will occur on Commitment day - when it finally arrives. I do hope all grasp this.

ATB.

GK.

Ah. Unlike Mr Myo who can get a bit aerated about the perpetuation of certain thread titles I am rather chuffed you feel compelled to perpetuate this one SL, it's just sooooooooooooooo.............appropriate.

And twice ;-)

GK.

WW

They are concurrent. Apply to one point on the timeline.

GK.

New presie

JPMorgan.

GK.

Morning Milo.

With the present market valuation being applied to this and with comparing that to what the consensus and rational production valuations are and also that the moving to production first date is not now particularly far away with the phenomenal way this build is progressing, I cannot but hold to my conclusion that the market presently in large part concludes there is a high risk that Sirius will not be able to get their St2 plan to work and instead will have to resort to a 'kicking the can down the road' alternative of piecemeal money raising to perpetuate the build.

If Sirius fail to get St2 to fly - despite some 4 years of collaborative work with lenders having been put in on this - then the market suspicion (there is no supportive evidence it is failing bar the louder tick of the clock) will be born out. So as has been the case many times over this long and complex process to turn an idea between a cashed up banker and two geos into a massive exporting 100y +, 1/5th of a trillion of total sales, feed the world concern, for present investors this remains and presently starkly stands out as being a......... binary bet.

Think I've said that before! :-)))

Upside?

St2 goes as present plan (resulting new issue/debt mix? Whatever, of little relative impact, can only modify debt burden by up to 20%). The project then moves to normal market valuation for it's level of completion and construction risk remaining and taking into account the new level of co's debt burden. IMO that fair valuation ~$4-5bn.

Downside?

The 'kicking down the road' option. Discounted placings at probably half the present sp. can $3.4 to 3.6bn be raised this way to complete this build on the back of a co with a valuation of some 1/6th of that? No.

So the 'in reality' no St2 downside?

Co failure or taken out where shareholders are de facto wiped out.

Binary.

My seven figs are on the 'upside' scenario btw.

We'll see.

ATB and enjoy your day.

GK.

Here's a quote from............someone or other............noone important!

"The plan is basically to work towards the commitment letters across those tranches to enable us then to move forward, raise finance and finalize the additional capital of $400 million to $600 million in whatever form that comes into the company and then move to financial close of the debt structures later on.

The other part, the $400 million to $600 million, the guidance we've provided in the past is still relevant. We're still working on multiple avenues for those funds, but those funds essentially will be coming into the project on the outside of that senior debt structure."

Commitment letters first and before they disclose anything about the additional capital, bar one assumes it's total magnitude within that $600m upper bound. So what do these letters mean?

"..enable us then to move forward.."

Ah, so he thinks these 'commitment' scribbles, a commitment from a lender group of $1.5bn that is only to be offered if these chancing miners have already secured offers of another $1.5bn plus then that creating the situation where the remaining additional capital then becomes readily sourceable, may just 'enable' something does he?

Hmm. Enabling a mine to be then fully funded to complete to 10mt/y capacity, with then relatively modest amounts extra needed to take that capacity to double that, then earning back that capital cost every year for the next one hundred years plus? Yeh right!

Pahh. Call that moving forward?

Dreaming idiot!!!!!!!!!!!!!!!!!

Or do I have the wrong idiot?

GK. That light at the end of the tunnel is?????????????

Morning Myo/Verde

Myo most interesting that. Your sluthing is remarkable, do you do a night shift for GCHQ?

Verde, yes, far longer trains (wood pellet for Drax), upto 30 waggons go past here. From the Boulby timetabling it looks like there is duplicate overscheduling that then regularly in part gets cancelled nearer the time, resulting in 4 trains out of Boulby per day - if I'm getting this right?

Trail weight out is 1600t and back (empty waggons) 600t, suggesting 1000t of product per run. 4k/day, up to 1.5mt/y! If it is not an issue with the strength of the line then they should indeed be able to have more waggons per run, but 4 runs per day looks to be it with that present single track structure.

If they are targeting 3mt/y they will have to do something.

GK.

FMU the blocker for higher volumes of ore (or product) from Boulby is the rail connection to Teesside. I think it has max safe capacity around 1.5mt/y presently. I think Boulby only now and then sent more than 1mt/y of MoP to the port.

It would not be impossible to upgrade the line to take more - the shafts were modernised some 4y back to max 5.5mt/y lift - but it would not come cheap and there has been no mention of upgrade cash forthcoming from ICL afaik.

Vid of route:

https://www.youtube.com/watch?v=2E6isuCFcH0

Hunt cliff - walked that:

https://www.gazettelive.co.uk/business/business-news/amazing-aerial-shot-shows-boulby-8970108

History:

https://en.wikipedia.org/wiki/Cleveland_Railway_(England)

GK.

Morning Slurms.

Dog star, in his various guises, knows this share and has been around a long time trading it (and trading it well too)...........and is just looking for another entry now. Examine the history.

Mind, his 'penny' comment may pan out right if there is no St2 deal.........but there will be a deal and a good one.

From some there will be a lot of 'liquidating' elsewhere going on on that day, but not to raise cash for this, more like in the small room I reckon.

Cheers.

GK...........Hold that image....;-))

Oh SL I expect THEY (but not YOU apparently!) are perfectly capable of grasping that were the total issue to go to 6bn that will mean there has then only been a 3% uplift in the total issue above what is already disclosed for the future.

You do know about what is already disclosed?

GK.

Indeed, I will be surprised if St2 fails (and if so SWM may just have to work for a few more years to keep me in the style I am accustomed to, that will go down well!) - though I am also very convinced this is not the general thinking of the market, where IB it is presently pricing in a significant risk of a St2 failure. Add to that uncertainty and a ticking (may have to scale back the build) clock.......................sp is where it is.

By 'ANY', I'm thinking of however the extra $4-600m is structured, provided there is a full commitment made to cover all this build to get to the 10mt/y production first level (as per this plan), then this whole project is very profoundly transformed. Sp?

Similar projects at this construction stage tend to have valuations around 30 to 50% of NPV. If you apply 100% chance that the build goes to 10mt/y and a 50/50 chance to 20mt NPV now is about $12bn. 40% of that? $5bn. The expected debt burden may take 10% off that? $4 1/2bn. Estimate 6-7bn shares by production, then sp around 40-50p.

ATB.

GK.

HI YP

I think that arising from the 6/9/18 Capex increase and subsequent ST2 progress target dates then not being met, the market presently sees a high risk that Sirius will not be able to get their St2 plan to work and instead will have to resort to a 'kicking the can down the road' alternative of piecemeal money raising to perpetuate the build.

Conversely I think they will indeed get their, what? 4y, plan to work out, though the costs are going be higher than the earlier guidance suggested. That understanding would have hit sp sentiment as well post 6/9, but I don't think that accounts for much of the ~50% fall. Thoughts of failure of St2 and what could then happen instead does.

From that the probable sp impact from what will be a profound project derisking that will come if there is ANY (full build capax monies covered and containing $3bn of senior debt) St2 package agreed and signed off, as has been the co plan from the getgo - ie as will be demonstrated as having happened by receipt of the Commitment Letters - will overwhelm any negative impact arising from any new issue agreed with that full St2 deal, however large (I expect a low amount).

"suggest 20-40". Yes, suggest 20-40 up on the recent low?

See what we get.

GK.

Morning Speedy

"dilution is short time bad but can be mitigated with share buy back from profit."

You need a sum to go with that, that will hopefully show you how wrong headed that thinking is.

For instance:

Now. Co issues 1bn shares at 20p today to raise £200m and with a view to reduce the total issue back to where it was by buying back those 1bn shares once the co can finance that from profits.

Future. Co making money, sp now 100p, buying back 1bn shares will now cost......................?
---------
Alternatively servicing and paying back £200m of debt will cost?

The caveat is that overloading a non earning co with too much debt increases risk of the enterprise being taken from shareholders.

Find the balance,

ATB.

GK.

SL

Trying to manipulate what people say to try an bolster your ill informed agenda does not serve your character well.

$40m is my prediction as of 22/1. I stick to it. This is the criteria:

"This for the $s raised from new issue shares as part of St2 and those shares issued before the financial close of St2."

You sold. Live with it.

GK.

Afternoon Mr R

Your time on such is too valuable. Just one of quite a few who hasn't got it to even imagine beyond their own conclusion: " people get bitter on long drawn out drops". Long? This is a ten/twenty year job.

So have obviously and impatiently sold out.........at a loss..........Hence bitter.

Others see such pull backs as one of the few remaining golden opportunities to significantly strengthen their position....On the assumption that the Eldorado Road, though rocky at times, continues to be rolled down.

I anticipate even an St2 that involves an 'all dilution' for the extra bit will still see solid uplift from the consequent removed uncertainty.

ATB.

GK.

Don't mention that it is a well observed phenomena that there is a great tendency from those who learn more about this project to then buy more into this project.

All good...........as long as it's understood from the outset just how long and complicated this all is........................before the moaning starts!!!!!!!!!!!!!!

GLH

GK.

Hi BF

The thing to understand is that unlike Sylvinite (MoP) or halite (NaCl), polyhalite is an elastic rock, it does not creep. Once mined in an area there will be some immediate elastic deformation that will then halt with the new equilibrium.

A hugh amount of geotechnical study has been done by Sirius's specialists, particularly SRK. See their work on this in the prospectus Sec 9.3 and 9.4 of their report.

https://siriusminerals.com/downloads/main-market-prospectus/

GK.