Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Wolf, I am not in a muddle. Whatever you think of Conger for selling whilst promoting the deal, his interpretation is correct.
However, moving on from that, the point is that however you interpret what Selan is paying is not the point. That grossly undervalues the asset. Whatever they are paying is going to be much less than it's true value . Otherwise, it wouldn't be worth their while. For example if they expected to make 100 million profit over the life of the contract, they are hardly going to pay any where near that are they ?
So what profit can Syn and the Selan expect to make from their respective halves of the contract. The presentations from last year give an indication. For a 10 well model they give a net present value of 58 million usd. The full field development will be 30+ wells, so a total for that of around 200 million. That is for the base case. If the upside case was in play, or gas prices went up, profits may increase. Also the presentation assumes a cost per well of 10 million, much more than they are saying now.
So even taking a conservative view of the presentation,Syn's half of the profits in present day terms would be 100 million usd.
That would be increased by by an amount equal to the free carry, as that is cash they will not be spending.
So if the free carry is 10 million plus the 2.5 million cash plus the 9 million bonuses ( that should be reduced to present day value, but can be ignored for now) it comes to 21.5 million. Or, as most seem to think, the free carry is 20 million it comes to 31.5 million.
So the total profits Syn can expect over the life of the contract is, depending on how you interpret the free carry either121.5 or 131.5 million usd. That's £97 million or £105 million. Not a great deal of difference.
With the current number of shares of 10.5 billion that would equate to an sp of 0.9 to 1.0 p.
The extra shares from the convertible loan and warrants from the last raise would increase the total shares to around 13 billion. Obviously a further raise would increase it further. That might not be necessary if the warrants are exercised.
With 13 billion shares it would equate to an sp of 0.75 to 0.8p.
With 15 billion shares we get 0.65 to 0.7p.
So even if the profit in the presentation is optimistic it would seem that the current sp of 0.15 is grossly underestimating the potential. The market seems to be taking an extreme worst case scenario.
All the above may be a bit long, but it is genuinely how I see it. It may be a few years before the full value is realised but I really hope the sp today moves towards a more realistic value. If I could get 0.25 today, I would probably sell out as probably not sensible to wait too long at my age.
Good luck all.
Ssccss. Yes that's exactly how I see it. Thank goodness someone gets it.
However, see my long winded analysis and summary below.
Thanks Conger. I was thinking the same, that what they were paying was not 20 million but 10 million for Syn's half of the first year costs. Not being an accountant wasn't sure if I wasn't missing something, so thanks for confirming. Of course that doesn't mean that is what the remaining 50% is worth. No partner would pay that as it wouldn't be worth their while. The true value may only realised some way into production in a year or two .
Yes, well done Conger. Wish I'd done the same. You may have helped me make my own mind up.
Have to see what tomorrow brings. Good luck.
NS. Really not sure where it goes from here. Bit baffled as to how 3 wells in 2 years constitutes an ambitious drilling program. Guess the three workovers add a bit of value.
Ssccss. To get out for whatever I can get or hang about for another year or two in the hope of better things. Getting a bit long in the tooth for the latter.
How spectaculary disappointing was that market reaction. Could have sold for a good deal more last week. Was it worth waiting for? Big decision to make now.
Actually it's even less per well. Only just noticed the bit about the 20 million including 3 workovers.
Yes deal good. Market reaction not so good. Think I won't look again until after close and decide what to do tomorrow.
The wells are coming in cheaper than expected.
Three for 20 million usd spread over a year and a half. Previously wells were stated to cost 10 million. Perhaps cheaper because the first ten will be from the existing 77h platform. Guess the cash is about in the expected ball park. The bonuses are a bonus. Lol.
Wonder where we'll finish the day. Gla.
The bonuses.
Go on you beauty !!?
Thanks guys. Don't think it's just the garages trying it on. From what I read repair costs have gone up by 20%/tops.
Sorry for the off topic.
Has anyone else found their motor insurers taking the p*ss this year. My renewal Quote was exactly 70.0% (the exactly is suspicious in itself ) up on last year in spite of making no claims. When I phoned I got a load of old cobblers about increase in repair costs. I read the other day that they have gone up about 15 to 20%.
Anyway, after a quick phone call I got it down to "only" a 38% Increase. Still painful but a saving of over 200 quid. These days everything feels like someone is having a laugh.
Lowtide. I contacted LSE about this yesterday and they said they still had issues with their data supplier. Wouldn't surprise me if missing rns's never appear.
Yes I did know that Slikoil. Ultimately for every buy there is sell. A bit more complicated in practice though. As you say often it's the market makers taking the other side of the trade. They may have a surplus of shares they need to dispose of and the price goes down, or a shortage so they buy at a high price and it goes up. Over any longer periods apparent buys must match sells.
Funnily enough I was just looking at the trades on the Stock exchange. They attach no buy or sell markers at all. So what we see on sited such as this is purely a best guess which doesn't work very well at all, especially when the spread is tight.
Not on Barclays. Dummy trades
Ask 0.1469
Bid 0.1455
Both are below the notional mid point so will show as sells. Just the daft system. Why in the 21st Century they can't attach a buy or sell marker at the point of transaction ud beyond me.
So did I VF as I posted at the time. Briana confirmed that " The following week " means this week. Hopefully it will actually happen this time.
Before the partner has drilled the first well Syn will have the cash payment which come after GOI approval. How much is anybodys guess but it could be 6 months away. Of course if the jv rns had dropped when stated we wouldn't be talking about any of this. So yes a few days more does matter.
It can all still work out well if the rns drops this week as promised.Gla.