focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Capital value $12 Bn and a share price of 33p (keeping maths simple) would mean 36 billion shares in issue. Currently 7 billion.
So the company could issue 29 billion shares to raise the $600M required to get through the next two years. thereafter debt will fund the project. That means they could issue shares at 2p to raise the $600M.
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Most sensible post in a long time. I would participate at 2p for sure so think it would be oversubscribed. It is better than the alternative anyway.
"Gina will just write it off. You have to remember it’s a lot of money bug fir her equivalent of us investing about £2500. It’s pocket money"
She will not be buying, all she has to do is wait. If it goes into admin her money was secured in the assets so will get it back. More likely will try to buy at that point.
"So, you think a new investor is going to pay above market price for equity?
Who are you kidding?"
The 400 mill for 50% was more of an example. The point was that if the partner could borrow at a cheap rate to complete that would provide a boost against the dilution.
They couldn't buy 50% on the market without the price being significantly higher as well so they may pay above the current market rate.
"OK.....
lets say company equity worth 100m.
Company requires new cash for investment, and can't borrow it.
Lets say they require 100m for investment.
Simply put that would equate to 50% dilution for holders
i.e. you own 50% less of the company."
In the case for SXX if we get a strategic partner putting in say 400 mill for 50% of company there will be a huge hit on dilution but we would have the 400 mill to further de-risk the project and more importantly if they can borrow the rest relatively cheaply it would give a boost to the sp.
"I don’t see this one going to the wall and believe a takeover / JV is likely. Most invested here are significantly Down and i for one will be waiting it out"
Could you run through a takeover/JV scenario that doesn't leave existing shareholders with massive dilution or indeed being wiped out?
"The difference is that HS2 would take public money, whereas SXX only needs underwriting - which won't cost the UK a penny, except in the extremely unlikely event that the project fails.
Right now, the only significant risk of failure is the finance, so if the underwrite resolved the finance, the risk of failure becomes incredibly low.
It's therefore a safe bet for Government; they get a win of securing jobs and lowering trade deficit, while not risking much at all"
Even if the project fails by that stage the mine would be worth more than the debt so they still would not lose. The 500 mill plus the other money that would be released will ensure the asset is worth more than the debt surely.
Would this type of bond give first call on the assets if it did go pear shaped later or is it still Gina.
Gina's investment is secured on the assets so basically she will own most of the mine if there is no other funding found. Won't be much left for shareholders in this scenario.
YorkshireLife
"You may be on to something there... only has anyone considered that a dilution and share placing might have "already" been done... instead of Bonds... hence the "significant' drop today - and within a short space of time this will be reported via RNS?
Maybe 10p or thereabouts was the placing price and will underscore the bottom and enable the company to now move forward with all necessary funding in place?"
At this point in time I would take that scenario. Maybe I am just getting desperate and don't care how they get some cash, as long as they can carry on, that is the main thing.
"You don't take on 15 new apprenti es if you are not pretty certain you will still be in business in 15 days time"
They will 100% be in business in 15 days time and beyond. It is more about how much will be owned by existing shareholders.
Anyone know if this bond sale is all or nothing event. If they sell 400 million say what happens then. Can any shortfall be made up with say more shares released.
"It will be an interesting day on this board if ST2 funding fails for some reason"
Don't think it will fail but it could be delayed further. Anyone know how long our current cash will last for?
Yes Andy, the $250 mill is secured on the assets so if the St2 finance cannot be obtained she will get the mine for a fraction of what was spent on it. I am sure she would have no problem getting finance to finish it then. From the RNS
The royalty component of the MRD entitles Hancock to a five per cent royalty on gross revenues from the Project payable on the first 13 Mtpa of production and one per cent on revenue from volumes thereafter ("Royalty"). The Royalty is secured over the assets of the Project, with such security to be fully subordinated to the stage 2 financing senior debt security once established
Hi, I am assuming that the method of raising the 400 -600m would have to be sorted first before the banks commit. Is that correct?
"The US$50 million equity component of the MRD will be provided once stage 2 financing commitments are obtained to fully fund the initial 10 Mtpa development"
So they are only providing the 50 mill once stage 2 is obtained. Nice no risk investment there when you can get 200 mill shares for 20p each at that point.
And in the unlikely event SXX do not get the financing and the whole project goes pear shaped she gets the assets where 900mill has been spent for her 250 mill. I am sure at this point she could then get the financing to complete. Looks like a win win situation.
"well wouldn't it be good to see the price rise into the "Bond Auto Range Retrieve & Annul" zone"
Hi all, could anyone explain what exactly happens with this process. Are all the bonds automatically converted and shares issued?
Hi all, pretty quiet here but was looking at RPT after the recent reserves update and rise there. It looks to me like the reserves here are similar to the updated RPT reserves but UEN has a much smaller market cap. Am I missing something (I know RPT has a lot of cash in the bank but even so it doesn't explain it).
56 mill shares is a large proportion of shares in issue. How many have been forward sold into the rise and how many left to sell? What is the normal strategy of the loan company, do they go short at this point and sell to drive the price down.