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MT3: thanks the post. I share with your point but with caution. I started to invest SXX much earlier than ST1, and have learned a lot of lessons (good and bad). Our PI usually have much less information than II, and need to be cautious to invest our own money to any company (including SXX).
Before ST1, the sp of SXX ranged from 30 to 45. SXX announced on 02/11/16 that they would raise £330-400m by placing with price 20 to 30p; and us$400-450m by convertible bond of 8-8.5% rate and conversion price 25-30% above the placing price. The final results were:
raised £370 with placing price of 20p; $400m by convertible bond of 8.5% and conversion price us$0.3076 (which is 23.5p based on the exchange rate today), the worst-case scenario in their original plan for our investors. Consequently, the sp went down to around 16p after ST1. The royalty financing from Hancock is even more expensive.
I still think SXX will be successful to raise money in ST2, and the sp in future will be high (may be much high) than the current price, but we cannot ignore the risk and uncertainty.
NB: what is your point?
The announcement can be found in the following link:
https://www.nemaskalithium.com/en/investors/press-releases/2019/854b1346-3761-413d-892d-85c8517ef660/
Many thanks, BBN. That is very informative.
Agree. It is time to top up or buy back.
http://www.lse.co.uk/ShareChat.asp?ShareTicker=SXX&share=sirius_minerals: Sirius Minerals changes $3bn debt plan following lender talks
The following are some interesting (fair) points:
"The first portion is expected to be a $500m to $700m high yield bond, according to analysts, followed by $1.5bn of bank debt and a further $800m to $900m of loans guaranteed by the UK government’s Infrastructure Project Authority." "However, analysts said the plan would result in higher financing costs, at least in the short term".
"Each tranche of this new structure will be fully committed from the start and, whilst it may raise the cost of the debt for the high-yield bond, this could be possibly offset with lower rates for the IPA at the end of the construction period." said Liberum analyst Ben Davis.
GLA
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No trades yet so far (after 14:05). System error?
There is no any trade between 12:19 to 13:10!
I think we cannot rule out the possibility that there may be problem to raise money in ST2. Although the possibility should be tiny, it happened to BCN recently.
There are so many discussion on strategic partner. I read the RNS of royalty financing agreement again (25/10/16), here is the details: "Under the Royalty Financing Agreement, Hancock has agreed to: (1) purchase a royalty on the Project of 5 per cent of gross revenue on the first 13 million tonnes per annum ("mtpa") of sales produced in each calendar year and 1 per cent for sales volumes above 13 mtpa in return for US$250 million (the "Royalty") and, (2) upon drawdown of the Royalty purchase amount, Hancock will subscribe for new ordinary shares in the Company in an amount of US$50 million subject to certain conditions. The structure of the Royalty Financing Agreement is similar to that of the arrangements with mineral rights holders and runs for the life of the Project or 70 years, whichever is longer. "
Related to (1), they paid 250m. The TorP price is about $130/t (page 7 in Nov 18 presentation) and the cost is $29.4/t, meaning the gross revenue is about $100/t. Assume the average sell is 7 mtpa, it just takes about 7 years they can get all the money back. The contract will last for 70 yrs! I understand SXX did need a strategic partner at that moment, but it is not CHEAP!
Related to (2), they paid 20p per share.
Hi PB, it should be not difficult to calculate: the total share issued is about 4.7 B, and the highest price after ST1 is about 38p, and thus the highest market capitalization is about 1.78 B (comparing with 1.12B at the moment).
In the worst case scenario that all 600m additional cost has to be covered by new shares with price of 20p, 3 B need to be issued, resulting in a total shares of 7.7B after dilution. It is still not too bad. Using the presentation of Nov 18, NPV under contract case with 20% extra capex is 5.641 B, equivalent to 73p per share.
Roulette: you are right. I don't think the discussion in this board has any influence to SP.
SXX-Pound-Party: Actually I don't agree most of the points raised by McCrum.
I am a share holder of SXX for quite a long time (longer than many members in this board) and have learnt a big lesson from st1 finance. We are better to read reports from different angles before we decide to buy or sell shares. GLA.
I read the FT article again and found that we may need to pay attention to some his points, although I think Dan McCrum is a bit too negative to SXX...
https://ftalphaville.ft.com/2018/08/07/1533614400000/Sirius-Minerals--money-for-a-hole-in-the-ground/?kbc=0212dd3e-6e94-49fa-97d6-94fb0d132e9c
Dear Stokey, do you think it is realistic to take a quarter or over of the market around the world in a short period for a new company? Also if you check the history of SXX, quite a few ToP contracts have been cancelled or amended. I am not saying the target is not achievable, but it is very difficult. This is my concern. Banks and institute investors have all those information (and much more), and thus, to get a good deal for st2 might be more difficult than st1.
Hi Stokey, from the table the demand in 2020 is 37mt/yr, and you know why the target of 13mt/yr or 20mt/yr is far too ambitious for a new company. I sold most of my holdings when sp was over 30 but I think the current sp is quite attractive and will top up, but I have a bit concern for st2 (learnt a lesson from st1).
Thanks Myosotis. From the table, sale of 20mt/yr (even 13mt/yr) is way too ambitious for SXX. Is this part of the reasons why the FT article was quite negative to SXX?
Think about what happened after ft1 was signed off....