Member Info for Longtermview24

Post appreciated Oilman

IBAB I understand where SXX is at you patronising feck. A direct public offer could be cobbled together in short order and I think it would have support because even you agree the economics stack up. The new equity would be supporting and bailing out the old equity but for the most part the new equity and old equity would be one and the same.

Mu scheme is a chance for existing PI holders and their friends and family not already invested, plus any interested II to save their own investment.

Maybe they don't want to and the raise would fail but you don't know until you try.

Double or triple of the share count, i.e., let the new strategy partner taking 50% or 75% were what I expected before in wishful thinking. However, AAL got in as an strategy partner candidates, did the DD, and then turned their role into a takeover party that wants to get the whole (100%) in less than the required $600m.

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Yes I too thought 50-75% would be what a partner would want for the $600M . Even our guru IBAB was throwing those sort of numbers around.

Whether Fraser has been hoodwinked by AAL part way through the negotiation or whether he saw an opportunity for him to keep his job with his mates at AAL and see this through under their watch, perhaps with a nice incentive scheme, hard to know, BUT the BOD entertaining a 5.5p (or less) sale, without at least giving a 2p raise a fair shake is NOT protecting sholder value or looking after our best interests, which is their fiduciary duty.

Due to the wide PI base, a fundraising in an open offer might be difficult, as most PIs might not be affordable to double or triple their holdings. Open offer plus firm replace should still be a final resort if the big IIs to push in this way.

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wwguk, fact is a lot of PI's have sold up, so are sitting on cash. So they could buy back in at 2p (having sold at 5.5p) and recoup their losses over the medium term. That's why it should be a direct public offer, not restricted to existing holders.

not in equity Oilman. Don't be disingenuous. Thisis no time for trolling. There are some people in a very desperate situation an this is a reasonable way out that should be given serious consideration by the BOD

4p to raise 600m 15billionshares still very acceptable 22 billion shares in circulation. Id take that all day from this point ,sure most take

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I agree Scott and I think a raise could be successful at 3p - 3.5p (where the sp settled for a long time). As IBAB has mentioned before (though there is no science to it) raises often happen below current price (luckily we're now at 5.2-5.5p, so your 4p could work).

For arguments sake, if we use the 3-3.5p level then a raise at 2- 2.5p is a discount to the most recent level. As were in the last chance saloon, to make it attractive let's say the price is 2p. My point is, even at this very low level, the math works and almost everyone can make a return on their investment.

A sale at 5.5p and almost everyone makes a loss and some are wiped out.

The BOD need to consider this seriously.

If they had raised the lot at 15p when it was oversubscribed it would all be rosy now. I know I keep plugging with this, but I really don’t understand, would it not have been better? I keep thinking I’m missing something.

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Bellers you're not missing anything but at the time they were looking for debt. Raising equity is dilutive. if they'd raised the $600M at 15p that would've been 3 bn shares (give or take) and 50% dilution (give or take). Nobody would've been happy with 50% dilution AT THAT TIME.

Now 80% dilution would still be a great outcome because we get to keep the upside when the mine is producing, rather than crystalising a whopping loss at 5.5p.

Times change. horses for courses. But the 5.5p is a terrible course. We have a great horse, but a terrible jockey.

The only way to recoup our losses is to hold on to the asset. The only way to keep the asset is to raise the next tranche of money by issuing shares (debt not available). IMO this can be done successfully at 2p and everyone can still make a return on their investment.

If Fraser was truly concerned with preserving shareholder value this is the course to take. Not selling it to his Aussie mates for 5.5p (or less).

2p? to get 600M it would mean 30B shares in new issue, even at 3p it would be 20B new shares (with consolidation 10:1 in just 1 year)

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Yes, that what I said. Did you read the rest/conclusion? What is your point?

Yuri - Yep, "majority but not all" is very important correction to assumption here.
I'm in quite large profits tbh (with SXX only for 4 months entering gradually), doesn't mean I'm very happy with the outcome (because of stolen extreme potential) but still for me it's a very green and relatively good road so far (and with remaining SXX lot still fine even if they drop final offer to say 5p)

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Yuri my point is this scenario is conservative. The vast majority would be in profit on their initial investment at 33-35p. Even if they weren't if they bought into a 2p raise they would be well in profit.

Everyone, II's included, will be well in profit on their 15p and 20p placement shares. Doubling their initial invests (or close thereto) in a 8-10 year span isn't a stellar return but its not bad and is significantly better than selling at 5p and showing a 66-75% loss.

It doesn't make economic sense to accept a 5.5p outright sale without trying some sort of raise. 2p is a giveaway and still works.

So why not try it, unless the BOD are crooked.

I didn't ever want a share issue of 36bn shares. I think they didn't try to raise the equity even at 10p months ago because they wanted to keep the issue as low as possible and were searching for other more favourable outcomes.

But we're now in the last chance saloon. And you can still make a compelling investment case for both existing sholders and new aholders participating in a 2p raise (and with a direct public offer it can be thrown open to anyone not just existing sholders to give bexst chance of successful raise). For a true lth they'll get their money back on their investment in 8 years. And on the 2p shares they'll be on a multi bagger.

If this approach isn't considered then there's foul play involved and Fraser should pay a very very heavy price.

I reckon the vast majority (not all, I admit) of sholders have an average of less than 35p. Maybe even mid-20's but let's say mid-30's.

At 13mta production in 8 years or so, the net income should be around $1Bn, making the capital value around $12 Bn (should be more if you factor in the value of the 100 plus year resource and the likely increase in value of poly 4 by then).

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.

There were 85000 PI's. Probably not anymore but we know 85000 have invested and it's reasonable to assume in the right circumstances they'd invest again. $600M is 460M quid, So that equates to a little more than 5 grand a head.

A successful raise at 2p would make the vast majority of sholders whole on their initial investment in around 8 years. Anyone participating in the raise would be on a 18 to 20 bagger in 8 years.

Surely that's a better outcome than selling the company for 5.5p. Most people are made whole. No lives, pension pots, ISA's destroyed and those participating in the raise turn their 5 grand into 100 grand.

If the BOD pitched a raise in these terms I think it would be oversubscribed by PI's, never mind the II's wanting a slice. I think that friends and family of the 85,000 shareholder base not already invested would want a piece too. I think $600M could be raised easily in an open public offer.

I think the BOD are failing sholders and this asset is being stolen from us. It's a disgrace.

no it doesn't it just keeps the shares in issue at a more manageable number. The value of each share goes up x 10

Issue 30 bn shares at 2p per share for the $600. Do a 1 for 10 consolidation, and let's crack on.

Let's assume the vast majority of sholders are in this at an average of 35p or less (most will be in the mid-20's I my guess).

In 7/8 years the mine should be operational at 13mta and throwing off $1BN profit (plus or minus). Let's say the company is worth $12BN at that point (conservative IMO).

For a company worth 12Bn at a share price of 33p (keeping the sums simple!) would equate to an issued share capital of 36 billion shares. We currently have 7 Bn. So the company could issue 29 bn shares in exchange for the $600M they need to finance the next two years (after which time debt should be available). Again keeping it simple, lets say they issued 30 bn shares for the $600. That would be 2p per share.

So if they did a capital raise at 2p per share issuing 30 bn shares, almost every current sholder would get their money back at 13 mta when the sp should, conservatively be around 33-35p (likely it'd be more when you value the life of the resource and factor in a likely appreciation in the value of poly 4 in the next 7-8 years). There would be no lives ruined, pension pots and ISA's decimated. And people buying in the raise at 2p would likely make close to a 20 bagger in 7-8 years.

Can someone tell me why selling the company today at 5.5p is a better outcome for sholders than a raise at 2p. A raise at 2.5p or 3p makes the sums even better.

If Fraser lets this go for 5.5p he should be hounded for the rest of his life.

Bellers - Ibab, the offer was seemingly there last August from us. Rationally, why not try the issue of shares and escrow the cash? If it falls short then give it back....but at least TRY. If the first was oversubscribed maybe, just maybe the 2nd one would be the same. Derisked.....if ever it was that risky, share price jumps and further loans are easier.

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I agree Bellers. Have a go at raising the money. What's to lose. If they raise the $600M at 4p a share, that's a better long term outcome for lth than a 5.5p sale.

I think they could do it at 4p.

BOD where are you?

"Can anyone give me a reason why we could raise $1.2BN for a green field and a Chinese TORP for a million tons or so, but two years later - two years of successful construction, with no major issues"

Well there were two issues that come to mind....I'm sure there were others.

1. Huge underestimate of the tunnelling costs. (probably scared the bejesus out of investors)
2. UK Corporate Bond market issues, likely cause, Brexit uncertainty.

Also, why did they not cut costs to the bone before they attempted to raise funds. No, they let the fund raise fail, and then decided to cut costs. BAD MOVE. Made the initial request for funds look extravagant, IMHO.

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The $400M equity and $400M convertibles (returned following failure of the rcf) were raised AFTER the tunnel cost increase was made known.

The company on several occasions is on record as saying Brexit had/would have no material effect on the company - or at least that was their stated position right up until the point where the bond failed and they used it, like others, as a convenient excuse.

Agreed Strab. There are plenty of ways this could be kept on the rails. Wtf are the BOD playing at. "Ever get the feeling you've been had"

Correction - I didn't mean IPA is a lender of last resort but it will stand as guarantor as last resort (amount sto same thing) - there was a way to access finance through IPA when all other avenues were closed.

(better get that in before IBAB gets his two cents in)

Tex - The risk profile of this investment was never aligned to the way a lot of PIs were investing in it.

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Perhaps, but having been told we were pre approved for IPA which is supposed to be a lender of last resort it seemed, at least to me, that the risk was more in construction delay/overrun than securing financing (but there was a large contingency in the finance numbers to address construction risk).

Can anyone give me a reason why we could raise $1.2BN for a green field and a Chinese TORP for a million tons or so, but two years later - two years of successful construction, with no major issues - we're unable to raise $600M to see us through the "risky" (but not to AAL) elements? Particularly when there was $400M available for convertible bonds and we were told (when this was returned) that there was still interest from some of these parties to invest - and PI's, if they knew the alternative was not just 5.5p and eff off, but they lose the potential upside when the mine is in production, PI's would've put their hand in their pocket - they've done so (to the point of over subscription) every time.

Every investment comes with risk. With "pre-approved" IPA status and a financier at the helm and a track record of raising funds pre planning and for a green field, and with 13 mta or TORP sales in the bank with ADM, Wilmar et al, I NEVER thought we'd fail and lose our shirt for lack of another $600M funding.

And now it'll be passed from one ex-Fortescue guy to another. What a stitch up.

Lost we will all be gone soon now won’t we.
After investing so much time, money and I guess real interest and hope in this over for me 6 and a bit years, I can’t believe i’m Saying it but I wish Sirius Minerals and Chris Fraser had never come on my radar. What a complete and utter waste of time and energy.
This talk of investor naivety I do find wrong. Of course some have been naive, and some over talked the future - but the sad fact is Sirius had a much better than fair chance of getting this financed. It is huge mistakes, and horrific circumstances and a failure to acknowledge they needed to change tac, along with probably some quite frankly dubious advice from JP Morgan that has brought about this truly dreadful situation.
It should never have come to this.
Yes the mine will be built, and the great thing for the area will happen, but it should and could have been Sirius Minerals finishing the job.

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Trev, I agree with your post above.

And still I ask why they cant, before selling out, do an open offer or public offer at 4p, where new investors or existing investors can subscribe for as many shares as they want. Put the money in escrow and let's see if they can raise the $600M they need. I bet if there was a good PI response they could top up the rest from II's.

I just don't see any effort to save the project for lth's. The fact that it is being sold (potentially) to fellow Australians and not just fellow Australians but those that have been known to them for a decade through Fortescue - smells.