George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
I did not post here for a while .... still licking my wounds. not just scratches, but deep wounds... hopefully I learned from it ... lost more than a Ferrari here ...
I thought that it would be a higher risk proposition, but I did believe (and funny enough, still believe ...) in the mine ability to produce stellar results and returns, unfortunately not for me / us....
Nice to see Fred and few other still posting ...
For my sins, I bought some AA (small $) as I still believe .... it was not AA fault that they bought us cheap in my opinion ...
timing is another item - imagine going out to the market now with a high yield (fair, higher risk proposition) ... we would be flying.
My half a penny ... sorry for all us (especially for myself), but hey ho, learn and move on.
M
Hi Fred,
I did not post for a while, still licking my wounds (still hurt)...
There are many things that 'could have been'...
In my view (only), we bought in a fairy tale story (which I still believe in), and our gamble was based on CF ability to pull a funding deal with a low % of equity on the table.
I still think that it could have been done, in different global circumstances, but we are where we are.
From the IPA point of view, the mine will be build, jobs will be created.
Rewards will be shared by others, but they will also carry the risk and cost to build the mine.
The only thing that I can do is reflect on the experience, lick my wounds, and hopefully be better at investment decisions in the future.
Still, a nice fairytale, and I am likely going to buy AA at some point ...
Good luck everyone, DYOR.
M
The question is, would you invest in SM now at 4p / share? i.e. holding to the shares (value drop is already in the past, the question is if it is worth holding).
What a strategic partner would bring? = answer is access to funding. IF the likes of BHP (whom can borrow at 3-4%) want a piece of the action, what form would that take? I guess they will say 50%-90% of the company for nothing in return for facilitating $3b borrowings.
If this is the case, say only 50% (optimistic, likely will be a lot higher), then we will end up with some 15 Mil shares. If so, is it still worth holding, or just cash in the miserable few pennies are in the pot now. Or there is a high risk of Nil left?
Any views? Casa?
M
Pound party - what, you did not go to it? was light night!..
Ah... you missed it!
(but the way, was in the point shop)
I guess this is code for T/O or merger.
So, what we have on the table? An asset that once fully completed in approx 10 years at 20mt/yr is worth $40-50 Bil.
Mine and infrastructure approx 20% complete. Needs $3b to bring to production.
On sale for.... how much?
Think like a hotel in HydePark - you have the land, started the foundation .... have ZERO DEBT to date ..... (just that construction will be more complex, not plain vanilla).
Well, we will see.
One message to re-iterate: NEVER bet against the market.
IMO
M
And, overnight, our Market Cap going from 600m to <100m...
I guess an auction is coming up, and we (PIs) are going to lick our wounds ... At least CF etc are in the same boat (consolation price ...).
Hey ho, was worth a try.
GLTA,
M
After this RNS, maybe we will end up with 500mil T/O offer ....
M
My thoughts on this ....
We know that Polyhalite MOP Mix is expected to become the standard.
MOP market is made up of multiple producers, with few large players (and BHP building a monster mine in Canada).
In my mind, if I had an MOP asset and I see my volume competing with others / over saturation, I would want my MOP to be chosen first by customer over my competitors' MOP. How? By owning the scarce resource called Polyhalite (mainly from SM), I would be the only one able to offer MOP Poly mix.
So, instead of mothballing assets, maybe investing in a new asset will create 1+1=3.
But time is ticking, and once we lock in expensive debt, the attraction to buy SM now is diminishing.
IMO
M
There is always a risk / chance of a T/O.
3 questions:
1. Whom (what is the strategic fit for the buyer?)- a like of Glencore, or BHP? BHP with the $12B MOP mine in Canada, can buy us, then be the only ones to sell MOP Poly4 mix, at a premium, crashing Nutrien etc.. Or a pure investment for long term return, a pension fund, VC etc.
2. How much ... depends on mine completion risk, and future cash flows / NPV etc. Here we can debate this a long time and still get it wrong...
3. When? Cheaper now (but higher risk), or 2021-ish? Unlikely it will be after 2023 when we are in production and the SP jumped a lot, unless even at that price it will give the likes of BHP the upper hand to sell MOP mix ahead of MOP from Nutrient etc.
Personally I thought a buy now, before we load high cost debt, is more likely (as the buyer would be able to finance a cheaper debt). Once we lock in expensive debt, less likely for a TO (in my view).
I think that we need to be rational and not call all the press reports as wanting to be negative.
As they have proven over time, the scepticism of some of the reports reflect investor' sentiment and flag risks that they see, and warned of the SP decline we've seen. So, we can't cry 'wolf, can we? ...
I am a SH, and down on my investment so far, of course I want SP to be up (to make me feel that my investment is doing well and in line with my long term interest in this investment), but many of these press reports have been proven right, correct?
It is reality - it is a high risk investment, and it is close to a binary point.
However, in my opinion: all goes according to plans, SP will jump (let's leave as to what level for another discussion, or better said, speculation discussion ...).
If we need to raise more via share issue / CB / warrants .... SP in the end will not be worse in the short term from where it is today (basically the 'jump' would be absorbed by the additional shares, as a worst case scenario). In my view ....
True, it will impact future share price and returns, but the SP should be after (the potential equity dilution) close to where it is today.
Therefore I think we look at, for the short term, either SP jumping, or floating to this level.
My half a penny thinking ...
M
Bellers,
Agreed - if out of the 85k PIs, half make a million on this, the UK economy will benefit enormously, as then we spend the money on goods and services locally and create more wealth etc.
If only IPA will step in to help, UK will get a double benefit.
But, let's not bet our money on the Gov go give .... they like to take the tax etc. and point the finger to someone else (politicians at the end of the day, right?).
We will see.....
M
Bond buyers...
They smell blood and pressure on SM, hence they try to maximise what they can get.
Would you not at least try if you were in their shoes? Z....
Bond buyers...
They smell blood and pressure on SM, hence they try to maximise what they can get.
Would you not at least try if you were in their shoes? Z....
It is all well with Poly4 feeding the world (it is a disruptive product, now proven and currently it is in very short supply).
It is all great with creating local jobs and supporting the local economy.
There is only one question: whom is going to pay for all this job creation? Don't bet on the Government, they are there to take credit, not give credit ... always. So it is the SH ... we will find out very, very soon if it is us paying for these jobs (if the new bonds go south), or we invested to create jobs for a mutually beneficial proposition here...
I think we are way too far down the road with construction and proven product for the mine not to be finished, the only question is what the current SH will have in few weeks' time. Not long and we will find out, and I am still a believer in CF to pull this one through.
IMO of course. But don't invest what you can't afford to lose (always).
GLTA
M
The problem is .... the Directors are not buying ... why?
My half a penny....
Jupiter, Qatar, Norway sovereign fund, Citi etc.... must be stupid to invest if this is going south...
I / we must be so much better at this if we think the opposite ... one thing I learned, is not to invest against the market... and the better players....
I had few mil shares, halved it earlier this year (and got a nice large loss, actual loss ...), now I am toping up again.
Do what you want.
M
I thought that my next buy would be after the bonds, less risk, sp likely in 20s....
I do think this delay is due to Trump and will correct itself and even at 15% we will be fine
I if this drops to 5, will buy more.
Don’t copy me- I don’t care or want to push it either way.
M
From the beggining this was all Based on His reputation, then Hope that he ca replicate past financing success
I Said earlier this year that, although i am a stong believer, he failed with st2.
The Saving Grace- if the Trump strop was next week, after e placed our bonds, we would have been ok. So it is out of control events that knock us now.
Let’s hope they sort it out, else..... ouch..
M
Yep, 3 out of 3 now... on holiday and sp drops on bad news....
For my sins I carry few shares and will hold. Took a loss earlier this year when I reduced my holding.
If it is a wipeout then CF loses too on his 125 mil shares so I think he will try as hard as possible.
GLA
M
Look on the positive side - this time next week, we will be put out of our misery and know how the market is reacting to the bond issue.
Secondly, NPV (we need to crudely also reduce it by a simplistic -3b, the debt and interest using -10% DF) = today this is about 6bil (9-3) on 13m/yr, and 13bil on 20mt/yr. But this balue is 'increasing by +10% every year, i.e. the discount factor simplistic ... and so by 2023 from 6bil we get nearly 9bil.
Also by 2023 finance risk will be zero, construction risk gone, we start selling ... therefore the market risk will reduce from 30% to 10-20%, therefore the implied value would be around $8bil... my guesswork.
GLTA
M