Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
They have agreement for the offtake with a Japanese buyer. However, they will not be signing any formal documents with them until the finance terms are in place. This is because the agreement is 2 way, with an obligation from the buyer to take but also for PRE to supply. The agreement is CAP and Floor on pricing, with a take or pay obligation on volumes from the buyer . The 3 part structured finance agreement will be signed and in place early in Q1 , the ASWF equity portion being accessible immediately with draw down from the ABSA and Multi lateral development bank being permitted once CPs such as the off-take agreement have been satisfied. The same off-taker is taking the MREC from Longonjo as for the Oxide from Saltend. The contract converting from one to the other when the product comes available.
Earthworks and civil works are just different phases of a construction project and subject to the same engineering as any other stage of the project. As the engineering has only just been completed, the earthworks can't have started before hand. The previous comment clearly referred to earthworks in respect of the construction camp. The civil works involve pouring concrete driving piles. This can't be done until the earthworks are done. For me there is no ambiguity or open to Interpretation.
Earthworks is pert of the construction phase. Presentation has construction starting in December (assuming both the 6 months duration and May completion for Earthworks are correct)
Spike501, i think that is a little naive. if they hadn't stepped down, the 3 shareholders had the required votes to fire them. They also have the required votes to impose an interim executive team which they have done. the cornerstone investors have taken over total control of the board and therefore the company. Paul Smith is definitely a Glencore-acceptable shoo-in. from the company's perspective, this development is positive. I'm not sure from a PI
As pointed out, over 50% of the shareholders must agree for directors to be sacked and replaced. As there was no EGM called, all three cornerstone investors (including Orion) must have worked together to create the required shareholding vote. Other than that, there are several options open to them. So, there is no point in speculating.
Calculating. Until news on financing comes through nothing is happening.
On the plus side no reason to sell, and every reason to hold. If the RNS are accepted at face value. the DD (both commercial and technical) will be signed off and "REPORTED ON" before the year end.
Are Earther, Essentially 100% capital allowances, ie not added to the balance sheet. ie 250 million * 25% = $62.5 million of tax credits!!!, certainty assists big time when considering the affordability of any debt repayments
Publican, it's not negative either, it just re-iterates what has been said in the RNS. which is what it should do.
HeresHopin, according to the covenants, the bank has no obligation to provide any more funding. But in my experience, they tend toward pragmatism when protecting a 200 million investment already made. I wasnt suggesting that they would continue the funding of construction, but if there was a likelihood of them getting their money back, a trickle feed may be agreed to maintain the already installed kit and safety considerations. To be clear, this is entirely at the bank's discretion.
NIW, the RNS did say that, but I'm sure the bank will allow limited release of funds for care and maintenance pending discussions. It's in their interest to keep the project on track, even if progress is in stasis for a while.
They wouldn't automatically get the previous debt arrangement. A new one would need to be negotiated and the old settled in full (or whatever they agreed on). Or they woud have to make an all cash offer, including the outstanding liabilities, which would include the already drawn down portion of the debt faculty and and any costs assosciates with it.
Bibente, why are you name calling, this is a discussion forum.. Firstly I agree it is a standard set up. I also agree that if a HOLDCO goes into administration, the OPCOs can continue to operate for as long as the agreements continue to function. So i actually agree with your points, but it doesnt make the points i make any less valid. None of these companies are set up as a separate legal entities purely as a protection in the case of insolvency, although that is one of the considerations, but also for practical considerations that are outlined in my previous.
Bibente, the reason why there is a legally separate entity to the holding company is because it has to comply with a totally different legal jurisdiction with different fiscal regulations that need to be ringfekced within the jurisdiction within which it operates. Of the owner goes into liquidation the asset is sold
Beneto, it might be a legally separate entity. But it has an owner, in this case it is Horozonte, which is an asset that needs to be liquidated
MV01, usually a share issue would be based on the total number of shares. ie HZM case with approx 250 mill, a further 750 mill would be issued (at 30p, this would raise $225 M) and would amount to a 75% dilution. Not ideal. It would also need an EGM to authorise the additional shares. it has been suggested that some equity in the operating company could be sold, as HZM own 100% of the equity, up to 49% could be sold to raise additional capital without losing operation control. this would reduce attributable cashflow to this project, but would leave the other assets intact. or even a rights issue and a partial asset sale to reduce the solution. The point being that administration is a last resort for all parties. if the lenders beleive that there is a realistic chance of the a solution being found, they will release a limited out of funds to continue on a care and maintenance basis, as it is in their best interests to do so.
Unsurprisingly, there is considerable speculation regarding the ultimate fate of Horizonte, i.e. whether it will have to go into administration or whether Horizonte will find a solution to complete the project.
Administration: The receiver needs to obtain the best possible price, considering the creditors in following seniority, Government, Lenders, staff, and then equity holders. Further speculation has been that if the company goes into administration, the lenders will deal with Glencore or a consortium of the cornerstone shareholders to pick up the project for a low value.
RNS advise that USD 131.2M of the senior debt facility is available to draw on, assuming that specific criteria are met. This infers that 215 million of the 346 M facility has been drawn down. HZM also advise that $429M has been spent so far. The spend is, therefore, split roughly 50/50 debt and equity holders. The three cornerstone shareholders hold approximately 50% of the stock, inferring they stand to lose over $100 M on the administration route.
The banks will look to make themselves whole on any sale of the assets. Consequently, they will be looking for $215M as a minimum and will resist any haircut. Therefore, any new buyer must come up with $215M, + 136M + 200 M or $551 M to finish the project. The big 3, would have to add their equity losses to this, consequently a further 100M would be added to their contribution. To mitigate this, they would look to the lenders to take a haircut, The lenders will be resist this. Assuming it is refinanced on the same basis as now, they would still need to come up with another $220 to finish the project. This would give them 100% of the P&L.
However, if they were to have a 3:1 rights issue at 30p, it would be oversubscribed. They would only have to put $100M and maintain their current equity share.
My point is that unless the banks are prepared to settle at a significant discount to their current loan value, there is little value to forcing the administration route. Glencore already has the offtake, so that doesn’t enter into the equation. my own view is that this stock is worth holding, at 10P its definitely a buy
ART123, that was my reading of the RNS as well , they have put the project into an enhanced care and maintenance to reduce cash burn and bought themselves more than a few months pending the resolution of their financing issues. even if they went into administration, the receivers should be able to get multiples of the current market cap for the work already completed, plus the asset. The cornerstone investors will insist on that. There may not be a recovery imminent. but definitely a hold for me, (at the price i bought)
Hi Lewis, other than giving comfort to investors a good track record is not a prerequisite, I'm not saying a bad one is acceptable. But absolutely correct that good management is essential. I also agree that HZM could have contributed, but think it's more likely due to the lack of liquidity on Pensana stock. I posted the following on another forum.
Somebody needed to exit, ie needed the cash. There was a 100k purchase at 31.6p at 0930, then consistent selling down to 28p between 1115 and 1415. In total it took 90,000 shares over 10 trades until the price hit 28p. Average price achieved 29.5p. Not saying this is the case, just that it doesn’t need to be any conspiracy. Only took £26,000 to lower the market cap by £10 million pounds. The stock is so tightly held, if you want out, you are going to have to pay, converse is true, 100k buyer paid 31.6p the same day.
Or they get together and make an offer of 270 million for the whole company. Ie a £1 a share. Actual cost to them of $135 million. Plus the cost to finish the project say $200 million and take full value of the company going forward. Lot higher effective SP and the participants are free to exit whenever they like at a commercially realistic price rather than subject to the whims of the stock market
SP, I'm not sure what point you are maing, but im also not sure I'm going to disagree with you either. fully agree with your first para. Which is presumably how SSW came up with there own valuations.