RE: 20p hold? No28 Mar 2019 07:03
Scotty your "Look at the terms of the royalty deal and then look at the equity deal. Total up the sums then use that as a baseline."
Indeed, I consider the Hancock deal a very useful baseline for reviewing my thoughts on the increased capital requirements, given the current asset value/ money spent on this project and the need to get St1 kickstarted, which is exactly what Gina's deal unlocked it's useful to consider the now reduced risk element of the project to date, when the ST2 finance package is finalised and released to the market as a package it's irrelevant which element of the money's gets spent first, I consider that the extra capital which was always said to be contingency money's required by the senior lenders could very well be given a more flexible position in the actual spend process.
I'm thinking that during construction (as mentioned by TonyBaby) that the requirement for three TBM's could actually be reduced to two once the rate per day has been established once it reaches a reasonable distance through the Redcar Mudstone, the capital spend savings on this single item alone would be quite considerable, I could see the extra capital requirements been shaved by a considerable amount from just this alone, again a time line saving in reaching Polyhalite ahead of schedule giving us a saleable product will have an effect on the overall costs.
However what you would need in the first place would be a more flexible approach to the senior debt lenders criteria for the $3bn than was previously being asked before the Alternative conditional 'proposal' on the 12th March and that is exactly what is stated in the RNS:
"The Company believes that the Alternative Proposal potentially offers a more flexible and attractive solution to its stage 2 financing requirements and therefore it is pausing discussions with its existing prospective lenders to pursue the Alternative Proposal."
It's my belief that the whole approach to ST2 will see a completely different structure to the previous demands from the senior lenders, yes there will be a price to pay for the approach but one that could provide a far more beneficial cost to this project and it's shareholders.
Every single element of the process of building this mine as been accessed on the worst case cost/ timing scenario, time is fast approaching for adjustments of this estimate and I believe the 'flexible' element will be encompassed and utilised in the way ST2 finance is structured and drawn upon.
Not long now.
Sheps8.
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