Member Info for Tobin

It’s cheaper than when you were looking in October. I was looking at timing.. sell in May and go away.. but I don’t really see that with PIN.
I don’t tend to look a a specific level to add to my holding; I tend to be more cautious if the markets feel really toppy but as a long term holder I like to buy if I see an unjustifiable discount to NAV and at over 20% at the moment on morning star I will be adding some more to my SIPP.

Hi GK,
This was the sort of modelling that I was looking at a week or so ago. Even with the weakening of potash prices the long term prospects look good and this is what long term lenders will be looking at.
With time, the prospects of population growth and move to higher protein diets I believe the value of fertilisers will rise and profit margins will increase. One of the long term costs will be energy costs and I believe fracking will control these at present levels.
Long term hold, accumulate on the dips.

It’s logical that any lender would want and upside equity component.. it’s not like your lending on some property, factory or equipment that they could have first call on and sell to cover debts if the project doesn’t go well.
It’s how much equity they want.
If there are convertible shares, presume they would be tradable, maybe an interesting way to increase holding.

10years ago, SP hit a low of 130p.
Bought some shares in PIN around that time, but not as low as that and definitely not enough!

January NAV is down, on currency changes. SP hit an all time high recently at 2200, discount has narrowed to 16% which is about average for the past year.
Half Year Report is out, and a very helpful video presentation on PIP.
Andrew Lebus is obviously unhappy that the discount is still far to wide, I concur, especially now its a 350 company with its 30year history.
https://vimeo.com/319686345

Thanks Myositis,
The take off agreements have to be reassuring,The November presentation is most helpful, and what I needed; passed me by! Im just going to run my own figures.. Sirius wouldnt be signing them unless there was a reasonable profit, and the average projected value of take off agreements is approximately $140-$150/ton. https://siriusminerals.com/downloads/investor-presentation-november-2018/ .. in very small letters at the bottom of page 3...
"2) US$140-150/t represents the weighted average price point of existing offtake agreements using independent third party fertilizer price forecasts (e.g. Argus FMB, CRU) expressed in nominal terms.

In the poly4 pricing senario they have it at $200/t but I feel a more negative approach is the contracted or Bank case, at that is about $120. The price they have for the MOP is $256, but its now about $210-$220. So maybe $110/ton.

Question remains is the size of the market and if price will soften as they try to push for higher production, or other SOP producers come on line .. Australian potash have produced there first product I see, and there is a polyhalite mine to be built in New Mexico.. small though 1.5mt/y. Im going to take this as a positive as others clearly see there is market. At 20mt/y this would be KCl equivalent of 5mt/y or something less than 10% of annual KCL market.
The cost of production is very low because of scale, and I see they still project $30/ton... lets say they dont hit this ..$40/t. This still gives $70/ton.
10mt/y.. $700mt/y profit, projected value on pe of 10.. $7billion.
How much we see as investors is a different calculation .. Im going to assume debt costs at 10%.. $400m/year.. still leaves a $300m profit/y .. net value for investors of $3billion .. 2-3 times the present SP.
20mt/y.. who knows .. but clear probability this can be achieved.. $1.4bilion of income, $400million in debt costs .. assume more debt to reach 20mt/y but lower cost.. value pe of 10.. $10billion so 8-9 times present SP.
I think i have convinced myself that SXX should still be in my next ISA.
Which is good as I just like to watch the updates of the build!

Thanks Sheps8
I do have maybe 30k in SXX, in profit and held for several years. I can do my own sums and do, but I’m interested in how much up side.
Maybe the best assessment is what the market is prepared to pay.. any links to the details of the take or pay agreement?

Thanks for the comments and links... I do know the story of poly4 and it certainly has a market as a niche product. Boulby are showing that.
I’m trying to get feel for worst case vs best case.
For the worst case the fall in price of MOP isn’t helpful.
If we say the long term price of MOP is now $200 than $300/t and this feeds through to poly4 price then that’s $25/t less value in the poly4. At 20million ton/y that’s $500m less profit and p/e of 10... the NPV falls by $5billion.
The bottom price is supported by MOP but with the cost of shipping that doesn’t give much value. So it’s on the value of the other products?

But 10million Tons??.. and ideally we want to see 20million tons/y to maximally use the infrastructure, that’s were the big profits are.
This mine has to move a lot of product and if there is a market..fine.
... but it’s how much the market will be distorted with volume.
I don’t think it’s that clear, and its that which is making it difficult for me to price the value of the shares.
Also the cost of the debt.

Any thoughts on worst case scenario vs best case?

Continued..
the cost of moving 4t of polyhalite to say Brazil or China is probably in the order of $40/t and that is just to the port... $160 compared to $40 for the same amount of K if we were moving MOP.
So that’s $160+4x$30= $280 vs $200+$40=$240 for MOP.
Good thing it’s not MOP.. but at the tonnage this mine needs to move it will need to compete against MOP.
I think that much of the value has gone with the fall in price of K???
Tell me how wrong please.. in numbers.

When this project got started the price of MOP was over $400/ton.
Sxx will produce polyhalite which doesn’t have chloride and is more like SOP which has a premium and was $600/t
Polyhalite is relatively low level source of potassium but has other stuff in there that should have some value.. the poly4 .. sulphur magnesium and calcium so a premium product??
But the main reason for the project is the potassium.
And here is my concern. The price of the potassium, K, has fallen. A year or so ago it was $300/t but not $200/t for MOP, the main source of K.
The projection is that polyhalite can be mined for $30/ton, but it has only 1/4 the K of MOP. The K is now only worth $50/t of polyhalite if priced as MOP.
But to get that ton of MOP equivalent you have to move 4t of polyhalite..

Though the NAV on morningstar has been higher. Await the monthly NAV.

Just having a look back at the SP charts there appeared to be a gradual long term increase in the SP, certainly in SP bottoms so I have been topping up on the hopefully short term dip. Its a little concerning from a chart perspective that the SP has broken its upwards trend and currently is below the january 2017 low.
But there also appears to a another trend going on here in the last few years of share price swings developing a pattern of lows in January to April and then highs in the summer.
Coincidence or an obvious reason that I am not seeing??

The aquifier is very slaine and under huge pressure but I dont think they are planning to have to pump too much from the aquifer, they are planning to inject grout. The risk of flooding is via cracks in the sandstone and this was best managed with grout.
The original boulby shafts where sunk with freezing for the first main shaft.. that leaked, and goutung for the second shaft that ended up finishing first!
In Canada they freeze the shaft because the sandstone in the aquifier is softer and more porous.

,

in the same vein as Sheephatch .. SXX is one of my long term holdings.. but my main one is Pantheon International..PIN, venture capital with a very good long term record. Will not set the world on fire, but 11.8% annualised growth for over 30years, its now a ftse350 company. If you dont want all your eggs in one basket.

Its always great that there are lots of comments on SXX, but it can be hard to find info, so sorry if I am asking question that has been answered.
There seems to be a number of comments about short sellers forcing the SP down, which if true maybe a concern that some one knows more than they are letting on.
But I have had a look at https://shorttracker.co.uk/company/GB00B0DG3H29/ and short selling of SXX doeesnt appear to have changed very much at about 6%
The biggest short seller is Highbridge Capital, a hedge fund.
The other company they short is PHP.. who own health centers. I don't have shares in PHP but I do in Assura, that is in the same business. PHP carry somewhat more debt but essentially this company is very low risk, it has long term leases to doctors, that are paid for by the NHS. Even if the NHS stops paying for GP surgeries, the GPs still have to pay unless they all do bust, and PHP still own the premises!
But like sirius they do carry quite a bit of degt, and SP will, and has been quite sensitive to long term debt rates, which is what I suspect why they have shorts on SXX and PHP for.
So I don't see a big issue here, but have I got it wrong??

December NAV is out this morning, 2627p, so down 1.8% on November. With the recent rally the discount has narrowed from approximately 25% to approximately 19%. Still far too wide IMO.

Some unhappy people. Its a long term investment, its going to happen. Dips are buying opportunities. Bought more today for the first time in months.
It may fall further, I will buy more unless something really changes.

10% in as many days. Not clear why. A lot of the trades look the same size. Program trades now that it’s in the ftse 250?

Not clear what triggered this rally, shares clearly under valued but that’s nothing new.
Appears to start before the latest RNS of NAV for November but this must have helped.
Maybe general market, maybe somehow linked to Brexit?
I will continue to believe in the company, it’s staff and the NAV. December should be out soon.

The unaudited net asset value ("NAV") per share at 30 November 2018 was 2,674.3p, an increase of 71.1p (+2.7%) for the month.
The markets eased off in the first part of November but have subsequently bounced back.
There is likely to be another RNS for December in 2weeks if they report the same as last year
The widening discount... probably over 25% ... looks like a buying opportunity.