RE: bankrupty/TrekMadone17 Jun 2022 18:52
Hi beardozer,
I echo bankrupty’s thoughts but to add you have to ask why the SP is down so much to understand if that is a surmountable risk meaning it’s cheap so worth holding or worth buying. In terms of upside I think if they pull this off we are talking many pounds and years of divi income but the upside is not todays worry.
1. The smallcap indices are all down. Few get away with sector devaluation, investors are risk off and chasing yield.
2. On amacro basis bonds are paying higher rate, inflation high, recession? etc but also monetary tightening means less capital sloshing around. Small caps are the last to benefit and first to suffer!
3. Interest rates rising is a biggie for us. The market is not yet convinced there will be buyers for the bonds.
4. We still need some of the permits.
You also have to factor in the risk mitigations.
We can’t do anything about 1 and 2 other than delivering on our objectives. However, the SP is down on v low volume. It can equally move up quickly.
We have 4 brokers that have taken on the bond placement and whilst there is no guarantees there is a high level of confidence.
My view is they will get it away but the terms will be slightly more favourable for the buyer than those in the RNS. They have hinted they may vary. I also think we will then become a little more linked to the copper price, that’s because the bonds will be.
As far as permitting goes I have little concerns. We have BoD members that have completed the permitting process before. We have collected years of environmental data. We have an exemplary ESG ethos and community engagement.
There is pretty much zero worry about having a market for our goods. The trillions of US Keynesian infrastructure spending kicks off in September. Biden wants US jobs and as little reliance on overseas ‘anything’ as possible.
It pretty much all comes down to finance as investing mostly does!
The best ways to mitigate that from a negotiation stand point is you have to be able to offer something, we do in terms of low cost low risk metals.
You have to have cash to see you through. We still have a healthy balance sheet.
You also have to have an alternative. We could do a loan, placement or even apply for a grant but those are not the preferred options albeit they are options from a negotiation standpoint as we have a very valuable asset.
We could get permitting news, drilling news, assay news etc all landing and yes they will help shift the SP as each is a derisking event but that financing RNS could also literally land at anytime and when/if it does with so few shares the rerate should be significant.
Usual caveats
Trek
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