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I gather the potential prisoners' dilemma has been addressed by JMP through its arrangement to place the new CB and the $500m in escrow.

casa: "There is also an comment from Bryce Elder (BE)
' Suffice to say it won't be cheap tho, and that idea seemed to spook at least one equity holder this morning.' Which may account for today's sharp fall."

I gather that the high interest rate in the range as modeled by SM may not be a surprise to many.
The more worrying comments from Bryce Elder might be the following:
"A reminder that Sirius needs to complete the $500m bond to unlock the $2.5bn revolver from Caz. Which has the potential to develop into a prisoners' dilemma of sorts."

If the $2.5b RCF cannot be unlocked by the $500m initial bonds alone, i.e., in addition to the $500m bonds, there are also other conditions for unlocking the RCF, than it has a potential to develop into a prisoners' dilemma. The potential purchasers need to be convinced that the $500m bonds will unlock the $2.5b RCF, i.e., those other conditions should either have been met or would also be satisfied after a successful sale of the bonds. For example, SM, JPM, and Gina should have had a conditional agreement on the inter-credit issue (i.e., under the condition that the $500m bonds are sold and the RCF unlocked), rather than to start the inter-credit negotiation after the initial bonds being sold.

J.P. Morgan Cazenove became a wholly-owned part of J.P. Morgan in 2010, having originally operated as a joint venture between J.P. Morgan and the UK investment bank Cazenove.
https://www.jpmorgan.com/country/US/EN/about/investment-banking/cazenove

"Cazenove was a British stockbroker and investment bank, founded in 1823 by Philip Cazenove. It was one of the UK's last independent investment banks and one of the last to remain a private partnership. The main parts of the business were acquired by JPMorgan Chase in 2009 with the remains being sold to other financial institutions. ... the combined business continued to be called J.P. Morgan Cazenove."
https://en.wikipedia.org/wiki/Cazenove_(stock_broker)

"Compared to Nemaska we think the risk of a capex increase that results in an incremental funding requirement is low. Of the remaining $2.7bn of capital left to be spent, only $757m is subject to variable pricing - primarily labour and owners costs. The $524m contingency reflects c.70% headroom on this number. Over and above this, the RCF has a further $1bn of available liquidity which will become available in $200m increments as each additional $500m is drawn and then offset with another HY bond. Hence, under the planned base case scenario, Sirius will have a contingency of $1,524m on $757m of variable costs."(Liberum).

I.e., SM is in a much stronger position than those of Nemaska and Pilbara Minerals.

The FT posts (see the link in casa's post) mentioned the SM indicates an interest rate of 12% for the Initial bond tranche, and 10% in subsequent tranches.

"In the bond offering document Sirius models an anticipated interest rate on the initial bond of 12%, followed by 10% for subsequent offerings once the RCF has been triggered. Relative to the Pilbara and Namaska bonds this appears to be a conservative approach and we think there are a number of reasons why Sirius could secure superior terms to those offerings (12% and 11.25%)"(Liberum)

Ithaca Energy was rated Caa1 by Moody in May 2018 and then upgraded to B1 in July 2019. Moody's B1 is one notch higher than S&P Capital B- and Fitch's B.
The interest of the Ithaca bonds in this month is 9.375%;

Another single B rated subordinated bond tranche from D&G in this month has an 10% interest rate.

Pilbara and Nemaska – failed to secure a public rating ahead of their issue, and got their bonds sold with an interest rate 12%.

SM has got a Single B, however, as it is new to the bond market, it seems very likely that the interest of its initial bond tranche would be higher than that of Ithaca Energy and D&G; but would be lower than that of Pilbara and Nemaska. It might be around 11%, or more likely between 11% and 12%, which is high yield for the purchasers, but much lower than the 15% upper limit.

If we cannot find any good reason for a drop before an important announcement whose odds of good is larger than bad, then the chances are that it is a “tree shake”. A hammer candlestick on the daily/weekly/monthly charts would confirm that.

Myo, yes, milestones on the critical path (i.e., the two deep shafts and the tunnel) are more important to bring the project ahead of schedule. Other milestones are much easier to manage and as long as they are not delayed they would not affect the whole project. However, if we want to bring the whole project ahead of schedule (e.g., earlier production and a completed 10mtpa mine before the end of 2024), other pieces are also important.

Fitch and S&P Global have made it very clearer in their rating reports on the conditions for rating upgrades:
Fitch would raise its rating if "Proven ability to successfully produce and market polyhalite";
While S&P Global would raise its rating "if construction advances ahead of schedule and under budget and if highly certain sources of funding exceed total remaining cash requirements".

Most of the items I put on the list are derived from the indications provided by the two rating agencies as mentioned above.

As we know that the JMP solution is an equity guaranteed, RCF supported high yield bond solution. The equity ($0.2b + $1.15 + $0.85b) raised in pre-stage 1, stage 1, and the first part of stage 2 (and the mine assets generated by the equity) provided guarantee for the high yield bonds. The JMP underwritten RCF provides flexible findings and more time for SM (with the help of JMP) to sell further tranches of high yield bonds.

A Rising Star in the bond market is a bond issuer that has its credit rating continuously upgraded and therefore becoming very popular in the bond market. Starting from a solid B rating, SM has the potential to become such a Rising Star.

Numerous construction, financing and market milestones may trigger a series of rating upgrades:
- Reaching the First Polyhalite at the shelf beam using the SBR in 2021 (ahead of schedule) in either service and/or production shaft;
- Reaching the bottom of the deep shafts safely ahead of schedule;
- Tunneling (completing all the 37km) ahead of schedule using the TBM;
- Completing the shafts and tunnel within the budget (not cost over run);
- MTS fit-out ahead of schedule;
- Mine head building ahead of schedule;
- Confirming polyhalite reserves at the seams;
- MHF ahead of schedule;
- Port facilities ahead of schedule;
- More sales agreements/sales partners;
- Funding raised (plus generated by the sales) adequate for completing the 10mtpa mine;
- Funding raised (plus generated by the sales) adequate for completing the 13mtpa mine;
...

Given the big progress SM has achieved, all the above mentioned sub-goals seem to be highly achievable by the SM team and their experienced contractors/collaborators.

We knew that the bond sale needs to go through the following steps (as reported some weeks ago):
- finalising the bond offering document,
- completion of the revolving credit facility paperwork,
- the receipt of a public rating from the rating agencies,
- roadshow.

Now, public ratings have been received. However, revolving credit facility paperwork has not appeared.
I gather this is one of the missing documents that will turn the tentative ratings into final ones (as they mentioned that "The final rating is contingent on the receipt of final documents materially conforming to information already received.").
Therefore, we should see one or more RNS relating to the bonds in this and next two to three weeks.

Why to decide the price (i.e., the interest of the bond) early next month (on the 6th of August)?

As the bonds are to be sold mainly in the U.S. bond market, the interest of a bond (given all other conditions) is also affected by the interest rate of the U.S. Central Bank. It is widely expected that the U.S. Central Bank will lower their interests later this month. UBS has just warned a sharp drop in interest rates starting from this month. Therefore, if SM can decide a time to set the interest of the bond, it must wish to set the interest rate after the drop of the interest rate in the U.S.

with an interest less than 12%, much better than the expected 15% limit

"Moodys B-", a typo? Should be S&P

"Setting out the roadmap for the financing, the analyst said the bond should be priced by August 6 with the deal closing three days later now that Fitch and Moodys have issued their respective credit ratings of B and B-."

I.e., closing in three weeks from the date the bond is launched, or closing in three days after it is priced on the 6th of August. The uncertainty on the initial bonds will end in two weeks from today!

VERY BIG progress/change has been made since the CF presentation at jp-morgan-high-yield-conference (http://siriusminerals.com/downloads/jp-morgan-high-yield-conference/) in Feb 2019:

In Feb 2019, CF attended the jp-morgan-high-yield-conference to promote the SM high yield bond tranche in the old bank group solution. However, at the time, the commitment of bank tranches and IPA guarantee had not sorted out; the bond tranche had not launched; Therefore, that was not a roadshow.

Now (5 months from the end of April to the middle of July), the JMP solution has been adopted and very good progress has been made:
+ the equity like fundraising ($425 placing + $400 new CB) has completed;
+ Intial $500m bond launched (to be sold through JMP and jointly promoted by SM and JPM);
+ $2.5b JMP RCF committed under the condition the initial bond tranche was successfully sold;
I.e., the initial bond will unlock the full funding needed to complete the mine.

In addition, great progress on both marketing and construction has been made:
+ new European and India TorP;
+ TorP increase from 8.2mtpa to 11.2mtpa;
+ more poly4 testing results; and,
+ big progress on all the four shafts and the tunnel (TBM in operation).

Now, this roadshow has the bonds ready for potential purchasers supported by the fast and big progress made in all the marketing, construction, and financing areas.

OR, thanks for the link on junk bonds (https://www.investopedia.com/articles/02/052202.asp).
Based on this article, although junk bonds many include risky junks or Fallen Angles whose rating may drop further and whose business default at the end; they also include many valuable high return investments (opportunities offered by those emerging Rising Stars).

It seems good for SM to start with a low Single B rating, as this will give it more chances to become a
Rising Stars (i.e., more chances to get upgraded than down graded): when its building milestones reached (or ahead of schedule) or funding arrangement nearly adequate for completing the mine (or more polyhalite deposit confirmed; more sales agreement signed, ...), its rating may be upgraded gradually and continuously (to B+, BB, BBB, Ba, ...).

I agree with casa that the initial bond tranche should have already purchasers identified. The road show is mainly for getting the SM polyhilite project well-known in the bond market for subsequent bond tranches.

ffcmember noticed an update of photos on MTS
https://map.siriusminerals.com/mhf/

The digging and fit-out seem to happen partly at the same time:
1. the rails for the maintenance train
2. five pipes for power, water, communication links, ...

Only the conveyor left to do

RNS: "Proposed US$500 million senior secured notes offering

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR WITHIN THE UNITED STATES, CANADA, AUSTRALIA, SOUTH AFRICA OR JAPAN.
..."

Does this mean that the bonds cannot be sold in U.S.A, Canada, Australia, SA or Japan?
or only this document cannot be distributed in those specifically named countries, if so why?