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As SM has signed 10.7mtpt TorP, it should be able to pay back the debt.
There are quite a few frightening wordings in RNS, such as uncertainty/on going concern ...; best effort by JMP, but not purchase by itself ..., it may not sell all the bonds...; fail to sell all would fail the $2.5b revolving credit facility ...

Are these wordings normal in every such commitment letters on the secured senior bonds?

The successful selling of the $500m secured senior bonds (Initial bonds) is the condition to the access of the $2.5b revolving credit facility. This Initial bonds has a senior status as it has priority over other unsecured convertible bonds and it is also secured against SM's assets.

Whether it can be easily sold depends on 1) its interest rate and 2) how secure it is.
It is anticipated that its interest rate may be around 10% or even higher to ensure all the bonds to be sold.
More important to purchasers might be the value of assets behind the bonds.
The fundraising of the $400m placement and the $644 convertible bonds are considered much easier than that through secured senior high yield bonds. After the successful raising through the placement and convertible bonds, SM would have mine assets valued around $2.15b (i.e., 0.2 + 1.15 + 0.4 + 0.4 billion fund used or still left in hand).
$2.15b assets should be a thick enough cushion for a $0.5b secured bond (i.e., the buyer should feel safe enough to get their money back through selling assets in case of SM default). Therefore, the $0.5b secured senior bonds should be not difficult to be fully purchased by the purchasers. If this is the case, than SM should be able to get the $3b senior debt and close the stage 2 financing successfully on time.

If you are still worried about the high yield bonds, what do you think would make the selling of the bonds difficult?

Ennismore Fund Management Limited reduced their short position.
The shorts dropped from 7.08% to 6.49% over two days (25-26 April).

TalygarnTom: "Looking at the details of the "Open offer" it doesn't look like private investors will be offered any of the discounted stock. Am I reading this correctly? "

Yes, I agree, from reading the RNS. Only 10% of the $400m will be conditional to certain IIs, possibly also for some PIs in case they are Qualified Shareholders under the Open Offer (more details on this may be soon available after their completion of the quick book-runner today in a perspectives on this to be published soon).

If qualified, Admission becoming effective by not later than 8.00 a.m. on 23 May 2019

I can understand that for many PIs holding less than the average 56470 shares (4.8b/85000); they may only buy
56470x4% = 2258 shares, using £339 at 15p. The fees of this trading alone may make the price discount not really very meaningful. This would add a lot of management and time cost to the the Lead Manager (Shore Capital), so they may not want to do it (although may PIs may want to participate).

Any other ideas on this?

The total funds raised after the completion of stage 2:
$0.2b before stage 1
$1.2b stage 1, including the $50m to be paid by Gina
$0.4b placement and open offer
$0.644b convertible bonds
$0.5b high yield bonds
$2.5b debt facility
--------------------------------
5.444b USD in total

Total shares after stage 2 fully completed: 9.38b shares

Cost per share = 5.444/9.38 = 58c (45p) per share
This shows that if your average share price is below 45p, your shares are below the cost for building the mine.
When the mine starts to generate cash, your shares will worth more and more above the cost price.

Current we have 4.8b shares.
The $400m placement at 15p or 20c, will add 2b new shares.
The $644m convertible at 20p or 25c, will add 2.576b new shares (this includes $244m to buy back the stage 1 convertibles, therefore, the 1.2b new shares from the rest of stage 1 convertible will be removed).
We may end up with 4.8+2+2.576 = 9.376b shares in total if all convertibles converted.
This is much better than the 10.28b shares as I had speculated before (see previous posts).

I have added again in this drop, as the percentage of new shares to PIs is too low.
We can only get about 4% of our holding new shares, i.e., for 1m shares, you may get 40000 new shares at 15p (£6000). If you want more shares, around 18p is a great price!

Now, all the needed funding secured and the mine will be built. The great risk of a potential funding failure has been avoided. A re-rating is going to happen.

Experienced traders/investors, like casa, would be very happy to get all he can get if there are people selling at 15-18p. Such a short-lived drop happens often as there are always weak hands there. If you are an existing shareholder, you should try not become one of the weak hands, to loose your shares at time just before its re-rate!

The deal is better than that reported by Sky news last night:
- $400m placement and open offer (not £400) at a price between 15-18p to existing shareholders
- $644m convertible bonds
- $3b senior debt, including 0.5b directly from JMP

Based on previous information, I had speculated that there would be $700m convertible bonds as part of the $3b debt. Now, the $600m convertible (with a higher conversion price) becomes part of the additional money out side of the $3b senior debt. Due to the complex of the deep shafts, more money at hand would be safer to any surprise.

Overall, this is a great deal! Good for existing shareholders (as we will get some shares in a discounted price). Good for the mine as more contingency money plus $3b debt is secured to complete a 10mtpa mine.

casa: "... Second The Pi's will not be asked to take part in an open offer. ...".

Yes, the report mentioned only placement. However, due to the fact that SM has mentioned in their feedback to the questions, they seemed to have promised to provide an open offer in case there will be a placing (see previous posts here). Therefore, I believe PIs would still be able to get a chance to get a some new shares at the same placement price as IIs and Gina will get (possible a smaller percentage to them, say at a level a bit higher than that (8%) in stage 1).
As the placement price may be decided later, it might not be a discount to the current price (21.9p) but a discount to a price when the placement detail is announced (tomorrow we may only get the requirement confirmed, rather than the price).

I gather tomorrow only the amount of the placement will be announced, without a placement price.
As the previous RNS only mentioned that the requirement of the non-senior additional funding will be identified before the end of April. The placement price will be decided later.

If the share price increases continuously after tomorrow's announcement and reaches 30p or above before the placement, a placement at a price around 20p to 22p would be still a great discount to the share price at the time (i.e., one above 30p).

NelsonSauvin, yes, even if the placement price is set at 15p, you cannot see a new share price tomorrow (or after dilution) at 15p, as in addition to the £400m, this fundraising (stage 2) also includes a debt component ($3b) that is much larger than the £400m (or $520m).

It is possible that some weak hands will sell tomorrow at a price lower than the current price (21.9p) based on their wrong understanding of the impact of the overall deal; but they will regret soon after they see the share price rocks much higher.

sorry typo: "If Gina is also included, this would be not fair"
I mean: If Gina is NOT included (as existing shareholder), this (a discounted price that is lower than 20p) would be not fair to her as she has booked $50m shares at 20p, a placement price other IIs and PIs got in stage 1.

According to the news, the placing ($520m) is less than $600m, and all the rest ($3b) is debt.
This is a very good deal.

All the $520m (£400m) will a placing with existing shareholders, who include major City institutions as well as Gina Rinehart. This means that Gina is also considered as existing shareholders (as she has booked $50m shares in stage 1), this opens the possibility to offer a discounted price (a gift or reward) to existing shareholders, say at 15p (If Gina is also included, this would be not fair; and if this is also open to new shareholders, it would be not fair to existing shareholders (including IIs in stage 1)).

At 15p, 2.67b new shares will be added to the existing 6b shares (i.e., 4.8b current shares plus 1.2b shares from stage 1 placement): the total share number will be 8.67, which is near the best deal (with 2b new shares) and is much less than the new shares number provided in my worst case scenarios.

Even if the $3b debt package includes some convertible, say $0.7b. If it is to convertible at time a couple of years away at the high conversion price, the total share number should still be far less than our estimated 10.28b.

This is a great news to existing shareholders!
Those have not risked to invest before the deal will have lost the chance to the get the share at the discounted price.

Milothe3rd, Fred, GK, Eureka, I had also speculated on the possible dilution before in posts.

I believe that the worst case scenario could be
1) all the additional requirement $0.6b would be in equity (say at a placement/open offer price 21p or 27c); and
2) $0.7b (out of the £3b debt) would be in CB (say at a conversion price 26p or 34c).

0.6/0.27 = 2.22b shares
0.7/0.34 = 2.06b shares

We have 4.8b shares at this moment, plus stage 1 convertible about 1.2b to come,
these may end up with 4.8 + 1.2 + 2.22 + 2.06 = 10.28b shares if all convertibles converted.
Due to the great construction and TorP progresses made in past few years and due to stage 2 funding should result in a completed 10mtpa mine, I have set the placement price and conversion price slightly higher than those set in stage 1 (which were 20p and 25b respectively).

The new shares could be much less than 4.28b, in case not all the additional money will be in equity, e.g., part of them raised using other options, such as strategy partners or CB at a conversion price higher than 21p; or the conversion price of the $0.7b high yield bonds at a price higher than 26p; or there would be less than 0.7b high yield bonds from the capital market would be convertible.

The new shares could also be more than 4.28b (or the total shares could be more than 10.28b), in case the placement price or conversion price set at a level lower than the above mentioned ones.

The above analysis is largely in consistent with Milothe3rd's conclusion. If the new shares are less than 4.28b (Milo speculated), the deal would be considered as a fair one. If the new shares are less than 2b, it would be a great deal (as GK speculated). If the total shares are around 11b, then the existing shareholders will still be profitable, although not at a level or not at fast as most here had expected. If the total shares are much more than 12b, then the share price may suffer a big dilution impact, at least in short term (as casa speculated).

Great! This is the third drop in this month: 7.49% to 7.39%; then to 7.29%; and now 7.08%.

From the new images we can see that the de-cast tower has been finally removed. The excavation within the D-wall has started.

Myo, yes, a strategy partner relating to the $400m-$600m additional funding requirement would be great!

"the Agreement provides for the establishment of a joint venture vehicle for the management of sales and marketing of POLY4 into Europe, as well as the movement of product."

Myo, do you have any idea on "a joint venture" between SM and BayWa? In addition to joint management, will it be financed by both sides? Something in someway similar to Cibra?

Daan Vriens, CEO of BAST, comments:

"We are excited to be partnering with Sirius to bring a high performing, multi-nutrient fertilizer like POLY4 to customers across Europe through Cefetra.