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The previous modified structure (three tranches in a sequence) of the $3b senior debt contains lots of uncertainties, and it puts the potential financial close to "later in the year". The milestone linkage (or condition) may leave gaps in between the tranches.

Now, with the new Alternative Proposal, every thing will become clear by the end of April, i.e., the end of next Month!
This is a great news!!!

jonesrichard, the company did not state in the last quarterly update that stage 2 finance will be completed before the end of this quarter. They said so in previous updates before the last quarterly update, but the situation had changed in the last update.

In the last quarterly update (22 Jan 19), CF said that they have been working towards the commitment letters across the three tranches and trying to have the commitment letters signed asap (without providing a specific target, i.e., no new deadline provided). He said that "we look forward to updating you as progress continues on both the debt financing, construction and also the work in the offtake side of things".

Therefore, it is not possible to see the stage 2 completed in next 15 days, but an update on some progress on the debt financing (commitments of one, two or all of the three tranches, strategy partner(s)) and/or offtake side of things (European TorP, or Chinese/Indian TorP) would be more likely. Due to the new sequential plan, my expectation for this quarter has been guided very low by the quarterly update, I would be happy with an update/news on any one piece of progress by the end of this quarter. More progress may be announced next quarter (i.e., Q2). The closing might be later in the year.

Due to the extremely large PI base of this share, to raise all the $600m in an open offer is not possible, as not many PIs would have the funding available as RedbullRJ does.

Hopefully most of the $600m will be raised in other options (e.g. strategy partners) than new shares.

If there will be some amount of new shares, an open order will be provided (as from "Pinched off blue share" discussion, IR from SM said that: "We are cognizant that private investors would welcome the opportunity to invest in the Company through an Open Offer should we pursue a capital raise in the equity markets"), possibly in addition to a placement to new IIs.

The potential open offer is mostly likely using the similar scheme as in stage 1, i.e. to issue 2 New Ordinary Shares for every 25 Existing Ordinary Shares among existing shareholders. This will be 8% of the existing shares. Such open offer will raise around 384m shares (i.e., 8% of 4.8b). If the offer is placed at 21p, this will raise around 80m.

Scotman, I do not know the typical proportion of the IPA cover (among all the fund to be raised), as I have not seen an article contains the covering history of IPA. The 20% proportion, I mentioned, comes from some common sense information on funding scheme to help cover a funding shortfall, and a discussion provided in my post, IMO of course.

Sorry, in my previous post, all the mentioned 13mtpa should be 10mtpa

IMO, $1b IPA cover is almost the best deal SM can get, which covers nearly 20% of the total needed funds to build a mine and ramp it up 13mtpa.

IPA guarantee, by its definition, only plugs the funding shortfall (i.e., a small proportion of the whole) in case such funding is not available in the capital market (i.e., gov support is needed).

In section 11, of the NEXT STEPS FOR THE NORTHERN POWERHOUSE document, it says that “In attracting significant private sector investment, it is proportionate to use Treasury Guarantees to help bring the infrastructure build to a successful conclusion. A test for the government is to ensure that they back this project, so that other transformational projects will be taken forward across wider sectors and places across the Northern Powerhouse”. I.e., IPA should promote private investment by covering a proper proportion of the whole needed fund. Such proportional help is the essence of government support in many areas. For example, in the housing market, to help people get on the housing ladder, the government Help To Buy Scheme may offer buyers a loan of 20% of the house price.

It is not realistic to expect a government help scheme as a primary funding source, e.g, to cover half of a large (multi-billion) project. The $2b IPA cover (i.e., 66.66% of the total needed $3b debt) as SM initially mentioned is not realistic. I agree with Miloth3rd that it is just a negotiation strategy, as in a negotiation, if you do not ask for more at the beginning, you may not get the minimum amount you want to get.

From the Help To Buy scheme, I gather that up to 20% of the total needed fund might be a proper proportion to cover a SHORTFALL. The SM total needed fund (including all raised and to be raised for building a mine of 13mtpa) is $5.1b (this includes $0.3b before stage 1, $1.2b in stage 1, $0.6b additional money (as Myo called stage 1 extension), and the $3b stage 2 debt ($0.5b SM high yield bond, $1.5b bank loan, $1b IPA covered loan)). We can see that the proportion of the funds are 2.1:2:1 of the total (5.1), i.e., risk money over 40%, uncovered loan 40%, covered 20%.

From the above, we can see that the $1b IPA cover, i.e., a cover on nearly 20% of the total needed funding, is already a perfect proportion SM can get from the IPA scheme. Even adding the $0.6b additional money, the risk funding proportion is still quite low, i.e., the cushion is not very thick for the $3b debt sits on it. Therefore, I would not surprise, if the bank group and IPA ask for higher contingency money than $0.6b to cover the potential risk of the deep shafts. The IPA covered part would be capped at the agreed amount, i.e., $1b, in case SM would need more funding to get the first poly, SM has to get the further additional money from the high yield bond market, with the IPA covered fund as backing (for the final shortfall) to complete the mine (rump up to 13mtpa).

Myo, this has made the potential government support more explicit. This is a visit by a special minister from the cabinet that wants to see the success of business of national significance, rather than officials at local level that are naturally want to see business success in their own area (e.g., North Yorkshire, Scarborough, ... Northern Powerhouse, ...).

Verulam and GK, thanks for your detailed info on why a “double thickness lined” tunnel is needed, which provides the justification on the additional money.

Pixxie and Myo, thanks for your info. I am just curious when I saw the big set of equip there after the D-wall completed. The email message from SM made this very clear:)

Myo: "...the D-walling was carried out after the 14B rig was taken down.....I think the chronological flyovers will show you that? ..."

So, the D-walling was carried out after the 14B rig was taken down; and then after the D-walling completed, a set of complicated equipment was installed to do the "casting removal" and fill out the borehole properly. I.e., it seems that to fill a deep hole properly is also not an easy job.

Myo: "Brandon Lewis' visit today ... Chairman of the Conservative party? Minister without portfolio?.............is there a significance....". "Chris Fraser, Graham Clarke and Matt Parsons accompanied him round......they must have though it important...?"

As the mine building progress and its needed IPA support is not in his responsibility, he must have been sent/asked by the PM/gov to view the mine progress and report back to the gov. At this critical time, care and support at this level is very important. Given the very positive comments by PM and this special Minister (and the explicit listing of the IPA covered tranche in the company presentation), I tend to believe that the negotiation on the IPA covered has been completed and the arrangement for this tranche has been agreed between the IPA and SM (only the admin procedure, i.e., the final approval by the gov is left to do, hence the importance of the visit).

Thanks, Myo, for pointing out that the tower is for the SM14b drill rig casting removal. I thought the boreholes were done well before the D-walling.

Just have had a quick search on the boreholes, but did not find a piece of info explained the whole drilling exercises.

Is it correct that the drilling events at the two shaft sites happened in the following sequence?
1. SM11 (a/b) borehole reached the full depth at the service shaft site;
2. SM14 borehole reached less than 1300m at production shaft site (but failed to go deeper for some technical problem);
3. D-walling was build at the production shaft;
4. SM14b borehole drilled after D-wall finished for a better understanding of the whole depth (so as to provide more detailed information for the shaft sinking), therefore, we can still see there after the D-walling and before excavation?

Can anybody recognize the set of specific equipment, with a vertical tower kind frame at the center of the shaft?

Is it used for building the winder house or the shaft under the tower?

I do not have an impression that we saw this before on the service shaft.
If the vertical tower could grow downwards, it might be used for moving the soil/rock pieces continuously from the shaft (so as to speed up the excavation)?

The Rt Hon @BrandonLewis MP to Woodsmith Mine today to view project progress:
https://www.facebook.com/siriusmineralsuk/videos/250000755882148/?t=9

At the beginning part of the video, you can see that the excavation of the production shaft together with its winder house has started.

CF's presentation at the JP Morgan conference gives people an impression that the IPA covered tranche is already in the bag, as it is listed there without any annotation/qualifier and as the next step on the $3b senior debt only involves the "Company working through dd and T&Cs with the commercial bank lender group" (for the bank tranche obviously and possibly also the first tranche).

Casa, good to know this presentation is done by CF.

Sure, this is important, as the first tranche of high yield bond, and then possibly the third tranche of the needed senior debt will come from this capital market. Once SM becomes a well-known bond issuer in this market, they will get a good funding source and access it when needed.

Hi, Thornback, I agreed with Mr.dt. We may interpret those terms as "will be closed" or "will be drawn" at the time on the timeline. The timeline is Indicative only, as it only provides a sequence without specific time labels.

The JPMorgan high yield conference must be one of the bond marketing events to connect the potential high yield bonds issuers (companies) and the purchasers/lenders.

On the page 13 of the presentation (on the stage 2 financing), the SM high yield bond tranche is highlighted (in a red-lined box) under the Indicative timeline for the conference audience.

On the left bottom of this page, relating to the three tranches of the $3b senior debt, it says that "Company working through dd and T&Cs with the commercial bank lender group". The negotiation with IPA is not mentioned, which may indicate that an agreement on the IPA covered tranche has been reached (as the structure change of the $3b debt must have been requested by the IPA and then agreed by SM) (if so, a solid progress and a great achievement!!!, which is not only a guarantee for the covered fund, but also essential for all the rest of the stage 2 financing).

Therefore, the current focuses of the stage 2 execution, as shown in this presentation, are on the commitments of the bank tranche and the SM high yield bond, in addition to the additional $400-600m (that is most likely arranged using a mixture of options as suggested by SM).

Possibly some of the options, e.g., Strategic partner, completion support, ..., could be sorted out before the commitment letters?

Interesting to see the order of the items listed in the presentation on stage 2:
US$400-US$600m financing closed
Lender commitment letters received

I thought the order should be ??
Lender commitment letters received
US$400-US$600m financing closed