Member Info for wwguk

JPMorgan Conf
https://siriusminerals.com/downloads/jp-morgan-high-yield-conference/

Chesh: "Volume is a bit low................! Not much of a reader, so if you've got any Pic's :)"

Yes, when bottoming the volume is low; when the changing of trend consolidates the volume will increase.
This board is textual, I have no easy way to post pics, and the software I used is a paid one (and it is not proper for me to capture and post their charts here). However, I have provided parameters for those charts and they can be reproduced in many other online stock charting tools. There are also many free charts available, e.g.,
https://markets.ft.com/data/equities/tearsheet/charts?s=SXX:LSE
For long term trends and their turning points, one can choose 5Y and (Lower) Stochastic to see the charts.
For short term trend, one can select (Upper) Simple Moving Average (e.g., 5 days and 10 days) and Parabolic SAR, and choose 6M to see the charts and their indicators.

When a trend change is going to happen on the chart, some significant event(s) may happen coincidentally/magically. Given that a small trend change on the daily chart has just happened, if the trend change can be consolidated in next few days or weeks, the weekly trend will also change, and then will the monthly trend.

These may imply that some positive event(s)/news relating to stage 2 may appear in the next few days/weeks (for the medium trend change) and a couple of months (for the long term trend change):
- new Chinese TorP
- new Indian TorP
- the long waited European TorP
- arrangement on other options for the additional ($400m-$600m) money
- commitment letters from the banks
- contingency figure inline with the previous estimate
- SM high yield bond
- IPA cover
- ...

Monthly:
- Full STO %K(14,3) (black), %D(3)(red): 6.27, 7.99; an oversold and bottoming indication; in past 5 instances when this %K(14,3 < 20 oversold line, the stock price had a significant rebound (2009jan from 0.5p to 12.5p; 2010June from 1.3p to 19p; 2013oct from 7.5p to 15p; 2015jan from 7.5p to 27.5p; 2017 jan from 18.5p to 32p). The black has moved up from 5.8 to 6.27, towards to cross the red currently at 7.99

Weekly:
- MACD(12, 26, 9) had first black to red upwards crossover (touched), and the second crossover is emerging;
- Full STO black to red crossover happened, had a retreat, now just had second crossover;
- PMO(35,20,10) black is flat and is to crossover the descending red;

Daily:
- MACD had black to red upwards crossover;
- Full STO upwards crossover had happened for quite a while;
- PMO had black to red upwards crossover;
- The 5 day moving average had crossover 10 day moving average upwards one at the end of 2018; and now just had the second upward crossover; a W shape bottoming pattern has appeared, which would indicate a change of the downwards trend and confirm a new up moving trend.
- Barabolic SAR has also provided a signal of trend change (from down to up).

Overall:
Both the long and medium indicators show a bottoming process, and the up trend sign is starting to emerging; the change of trend in the short term has just emerged. It is very like that in a few days, or at most a couple of weeks, all the long, medium, and short term indicators will all show explicit up moving signs (in case the short term up moving trend to continue for a few days).

All IMO of course (20 Feb 2019).

I agree with Myo that "some or all of the stage 1 capital extension (the $400-600m) could have been/could be raised in advance of the stage 2 monies being confirmed", as the risk money raised in (and pre-) stage 1 is not thick enough to serve as a cushion behind the $3b senior debt .

To allow the construction to continue at the current pace as planned, the money may be raised/announced in the following order:

1. Money offered in the forms of other options, as part of "the stage 1 capital extension (the $400-600m)" in relation to the needed contingency money;

2. Money from capital market in the forms of convertible bond and replacement/open offer, as part of the ($400-600m) additional money (given money raised in 1, this element should be much less than $400m);

3. The £50m from Gina (at the time the $3b senior debt sorted out);

Then the three senior debt tranches ($3b in total):

4. SM high yield bond tranche;

5. The bank tranche;

6. The third senior debt tranche with two options:

6a) The IPA covered tranche (to support the first and the second tranches, this has to be a firm offer in case of contingency needs at the time to make sure a 10mtpa mine being built);

6b) SM bond (also with senior status) that is cheaper than the first senior debt tranche (and also cheaper than the IPA covered tranche), in case of the successful first poly and initial sales achieved by then, and the money is mainly for ramp up purpose.

Such sequential arrangement may push or allow the whole stage 2 to be closed at a later date than previous anticipated, in Q2, Q3, or Q4; in whichever case, the construction will continue as planned so as to insure the first poly in 2021.

Recent developments indicate that the government support in some form can be expected (as shown by the PM support in her comments in PMQ) and that the existing 8.2mtpa peak TorP (plus the potential European TorP) seems to be enough to support the $3.6b stage 2 funding requirement. However, there are still quite a few uncertainties (and open questions) to be addressed in the coming weeks and/or months.

Milestones (Next Steps) mentioned and/or left for stage 2 financing:
1. Convert advanced offtake volumes (i.e., the well-advanced Europe TorP)
2. Additional capital financing options (progressing)
3. Due diligence (ongoing), reports prepared, working on addressing the matters raised,
4. Lender commitment letters (asap), seems to be on the bank tranche only
5. Financial close

Questions (IMO and answers?):
- Commitments for the first tranche (i.e., the uncovered SM bond, these would be one of the conditions for the bank and the IPA tranches): time and amount?

- Contingency (in line with the September estimate, but to be decided by the lenders and IPA; part of the results of the due diligence; the amount of the needed additional capital is dependent on this): time and amount? (Together with bank commitment letters?)

- Bank commitment letters (2018June->2018Q->2019Q1->asap), time and amount?

- The well-advanced Europe TorP (listed in Next Steps in 2018 oct Investment Presentation), time and amount?

- IPA is supposed to help address the liquidity that is not available on the market, however, by the time when first Poly appears and sales start, the pre-requisite situation for the IPA cover will disappear, will IPA promise an IPA covered tranche in advance, or will IPA only provide an conditional backstop? If it is the later, will other lenders agree (or do we still have a full commitment for the full funding needed for a 10mtpa mine, see below)?

- Financial close of stage 2 financing (listed before: 2018Q4-> 2019Q1, but not in the latest update and investment presentation), what does “financial close” mean? (stage 2 financing commitments are obtained to fully fund the initial 10 Mtpa development of the Project); why not listed anymore? No deadline anymore? or No closing (in its original meaning) anymore?

Thanks, GK, so from the discussion, the common understanding of the possible stage 2 arrangement might be (collected and used in the following sequence):

1. "additional capital of $400 million to $600 million in whatever form", may include dilutive elements, such placement/open offer, convertible bonds, ...

2. senior debt tranche 1: SM high yield bond, similar to the bank tranche, but with a higher interest rate than the bank tranche;

3. senior debt tranche 2: the bank tranche

4. senior debt tranche 3: with two options (in case all the milestones reached):

1) the bond covered by the IPA (with an interest rate decided at the time when the whole deal is reached, i.e. with an interest rate similar to the bank tranche, plus an additional fee to the gov.); or
2) SM bond, it is high yield bond, but with a much lower interest rate than the first tranches and also cheaper than the IPA covered tranche (and therefore also cheaper than the bank tranche);

The higher cost of the first tranche of senior debt could be off set by the possible lower cost of the SM bond in the third tranche, in case by then SM is able to do this.

I agree with LITC's interpretation of the three tranches of debt.

The $4/600m additional money will be raised and drawn down first; part of this may be dilutive.

I wish that the possibility of conversion of the high yield bond (i.e., the first tranche) as mentioned by SL could be ruled out, by its the senior status.

Can any one confirm that the "ranked senior secure pari passu" of a high yield bond would generally remove such option? (as it will be very bad, if both the additional money and the first tranches will be dilutive).

Nice soil in the national park: soft, loose, easy to dig at least up to 46m. If I had the soil in my allotment, I would have had much bigger and longer (possibly genetically modified) reddish up to 46 meters ;)

If a hanging roadheader (SBR) that can remove soil automatically and continuously had been used, the soil within the D-wall could have been removed in a couple of weeks, rather than months.

From the all pictures we have seen so far, I believe that the same job could be and
will be done in a much faster rate in the production shaft.

My current understanding is that in general "uncovered debt capital markets tranche" may be attached to a convertible clause. However, if this "uncovered debt capital markets tranche" is of rank senior secure, pari passu, then it will sit at a higher level than convertible bonds, and therefore, will not be possibility convertible.

Is this right?

We know that convertible bonds are high yield bonds for seed investing in early stage companies. Similar as equities (i.e., shares), convertible bonds are often served as risk absorbing cushion underlying senior bonds or senior debt.

If certain high yield bonds considered as senior, are they possibly convertible?

As the SM's first tranche will be high yield bonds (as a part of the $3b SENIOR debt) and the third tranche may also be such bonds (in case SM by then chooses not to use IPA covered bonds), the answer to this question is very critical (as the convertible has a dilutive potential).

Can any finance person, or any person familiar with many types of bonds, here help answer this question? (please take the current SM context into consideration, i.e., an answer that is more than just a very general one is preferred).

Monthly:
Full STO <= 7.72; an oversold and bottoming indication; in past 5 instances when this < 20 oversold line, the stock price had a significant rebound (2009jan from 0.5p to 12.5p; 2010June from 1.3p to 19p; 2013oct from 7.5p to 15p; 2015jan from 7.5p to 27.5p; 2017jan from 18.5p to 32p).

Weekly:
MACD(12, 26, 9) had first black to red upwards crossover (touched), when clearly crossover happens the upwards trend will be confirmed;
Full STO upwards crossover had happened, had a small retreat (very similar to 2017march) if it crossover upwards again then the 2017march pattern repeat and a upwards trend will be confirmed;
PMO(35,20,10) is to crossover, if happens, upwards trend would be confirmed;

Daily:
Full STO upwards crossover had happened (from <20 to above 20); had a small retreat;
The 5 day moving average had crossover 10 day moving average upwards one at the end of 2018; if this happens again next feed weeks, then a W shape bottoming pattern would appear, which would indicate a change of trend and confirm a new up moving trend.

Overall, both the long and medium indications show a bottoming process, and the up trend sign is starting to emerging; the change of trend in the short term is still not as obvious as the long and medium ones, but a similar sign (in its beginning form) can be noticed or hopefully expected. All IMO of course (30 Jan 2019).

Sorry, the photo seems to be an old one for the guide wall of service shaft.

“The project time line is unchanged, we still aim to reach the polyhalite seam in 2021,” the spokesperson said. “We are still going through due diligence process ahead of finalising stage two financing and still in negotiation with banks and lenders.”

See photo at
https://www.newcivilengineer.com/latest/owner-insists-3bn-polyhalite-mine-is-on-time-despite-funding-cut/10039264.article

On 29 Oct '18, I posted that to get IPA guarantee, “At least two lows are needed”, as IPA guarantee, by its mission, is to help plug the funding shortfall (i.e., when the needed funding for a national significant project cannot be fully raised without their support).

The current share price is lower than the cost per share out of all the money raised by SM so far (including those used and turned into the well-progressed mine infrastructure and those left to be used by the end of this Q2). Of cause, this extreme low share price is not normal, which indicates that the market may believe that the stage 2 fundraising may fail. This looks bad for the current shareholders, but this would also help convince IPA that its help is essential. This helped get them involved and will push them to make a concrete commitment, which in turn, will facilitate the completion of an overall deal of stage 2 (to get the mine built).

Some posters here mentioned that why not to raise part of the extra funds in placement form later at a much higher share price. This is not possible, as all the senior debt lenders and IPA want to have a thick enough cushion underneath; While with an IPA backstop there, another tranche of high yield bond later would be fine to everyone.

wwguk: "The IPA guarantee, or backstop, is still essential to get the ball rolling and safeguard needed funding for building the mine; Otherwise, SM has no need to change the funding structure (as to raise the third tranche of senior debt at this moment will be difficult; while to collect this after the first poly will be very easy)."

The third tranche of senior debt, if raised after first poly, may be much cheaper than the first tranche of high yield bonds, and I gather would also be cheaper than the IPA guaranteed bonds (this may be the main reason why CF has mentioned the possibility in the conference call).

The SM original stage 2 plan was to start with $3b the IPA guaranteed bonds and the bank senior debts in parallel, and the additional extra money at the end ($400m to $600m, possibly with some of them as completion support that may never be needed. When I commented in my summary of the RNS on the structure change, i.e., the IPA guaranteed bonds as backstop which may never happen; I was in a mood of disappointment.

However, to reflect more rationally, our disappointment mainly came from the unrealistic expectation to get some IPA guaranteed bonds as cheaper money and to avoid those more costly money from the market (i.e., those dilutive funding from placement) as much as possible.

I disagree with casa on the comment of “The wind direction is very clear, the IPA, cursed by a poor track record, is planning to stand on the sidelines , unless and until the project is on the cusp of success”. I believe that the IPA agreed part will step in by default (i.e., automatically), in case the project may be on the cusp of failure (i.e., with a funding shortfall, that cannot go without the IPA guaranteed bonds. In other words, the IPA guaranteed bonds will be available at the time for the third tranche, i.e., when the planned milestones by then achieved and SM may still have a shortfall of the funding (i.e., the $400m to $600m)) to address those expected or unexpected contingencies.

In case, SM can go without the IPA support at that time, in addition to use the incomes from their own sales and the 1/3 sales from Cibra, SM may choose to raise some money from market in the form of high yield bonds (I had listened the conference call again, and noticed that my initial worry (i.e., the worst case scenario I mentioned in my earlier post) on the possible raising in the form of placement had no ground; CF means bonds, i.e., cash from senior debt, rather than cash from replacement!).

I agree with Myo that “the IPA involvement has been the catalyst to reassure all stakeholders throughout ..” whether a penny of the IPA guaranteed money is to be used or not. The IPA guarantee, or backstop, is still essential to get the ball rolling and safeguard needed funding for building the mine; Otherwise, SM has no need to change the funding structure (as to raise the third tranche of senior debt at this moment will be difficult; while to collect this after the first poly will be very easy).

WhichWayNow, Sorry, typo again, I mean I am NOT a researcher on stock market related topics.