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4.If the use of the standard way in the above examples are correct, the “impact” as described above look a bit strange to me; as I believe that if the placement price is set at or slightly above the share price before the placement, the share price should not change or be slightly higher (as shown in the examples provided below; Casa, could explain the different effects before the above using the standard city way and the below using a common sense method):

Examples:
MC at 0.21p: 0.21 x 4.9 = 1.029 billion pounds
Placement at 0.21p, 0% discount
(1.029+0.4)/(4.9+1.905)
= 1.429/6.805
= 0.21

MC at 0.25p: 0.25 x 4.9 = 1.225 billion pounds
Placement at 0.21p, 16% discount
(1.225+0.4)/(4.9+1.905)
= 1.625/6.805
= 0.2388

MC at 0.30p: 1.47 billion
Placement at 0.21p, 30% discount
(1.47+0.4)/(4.9+1.905)
= 1.87/6.805
= 0.2748

3.You mentioned that this calculating method leaves aside any “sentiment” effects. However, as the method uses the current market cap of a company into calculation (to work out of the percentage), it seems to me that it is actually influenced by the “sentiment” effects implied in the different between the share price just before the placement announcement and the placement price. Take SM for example (to raise 0.4 billion in placement at a placement share price 21p), when its market cap was 1.833 billion pounds (at 39p, 4.7 billion shares). If the placement was made at that time, based the standard way, the 0.4 billion raised fund took around 21% of the market cap, post-placing SP should be 21x(100/121)= 17.35p, the this indicates a 55.5% drop of the share price (the big drop may be explained by the big 46% discount the company provided to the placement investors); Partly due to “sentiment” effects, the SM share price dropped to 20.5p (with a market cap of 1 billion pounds), 21x(100/140)= 15p, the price would have a 26.8% drop from 20.5 to 15p. The percentage drop was less than the above scenario, as the placement discount is less (here actually the placement price is slightly higher than the price before the placement, a low discount rate or a premium price offer deduces the negative impact?).

Sorry, a bit long to read: in a few posts due to limitation on post length.

Casa (20 Dec 18): “IF it were by a placing that's £400mill/1bill ie 28% of the current market cap. At an SP of 21p that level of dilution equals a post-placing SP of 21x(100/128)ie 16.4 pence(leaving aside any ‘sentiment ‘ effects.)” Casa (18 Jan19): the one given about is a “standard City way of calculating the ‘mechanical‘ effect of a share dilution”.,. “If anything I have written is unclear or if you disagree fire away, I will respond”.

Hi, Casa, I made some comments twice on your calculation and explanation, with some disagreement on your use of the “standard city way”. However, I do still have a few things unclear on what you have written (or may have some misunderstanding on the standard city way). Could you please respond on the following (5 questions )?
1.”£400mill/1bill ie 28% of the current market cap”: is the “28%” a typo (as 0.4 billion out of 1 billion is 40% rather than 28%)? Or I missed something on the “28%”?

2.Could you please provide a reference on the standard city way of calculating the “mechanical” effect of a share dilution (especially, on how this formula is derived and when it is proper to apply)? This may help me understand it better.

Casa, thanks for your detailed responses. The point I want to make is that the share price of a company after “dilution” (i.e., placement/open offer) could be higher, e.g., in case there are additional money (such as debt) added to the numerator (in addition to the current market cap and the money raised in the placement) to be divided by the total number of shares (including the newly increased shares). Your “standard City way of calculating the ‘mechanical‘ effect of a share dilution” can only be applied to normal placement/open offer without such debt raising at the same time. As the debt is the largest part in the stage 2 package (i.e., 3 out of 3.6), how can this be excluded from the calculation. Therefore, such standard city way is not applicable to estimate the share price impact of the SM stage 2 fundraising.

I agree with you that the Enterprise Value of SM will not increase to 5 billion immediately after the stage 2 is closed (as not all the 3 billion would be transferred to SM immediately). I did not use Enterprise Value or Market Cap in my calculation, as they both are dynamic and can be affected by sentiment and many other external factors. I used basic cost analysis, as it is a method suitable for early stage companies.

The 48p is the cost per share to build a mine and ramp it up to 10 mtpa. It is not an estimate of the share price after stage 2. I did not provide any hint on how fast the share price may reach this value (but we all know that if the mine is to be profitable, the value of the mine is going to exceed the cost to build it). Nevertheless, I believe that this cost per share value can be used as a cost reference value for us to see if we can get a good price when we purchase the shares from the market. Common knowledge tell us that to buy something good at factory price is a good bargain, and if we can buy it at a half of the factory price, it is a great bargain. Given the stage 2 uncertainties have been greatly reduced recently (this indicates that ST2 will be achieved and the mine will be built), the current share price seems to be a great bargain as it is less than a half of the cost per share to build the mine. Such opportunities are rare, and may only be available for a short time.

daily: cup and handle, indicating the possibility to rise to 25.5p; may have a brief drop to shake out weak hands;
weekly: take off in view;
monthly: at bottom, and show initial sign of moving up;

It seems all the short, medium, and long indications are on up side :) IMO

It is true that in most cases, due to dilution the share price of a company will be lower when a replacement is made. Casa said (20 Dec 18) that “IF it were by a placing that's £400mill/1bill ie 28% of the current market cap. At an SP of 21p that level of dilution equals a post-placing SP of 21x(100/128) ie 16.4 pence”. I believe that your calculation was made under the assumption that the total value of the company keeps the same, hence to end with a low price per share.

However, due to the fact that the coming replacement/open offer is to be made together with a large debt element (3 billion), which will increase the enterprise value of company. Assuming $3 billion new shares will be added in a stage 2 deal, the total money raised by SM will be $5 billion (0.2b pre stage 1 + 1.2b stage 1 + 3.6b stage 2) and the total number of shares will be roughly 8 billion (current roughly 5 billion + the 3 billion). Before stage 2, the cost per share is 1.4/5 = 28 cent (or 21.6p per share), which is largely the current per share price. After stage 2, the per share cost will be 5/8 = 0.625 cent (48p = 0.625/1.2986).
I believe the reason for the current low SP is due to “the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern” (Dan McCrum September 27 2018). I believe that the main uncertainties are the 3 billion debt, rather than the additional 400-600 million budget. Given now that the banks have tentatively indicated at least 1.5 billion senior debt and the government guarantee has become very promising (given the recent comment by PM at the PMQ), I believe that such uncertainties have been greatly reduced. The odds of a successful stage 2 becomes higher. Therefore, we may now make a better informed bet on SM.

Casapinos, could you please comment on the above contrasting your lower per share price calculation; if possible I also wish to learn whether you believe that SM is more risky at the time you first brought the share or at this moment given “The good news is that it is now likely that whatever happens, ST2 will be achieved” (hence the mine will be built).

"casapinos: FLBW I suggest you ask to have your post taken down as that is confidential information.
VincentVega: It’s actually not confidential information. For a small fee, such information is attainable in October (if memory serves) for the previous year."

If it is not confidential and can be purchased, I suggest those had not seen this info before to have a look at it.
As this file contains not only all the shareholders in their real names and the whole transaction history of each shareholder (a bit surprise to me), the real name part may violate the recent data protection law/rules. I am not sure if such data is still purchasable nowadays in the form as shown in FLBW's link.

When I saw the small number of shares bought or sold in the SXX Share Price page, I thought that those might be done by small PIs. However, I just noticed that many larger (e.g. over a million or multi millions) shareholders, selling very small number of shares (e.g., less than 10k) one by one very frequently (e.g. more then 50 times on the same day) and then buying one by one in a sequence also in very small numbers. Are these day traders using some automatically share dealing software? Why they buy and sell in such small numbers (trying to control the price (e.g. by CB holders?) and/or using some computer algorithm to earn money (through day trading)?)? It is a surprise to me to notice that there are so many such kind of sharks there to play with small PIs. They must have earned a lot from the small PIs when the shares going from low to very high and then from very high to very low. Any advice or hint to help us PIs?

GK, yes, the First Poly will be dug out by the constructed in the vertical Production Shaft.
However, it is very intuitive that digging the Poly horizontally from 2021 to the end of 2013 before the 10mtpa is reached should be considered as mining (although the Poly might be transported by road before the MTS is ready). Such mining must be conducted by SM rather than by the shaft or tunnel constructors. That is why I feel it is a bit strange to say Mining begins in 2024.

Thanks Myo for the link. Just watched it and noticed that at the end there is a big caption "Mining begins in 2024".
Some posters here noticed this and thought that this might be an error, while it is not.
Does this indicate a possible delay? or, it just refers to the full 10mtpa production.
It would sound better if it says "First polihalite in 2021 and 10mtpa in 2014".

MM can still buy shares from sellers and sell them to the buyers with a price that differs from both of the sellers and the buyers, and these are displayed under UT.

Does this mean that MM cannot make profit in the middle any more?

Now the Share Price on www.lse.co.uk is displayed in a more meaningful way: with buy in blue when the ask price is used, sell in red when the bid price is used, and blank when the average of ask and bid prices is used :)

"The IPA guarantee will only be provided if the mine cannot be funded without it.
Could Sirius raise $2 billion via dilution? Probably not."

SL, I think OR's above statement and question is squarely to the point. IPA guarantee will only cover the shortfall that the company cannot get from elsewhere (including stock market without serious negative impact to its business). Due to the SP has dropped significantly, to raise a fund that is doubles its MC would certainly have a big negative impact to the company. SM may absorb a $600m placement and some additional contingency fund in some other means (such as 5% of revenue to a strategy partner). This will leave about $1.5b shortfall for IPA to cover. If the MC maintained at above $2.2b (i.e., at 39p per share level), IPA may not provide any guarantee, as they may consider that SM should be able to handle a placement of 2b less than its MC.

"I’d have to go back to find some notes to see what The $50 mllion usd from Gina gets her. "

scotman, Gina's $50 million has not been provided to SM yet. It will be paid and converted into 50/0.248 = 202 million shares after st2 is secured (see the amended agreement). (£0.248 = 20p x1.24 the share price and exchange at the time when the cornerstone investment was agreed in st1).

GK/Fred/Jimmy, I think I may understand Fred's concern. If shares would be consolidated for a 5 to 1, one pound per share could be reached much sooner, at a time not many here want to have a "one pound party" (as its meaning and significance changed). I believe that 1 pound per share could still be reached without such a consolidation as long as st2 is successful and the mine is built. Any significant number (of shares) we hold would also be the same number of pounds. E.g. many mili holders here will all be millionaires :)

"I was wrong about getting some TorPs news this month (unless it’s this week) but CF and BOD if you read this board .....please give us some Christmas good news - we deserve it - and even Casapinos might buy some shares (I’m sure he wants to really)!"

Fred, the gov guarantee is essential for the success of st2. IMO, SM staying in a situation that only the gov can help is essential to obtain the gov guarantee. Therefore, before the gov guarantee is secured, SM is better to remain in such a situation. To release good news and push the SP higher in this critical period is not helpful, as this may push the gov and the potential IIs away. The success of st2 (i.e., reaching a package deal among all the stakeholders (banks, gov, SM, IIs, SM and possibly a strategy partner) is much more important than enjoying some paper money increase, which may be counter productive to the st2 success as mentioned above. SM needs both the existing and the potential new shareholders (especially big IIs and PIs like pasa).

"What cooperation? They have tried to derail this project at every opportunity. Sirius Minerals don't even get to buy the polyhalite direct from Boulby."

Scotman, I do not know that SM did not get poly directly from Boulby (I initially thought they might). Whether willingly or not by their management, their polyhalite production, lab/field testing, and marketing activities did provide indirect help to SM as otherwise SM has to do their own field testing and product-backed marketing many years later.

My firsy posts on the board are on this topic. Boulby has made a major contribution to the polyhalite industry in general and to SM in particular. Many their former staff members have played important role in SM, including the two names WoodSmith, and the managing director of the mine and the world first poly production. Their poly product provided raw materials for the testing poly4 products used for poly4 marketing (sample for customers) and field studies. I believe their cooperation will continue, and SM will take care of people working at Boulby when the SM' mine is built.

Myo, thanks for the links. I'd read them and be happy to revisit the questions. However, as all the posts on the questions had been removed, I am not sure if I did anything wrong on some or all of them.