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I seem to have rather riled Sirius Minerals (LSE:SXX ) with a suggestion last week that it urgently need to issue equity. The company has issued a statement today which says that “ The Directors of Sirius Minerals Plc, the globally diversified potash development group, would like to correct current misinformation about the Company’s financing plans for the York Potash Project. As at 31 January 2013, the Company had a cash balance of GBP24 million and no immediate plans for a placement of shares.
The development of the world-class York Potash Project will require multiple financings and these will be carried out when required, when opportunities present themselves and always with the best value to shareholders in mind.”
Ooooh er missus. Whatever you say.
Now let’s look at the facts. As at 30th September (interims) you had £36.7 cash in the bank. You also had net current payables of £2 million and I assume – since you neglect to clarify that position, that this latter figure is unchanged. So in the four months to 31st January you managed to burn give or take £13 million of cash.
Now you had a cash position net of net current liabilities of £22 million on 31st January. Your cashburn rate appears to be just over £3 million a month even before you have started building the project in North Yorks for which you have yet to receive planning permission. I presume that you will not leave matters until the last minute before issuing equity . But at current trend rates the piggy bank is all but empty on or around August 31st.
You may not have “immediate” plans to issue shares but if you don’t start thinking about it pretty damn soon then it is going to be Grim Up North for you all.
I have needless to say had a string of emails from folks ( all Sirius shareholders) asking what my hidden agenda is. I have none at all. I merely point out for folks too lazy to read interim results statements and look at cashburn rates ( something today’s statement really helps with since I had assumed that cashburn was merely running at £17.5 million a half year but it appears to have accelerated) that a big share placing is on the way. That it is not “imminent” is a great relief. That it is very soon, is beyond doubt.
You can read my recent comments on Sirius HERE
Taking a wild guess, I reckon that Sirius will get planning permission in May. That is seen as a milestone but does not generate any actual cash. But there will be a big PR hoo hah around that time hoping to drive the stock North by getting private punters and BB morons to buy and the placing will be done ( at a discount to institutions) into that strength.
Tom Winnifrith can be bothered to read interim cashflow statements and writes for 10 UK and US financial websites . Links to all his content can be found at www.TomWinnifrith.com and you can follow him on twitter @tomwinnifrith
I do not believe you have riled the company but they have to clear up any confusion caused by people just spouting off for the sake of it to fill there time! DYOR before making naive and misleading statements!
Based on the statement below that you expect the share price to strengthen up to and around planning permission at the end of May, how does that back up your insightful sell recommendation of last week? Must try harder!
“Taking a wild guess, I reckon that Sirius will get planning permission in May. That is seen as a milestone but does not generate any actual cash. But there will be a big PR hoo hah around that time hoping to drive the stock North by getting private punters and BB morons to buy and the placing will be done ( at a discount to institutions) into that strength.”