Pensana Investors - PRE

Pensana Investors - PRE

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Stock Name Stock Symbol Market Stock Type
Pensana Plc PRE London Ordinary Share
  Price Change Price Change % Stock Price Last Trade
-0.70 -1.22% 56.50 16:35:11
Open Price Low Price High Price Close Price Previous Close
57.50 55.40 57.50 56.50 57.20
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ALTERNATIVE ENERGY

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Posted at 19/1/2023 15:37 by mwj1959
I'm sure they are aware, but that doesn't mean that they are going to put their hands in their pocket meaningfully to support the project. Our fate (at least for Saltend) lie very much in the hands of institutional investors, who generally speaking are not feeling too generous at the moment. An appropriate nudge from the government might well oil the financing wheels however.
Posted at 22/12/2022 17:35 by mwj1959
Investors should be under no illusion that this is continues to be a very high risk / high reward share, despite the obvious merits of the project. That's why I've described the shares as long-dated options in the past...you could lose everything or make multiples. Clearly, most of us think the latter (eventually), but it's for the former reason that my investment remains a relatively modest one and certainly one that wouldn't be the end of the world if I had to write it off.
I am still struggling to reconcile what I heard around financing at the AGM and PA's far more optimistic tone in the recent M&G additional funding announcement. Has the financing backdrop really improved that much in a couple of weeks?

Posted at 22/12/2022 08:41 by raremurph
Thanks for that Hogwatch. That doesn’t look good at all and has all the hallmarks of a massive fraud. I hope that I’m wrong, but it seems that PA has been economical with the truth to raise money and has little, or no integrity. I will not be investing any more funds into Pensana until they demonstrate that they can deliver on promises and reply to investors emails.
Posted at 20/12/2022 11:02 by dumbpunter
"Leeches on capital markets with uneconomic concepts and their predictable failures are part of the reason, why China will retain its lead in rare earth, why ex-China rare earth will remain a minefield for casual investors and a bottomless pit for subsidies from well-meaning but uninformed governments.

Such leeches can also become a serious reputational liability for their collaborators."


hxxps://treo.substack.com/p/prc-re-magnet-export-value-jumps

Posted at 01/12/2022 17:15 by mwj1959
Some more detailed comments

A key point that I took away from the Q&A session was that we need to look at Pensana as a two project company - Longonjo is the downstream company and Saltend a midstream company. Both can operate completely independently of the other, are not dependent on each other and are broadly speaking being financed as such. Longonjo can sell into the worldwide REM market, while Saltend can buy REM from elsewhere. But the value to Pensana, according to PA, is primarily in Saltend being developed as margins are likely to be far higher there (60 - 70% EBITDA margin) versus Longonjo at a 10 - 15% EBITDA margin. So the company could exist just with Longonjo, but the icing on the cake comes from Saltend.
On financing:
Saltend - As posted earlier the bond part of the $250m fund raising is not progressing at present and won't do so until the board feels market conditions are more favourable (i.e. the cost of funding are more reasonable - what that exactly means is hard to interpret, but PA was saying that if they had raised the money in the past couple of months it would have cost mid teens % with conditions attached, such as the interest payable being put into an escrow account. Clearly we're not going to get back to the sort of mid to high single digit levels seen 6m+ ago, so I would presume something in the low double digits, 10 - 12%? would be acceptable). So, nothing before Q2 in my opinion. As far as the other $75m goes there continues to be discussions with a whole range of strategic investors (PE, hedge funds, closed end funds, royalty companies etc.) with a broad range of instruments being considered, such as convertibles, royalty payments etc. I didn't ask whether all the moving parts of the financing needed to be completed at the same time. Overall, it is clear that PA was far too optimistic in the Crux interview, which he freely admitted.
Longonjo - A very different project financing challenge, but also likely an easier one. Raising the bond / loan package, which will be guaranteed by UK Export Finance, is being co-ordinated by ABSA, who are speaking to three bilateral government agencies, two South African and one American. The level of interest rate is not subject to the vagaries of the bond market and as such a much more competitive rate should be achievable here. Discussions are progressing faster than thought and are in their final stages. So, takeaway here is more positive than for Saltend.

Putting the two together and the obvious conclusion is that we're not nearly as advanced in the process are some thought and those who voiced concerns were right to do so.

Given this far from ideal situation someone (definitely of the disgruntled investor type)asked when the company would run out of money. A valid question to ask. PA said that it wouldn't run out of money because there were supportive shareholders, who would continue to fund the company. But there would need to be a fund raising in Q1, unless some sort of miracle happened on the financing front. How much would that be? The Q wasn't asked, but $10m was raised last time around in August. How the burn rate has changed since then I don't know.

The state of the share price was also raised, which PA addressed by showing side 26 in the AGM presentation (hxxps://pensana.co.uk/wp-content/uploads/2022/12/AGM-Presentation-1-December-2022-.pdf). He said that what we were seeing was "typical" for a company such as Pensana. It's all about the Lassonde Curve! Private investors, focused more on ST returns, disgruntled by the lack of progress on financing etc. having been selling out, whereas institutional investors, far more focused on the LT upside, were looking to buy at current "distressed" levels. Time will tell whether II are smarter than PI!

My overall conclusion is that while the market fundamentals underpinning the company continue to be extremely attractive and the potential upside for equity investors remain substantial over the LT, but only if financing is achieved. Ultimately I think it will be (even if ultimately they have to accept higher rates on the bonds than is optimal), but there is likely to continue to be significant uncertainty around this for the foreseeable future (quarters rather than years clearly), which is likely to weigh on sentiment towards the share price in ST, even after the declines we've already seen. For those LT investors, hoping that the Lassonde Curve will out, this will likely provide a good entry point.
All my opinions of course!!

Posted at 29/11/2022 16:39 by cyberbub
Thanks for going Mwj.A question on the funding would be good obviously, but just asking "where is it?" won't be useful, I think something more specific would be useful eg. "Can you confirm your statement in interviews that the key funders have already taken their investment decision, and that only completing the paperwork remains?" It would be good if you get the chance to ask a second question afterwards about why director remuneration is so high. Personally I agree and am tempted to vote against the remuneration policy - not that I expect my tiny shareholding to make a difference!BTW I've said this before, but I don't think PA intended to imply in that interview 6 weeks ago that there would be no dilution in the fundraising! There was $75m gap to be raised on top of the bonds, and he said they could complete that element "without having to run around the capital markets". I interpret this to mean that they won't have to go to a normal public placing, and will get the equity investment off-market from a "strategic" investor, and existing large investors. There must be some form of dilution, whether it's at the PRE level or at the project level it's still dilution!NAI
Posted at 14/11/2022 11:36 by mwj1959
Not sure this RNS has a lot to do with getting funding.
I've re-listened to PA's Crux interview. I agree that it is not entirely clear (the interviewer was equally uncertain at times as to the exact structure of the financing too). Re Saltend $175m of the $250m required will come from the bond market (hopefully!!) with the remaining (hopefully!!) coming from a strategic investor ($50m) and institutions / shareholders that the company already knows ($25m). A similar type profile for Longonjo, but with no specific numbers, but the expectation that most of this will come from the debt markets. If there is any equity issued there will be dilution to most existing shareholders, other than those who are able to maintain their existing % shareholding through participation in the equity raise. But PA does say that they would like to avoid any dilution (but no guarantees here) and that there are ways in which the various other investors outside the debt markets can participate without there being dilution at the PRE topco level. Not entirely clear what these might be, but royalties might be one of them, particularly in the case of Angola.

Posted at 14/11/2022 09:55 by cyberbub
Yes. However it seems likely that finance (for Salted at least) will be agreed shortly...In that interview Atherley said that there was $75M needed for Saltend on top of the anticipated bond issue, $50M from a "strategic" and $25M from existing investors. I understood this to mean $75M of equity, but he wasn't being very clear and kept saying no dilution. What is everyone else's understanding? He said the same for Longonjo, a "strategic" investor but no dilution at TopCo level. Surely it makes no difference whether it's TopCo or project level? Pensana TopCo might maintain 250M shares, but if the project level company has given away 25% to a "strategic" then it's still dilution?
Posted at 10/10/2022 09:36 by mwj1959
A very useful update. This is the first detail I've heard re how the $250m needed for Saltend is going to be raised (correct me if I'm wrong here and if that is the case how they can "announce" this without an RNS I'm not sure). So from the bond side of things looking to raise $175m with documentation being completed and going to market in next few weeks, whilst acknowledging timing for such an issue isn't great i.e. cost is likely to be higher than initially thought. $75m from equity investors (compared to a current mkt cap of c.$180m), even in the same breath he said that they won't need to go to equity market! They are going to the equity market. $50m hopefully from a strategic investor. Not sure whether it was a slip of the tongue or not but he did initially say that they had "got" this $50m ,but then quickly changed that to "looking for" (3.34 on Crux interview). The remaining $25m to come from existing shareholders and institutions that they already know. So quite a lot of equity to raise and key to its success will be getting the strategic investor on board as this should encourage further institutional investment. So that's Saltend. Also a lot of interesting detail later in the video about funding for Angola, particularly around the UK government's involvement alongside 3 other bilateral agencies, all being tied together by an investment bank. Looks to be all debt.
Posted at 05/10/2022 15:36 by mrmark1
PA has already stated public ally there is no equity raise. The Bond market is open and that's $175m - the remaining is with the current large investors and 'some of the largest companies in the world'...October will be a good month for Pensana and shareholders! Sells are being soaked by investors that understand where this going GL
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