Pensana Share Discussion Threads

[cyberbub] 14/11/2022 16:09

Cheers Mjw. I have bought a few on Friday and today.I find it hard to believe that a project with such attractive economics will fail to get funding, even in the current market. They could easily return 50% or more of that money in divis from 2026, imagine £200M+ in divis with 500M shares issued? That's 40p a share divis! Or a 70% ROI for people who buy today - make your money back in a couple of years and the rest is jam.What I'd be interested to know is if they raise the money in corporate bonds, will the interest be payable immediately? Or will the lenders allow the interest to accrue until cashflow starts? Obviously hopefully the latter...

[mwj1959] 14/11/2022 15:59

On Liberum's base case numbers the company will be generating revenues of $470m in 25 and then + or - $1bn in the following 6 years, which in turn will generate PBT of $101m in 25 and then $602m in 26, dropping to a range of $450 - 600m p.a. thereafter. FCF, which is what I normally focus on, will be $63m in 25, $450m in 26 and then + or - $400m thereafter. So clearly very attractive if delivered. Whether that will be the case only time will tell. But that's all jam tomorrow. What matters for now is that financing is raised and the project is delivered on in line with the expected timeline. Then we can start to worry about how much jam there is for shareholders!

[cyberbub] 14/11/2022 15:01

I repeat that whatever form it takes is still dilution. If we get an extra 50% shares at the TopCo (PRE) level through direct dilution, or if we give away 33% of the operating companies in return for the funding gap needed, it's essentially the same thing.Personally I have no problem at all with a 50%+ dilution, that's what the stock markets are for - raising money! I repeat that *if* the $450M is correct and achieved, anyone investing at these levels will be very well rewarded by 2025 or so.Are we confident of the projected post-tax profits?

[mwj1959] 14/11/2022 14:15

In their recent initiation on the stock Liberum, their corporate broker, see up to 80% of the estimated $494m needed to be raised being done so via the bond / debt market, which leaves at the 80% level around $100m to be raised elsewhere ($75m for Saltend, $25m for Longonjo?). If that were done via the equity market at say 50p share that would require 175m new shares to be issued, which would take shares in issue to around 425m. That would be a serious dilution. Interestingly Liberum only has a very limited dilution (247m to 252m)in their risked valuation of £2, so clearly don't think that will be the case (I presume that is what the company has told them). But if that is correct it still remains a bit of a mystery as to in what form this $100m would take if it is not equity.

[cyberbub] 14/11/2022 13:00

Yes that's my understanding. I reiterate my point though that whether it's taking a stake in the project-level company, royalties, whatever, it's still 'effectively' the same as TopCo dilution.... someone else pays some money to get part of PRE's cake...If PRE need to raise $75M = say £65M then that implies a little over 100M shares at the current share price Personally I have no problem with that at all. And the same again for Longonjo. If the company ends up with 'effectively' 500M shares that's absolutely fine. $450M/p.a. after tax on a conservative p/e of 10, even with 500M shares, gives an share price of 800p (plus some very nice divis).Are my admittedly rough calculations reasonable, do LTHs think?

[mwj1959] 14/11/2022 11:36

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.

[mikethebike4] 14/11/2022 10:56

may be some negotiations over terms for this size of borrowing

[cyberbub] 14/11/2022 10:52

I don't think listed companies are allowed to hold back news, if the results came back they had to release them.If you take Atherley's Crux interview at face value then the bonds should be easy to source (perhaps they're waiting for interest rates to settle a bit) but maybe the equity portion is taking a bit longer. But if it's true that the company will be making $450M p.a. after tax in 3-4 years time, I can't see there's any risk of not getting financed!

[lewis winthorpe] 14/11/2022 10:06

He also said in a few weeks on that interview and that was many weeks ago.This RNS says to me that funding isn't as close as led to believe. If it was I would have held this RNS back until AGM time

[cyberbub] 14/11/2022 09:55

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?

[mwj1959] 14/11/2022 09:49

Agreed Lewis...

[lewis winthorpe] 14/11/2022 08:53

Pointless as finance is only thing that matters at moment. Might as well be on Mars without ability to get it out of the ground.

[cyberbub] 14/11/2022 08:50

Mr Market seems underwhelmed, personally I don't know if those grades are good or not?

[oapknob1] 14/11/2022 07:37

The results from Sulima West are considered to be a significant discovery and will be the main focus of exploration activities in 2023.

Sulima West nepheline syenite and carbonatite complex

-- Significant rare earth elements (TREO), phosphate (P) and manganese (Mn) mineralization have been identified at Sulima West.

-- One of the five historic trenches at Sulima West, excavated in the 1970's by the colonial era Compania Minerais do Lobito prospecting for radiometric anomalies, was cleaned and sampled at 2-meter intervals across the iron/manganese ("Fe/Mn") enriched lateritised regolith. Analysis returned values of between 0.3 and 9.7% TREO, with an average grade of 3.4% TREO over 68 meters at surface.

-- A historic pit at Sulima West and adjacent to Trench 1, was cleaned and sampled at 1-meter intervals. Analytical results (ICP-MS)returned values of between 3.4% and 5.2% TREO, with an average grade of 4.3% TREO over 6 meters.

-- Five additional Fe/Mn laterite samples from the other trenches reported individual values which vary from 4.5% to 7.6% TREO.

-- Reported manganese grades in the laterite range from 1.5% to 18% MnO and average 12% MnO at surface. The manganese component is regarded to be economically significant.

[sirmark] 14/11/2022 07:23

Great news "Pensana is very pleased to report on the results from the recently completed exploration programme on the Coola Exploration Licence located 40 kilometres north of Longonjo."

[mikethebike4] 10/11/2022 15:53

Pensana Chairman Paul Atherley also commented:

“Following the launch of the Government's Critical Mineral Strategy at Pensana’s Saltend ground breaking ceremony in July, we believe that Pensana is uniquely positioned to support the Critical Minerals Strategy and to benefit from the transformational demand for permanent magnets necessary for the ongoing global energy transition. Pensana aims to become an alternative source for European automotive and wind turbine original equipment manufacturers (OEMs), and ultimately disrupt the current Chinese monopoly on rare earth supply”.

Right on !

[mwj1959] 10/11/2022 11:26

Parliamentary Questions: What steps are the Government taking to improve resilience and diversify rare earth mineral supply chains away from China? (Andrew Rosindell, MP).

Minister of State at the Department for Business, Energy and Industrial Strategy, Ms Nusrat Ghani, responded to questions on what steps the government are taking to diversify rare earth mineral supply chains away from China.

“The Government published the Critical Minerals Strategy in July, which sets out plans to improve the resilience of critical minerals supply chains by boosting domestic capability, enhancing global markets, and playing a leading role in solving global challenges with our international partners.

The Government is committed to building domestic critical mineral supply chains, for example, by supporting UK-based rare earths developer Pensana’s new rare earth magnet materials refinery in Yorkshire. Earlier this year, the UK signed up to the Minerals Security Partnership alongside ten other like-minded partners to support the development of diverse supply chains”.

Pensana Chairman Paul Atherley also commented:

“Following the launch of the Government's Critical Mineral Strategy at Pensana’s Saltend ground breaking ceremony in July, we believe that Pensana is uniquely positioned to support the Critical Minerals Strategy and to benefit from the transformational demand for permanent magnets necessary for the ongoing global energy transition. Pensana aims to become an alternative source for European automotive and wind turbine original equipment manufacturers (OEMs), and ultimately disrupt the current Chinese monopoly on rare earth supply”.

[oapknob1] 09/11/2022 16:20

Interesting that Haugesund Sparebank was also awarded Cicero Light Green status with governance score of Good on 18th October. Are PRE looking to Norway for some of the financing ?

[mikethebike4] 09/11/2022 14:10

SP seems pretty solid to me

[sirmark] 09/11/2022 08:33

It's also in the header for future reference.

[cyberbub] 09/11/2022 08:05

Thanks Mike that's useful

[mikethebike4] 08/11/2022 17:24

Cyberbub



Watch the first 10 minutes for partial answers

[oapknob1] 08/11/2022 17:19

UK headquartered Pensana intends to create a sustainable magnet metal supply chain, with a rare-earth processing facility at Saltend Chemicals Park in Hull, UK, and mining in Angola. The Saltend facility is set to produce some 12,500 tonnes of rare earth oxides yearly, of which 4,500 will be neodymium and praseodymium oxides ("NdPr"), or an estimated 5% of global production in 2025. Operations are planned to start in 2024.The framework will exclusively finance project related capex and construction costs of the Saltend refinery, where the main product is a key element in permanent magnets needed in electric motors end generators. The issuer intends to sell NdPr to manufacturers supplying automotive industries in the EV segment and wind turbine producers, thereby enabling the transition to cleaner technology; excluding activities that have no role in a low carbon and climate resilient future. Some climate considerations, such as installing solar panels, have been taken in the design of the refinery and efforts are made to reduce emissions associated with chemicals and energy use. However, due to lack of data, it is not yet possible to conclude on the NdPr's carbon footprint compared to other producers, although it appears likely to be lower than the NdPr currently dominating the market.

[oapknob1] 08/11/2022 17:08

Cicero, a leading reviewer of Green Bonds has concluded that Pensana's plans are in line with Green Bond principles, with a Light Green rating and governance score of Good.