Pensana Share Discussion Threads

[cyberbub] 16/11/2022 19:38

£700k minus tax is £400k, so £600k is 18 months net salary - not trivial. More to the point, he obviously thought 120p was good value, why would he waste his money and not wait? Closed periods?I do take your point that he's wealthier than most of us though! :-)

[lewis winthorpe] 16/11/2022 17:46

700k last 2 years (20, 21), so 1.4 mill. 275k base salary rising to 700k if finance done. Incentive bonus of 4 million shares if construction starts by may 23. So 2 million quid at today's price.My heart bleeds at his 600k at 120p.

[cyberbub] 16/11/2022 17:31

Can we find out his salary and benefits from the accounts?

I doubt as much as £1M p.a. myself, but even if true, no one wants to throw away a year's post-tax salary, or at least make 50% less on that investment than they could have?

[lewis winthorpe] 16/11/2022 17:10

Wise,I hate the director buying at higher prices argument, what salary has he drawn over the last few years? In excess of 1mill per annum I suspect

[oapknob1] 16/11/2022 16:38

200,000 trade popped up after hours indicated as a sell

[wiseacre] 16/11/2022 16:26

PA has long promised there will be no equity dilution but that fear is probably what is holding the share price down as well as the length of time getting the bond issue away. Many have perhaps forgotten that Atherley himself stumped up £600,000 in a share issue at 120p.
I believe the bond issue is quite imminent and is being attractively dressed up as a green bond. Now is probably the best time to buy the shares.

[sirmark] 16/11/2022 12:14

Looking good today and ALK in focus also doing well.

[lewis winthorpe] 16/11/2022 11:26

Yes, but they started the bond partnership and financing 12 months ago let's not forget. Delay, delay, delay.

[cyberbub] 16/11/2022 10:41

Looks like a big delayed sale gone through which had dragged us down the last few days?

[cyberbub] 16/11/2022 10:40

Yes fair point Mwj, the bond funders don't get the IRR as such. However as you say, if the huge IRR attracts 30% equity funders it will de-risk the bond funders (as well as helping to ensure success of the project overall = bond funders get their interest and capital returned)

[mwj1959] 16/11/2022 09:07

Agree with OAP's comments. Whatever the many merits of this project PA is still trying to raise an awful lot of money from various sources and the backdrop for doing so is a lot tougher than it was 12 months ago. Getting all the different parts squared off always takes time. Fingers crossed that it all works out and in a timely manner, but that's why I haven't taken a massive position in this company. The upside is clear to see, but getting there is the challenge.

[oapknob1] 16/11/2022 07:17

You would think if they are funding Saltend via the bond market those providing initial funding will want to know what's feeding Saltend, when, and for how long.

[cyberbub] 16/11/2022 00:09

OAP, surely the finance deal would only be delayed to review something that could be *bad* news? The recent Coola RNS can only be good (or neutral at worst) news, given that Longonjo already has a 20-year mine life?

[oapknob1] 15/11/2022 21:53

I sincerely hope so. But I am disappointed with his pumpy vagueness during his interview. Appreciate he has maintained everything is in place but that then begs the question, why has there been no RNS confirmation of initial funding.My view is the funding is delayed for due diligence re recent Coola Exploration Licence RNS, before final decision.

[cyberbub] 15/11/2022 16:40

What's your view on any problems financing OAP? I can't see any issues with an IRR of 60%, just a matter of waiting (and what terms we get) IMO. I hope that any equity component is not below 50p.It's true that Atherley comes across as a bit of a salesman, but I suppose that's his job. Setting aside the salesmanship, he specifically stated that the funders' decisions had been made, and that they were going to be "finishing off the paperwork within a few weeks", a few weeks ago. I am expecting the announcement well this side of Xmas, personally.

[oapknob1] 15/11/2022 16:25

Finance. Finance. Finance. After CEO video pump, nothing about Finance. Weeks. How many. 4, 8, 12, 52, 100 ? Time for specifics rather than pumpy video interviews.

[cyberbub] 14/11/2022 21:57

PS the point I'm making is that, for anyone taking a 3-year view (rather than a 3-day or 3-week view!), the *downside* from 56p seems limited to disaster scenarios??Sometimes in the stock market having a good certainty that at least you're not going to *lose* money is good enough...!

[cyberbub] 14/11/2022 18:38

Yes I was wondering a bit about the alternative feedstocks that Atherley mentioned in that video....To me getting the funding is low risk given the project's economic case, we will get it even at the cost of some dilution. I am working on the basis of 'effectively' 500M shares, whether that's the actual number in PRE or not. If the project meets its targets then 56p will be an unbelievable memory. Even if NdPr prices drop by 50% (highly unlikely IMO) the company will still be well profitable at their stated cost of $15k/ton, and 56p will have become a modest multi-bagger when in production.Just my view of course, I don't have a crystal ball!

[mwj1959] 14/11/2022 17:57

A collapse in NdPr prices is clearly a potential risk, but one that seems unlikely for now given the forecasted supply shortfall. Liberum's bear case for the stock is threefold: financing, alternative feedstock providers to Longonjo are unknown and global supply chain constraints and inflation pressures (impacting costs?). The first is the critical one in my opinion. I will sleep better when it is out of the way!

[cyberbub] 14/11/2022 17:18

Mwj, so in effect if the interest can't be accrued and they still have to pay out before first production, they need to source an extra 20% capital than they need, as effectively 10% per year will be paid back in interest?

You're right to be cautious, the stock market is littered with disasters from overconfident investors. But the company seems to have everything going for it: very supportive and reasonably stable governments (we need to check that in the UK these days too!!), very experienced and credible BOD and management, all permits and resources in place, industry partners and offtakes in place, strong marketplace for their products which is likely to get stronger still, long term... And not forgetting comparator companies like MP which are valued at 40x Pensana today, with a broadly similar economic case and development position.

Who knows, we could see some share price weakness still short term, but in my view when the finance closes and assuming the terms aren't seriously poor (why would they be?), we should see a substantial rerating here. 150-200p doesn't seem unreasonable to me IMVHO, even after some dilution.

Once the money is agreed, there seems little risk to getting Saltend built (barring execution risk / acts of god). I will accept that Longonjo is riskier, but with the Angolan govt owning a big chunk of the equity, it's in their interest to smooth the way.

Am I missing any other significant risks?

NAI of course

[mwj1959] 14/11/2022 17:00

Corporate bonds normally pay their coupons on a half-yearly basis, so the first payment would not be until mid year 2023, if they raise the capital now. But some do pay annually, which would mean first payment would be end of 2023. Liberum have the cost of debt at 9.5% and net financing costs of $36m a year, so while they won't have cashflow to cover that in 23 and 24 they will have more than enough to cover from 25 onwards. Interest won't be allowed to accrue until they're cashflow positive.
I think that you're being optimistic on the dividend front. First thing they'll have to do is pay off all the debt (Liberum look like they're factoring in 5 year debt in their model), but that won't be a problem if the cashflow projections are anywhere near correct.
And let's not get carried away or too greedy. This project only starts delivering in 2025, so over two years away, even if financing / clear development progress will likely see the jam tomorrow increasingly getting discounted in the share price.

[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...