Sirius Minerals Share Discussion Threads

[ppvn] 05/5/2017 14:45

Hi HAZL. As with any share, there are of course no guarantees. I’ve explained what is happening in the background, as well as the prices at which it will be happening. The reason I say, for example, “will be converted” is that, of course as we all know, these things have not happened yet. Only $400k worth of bonds have been converted thus far, and that was announced yesterday. Should the shareprice go to 20p for example (I don’t believe it will), then the funds with large short positions will buy back in the market, since it will be cheaper for them than converting at a price of $0.3076. And their short position will reduce to zero at a profit of around 6p per share. Then, once we go up above the conversion price again, they will begin to sell short, and the cycle begins again. It can therefore be demonstrated that the current value assigned to this company is around 24-26p, providing of course that we do not decline below 23.86p and stay there whilst 160mm shares are purchased in the open market, which would cause our price to rise again. Funds will of course have overheads and profit margins (they have lent us $400mm which inevitably comes at a price to Sirius) – and that price is around 26p as you saw from last week, when the selling was going on. No technical analysis, no false dawns, it is what is happening at the moment and will continue to happen (unless the funds decide they want 28p, or 29p, or however much for the shares that will be derived from their bonds). But then the shareprice will again fall, until all the shares have been sold. I note that there are still people saying this will soon rise to 30p, or 40p, or even higher. I’m sorry to say this, but it won’t (unless the funds decide to stop selling at these prices). Only when they have sold the remaining 1.1bn shares will we be free to rise further – and with around 60mm shares transacted per day they will probably be able to dispose of around 6mm-10mm shares per day without affecting the shareprice negatively. Keep a track of how many are sold here – but don’t forget to also keep tally of how many conversions have already gone through: hxxp://shorttracker.co.uk/ Magic, eh. Now you all know what the pro’s do, and whilst that may be jolly exciting, one thing I can assure you; the shareprice really won’t be. Unless our CFO does what he’s paid to, and a very pleasant, likely handsome, and of course intelligent party purchases 1.1bn shares. One final point – when all of our bonds are converted, the debt will be gone. Rather than having a liability on our balance sheet of $400mm, it will instead appear in the “Fixed Assets” part, and we haven’t had to pay back a penny of principal. Aces. Oh, and really really finally – no I don’t work for a fund.

[ccr1958] 05/5/2017 14:29

yes ,sensible explanation from ppvn... appreciated ..

[hazl] 05/5/2017 14:00

PPVN Thanks again for your informed view.
It helps when somebody appears to be transparent about their reasons for investing and their expectations.
Of course there are no guarantees but in a strange way I feel what you have said makes me feel this is a safer place to park a few quid, than I had before, but there is inevitably a longish wait .
One last thing do you work for any of these hedge funds?
You seem to know a lot about it.

[spirito] 05/5/2017 13:39

ffs don't anybody sell

[janekane] 05/5/2017 13:36

Nice rise today

[blueball] 05/5/2017 11:51

Come on lets get this back to 25p.

[1crossfire] 05/5/2017 11:50

Bought in before the last announcement @ 18. Sold @ 25.5. Wont be going near this until closer the next announcement. Anyone trading in between this is wasting their time where money is to be made elsewhere...

[mr.oz] 05/5/2017 11:22

cracking post , thanks PPVN

[ppvn] 05/5/2017 11:15

Hi Casapinos. In response to you, I think your question is basically “where do we go from here”. An interesting question! A few thoughts of mine are below.
Just over 10% (it was around 12.3% at last count) of the shares that will be converted from our loan notes have already been sold. It’s around 160mm shares. What will have happened yesterday, is that some of the funds with established short positions could have bought back in the open market below the conversion price (23.86p when last calculated). That way they lock in around 10% profit (assuming they sold at 26p and bought back at 23.5p, as an illustration). I doubt that many shares actually were, or if any were. We were not below that price for long (and did you notice the spread also widened to 23p bid / 23.5p offer?). The reason the spread widens is because below the conversion price there are buyers at [an unknown to me but] set price – so you as an investor get offered less for your shares so the market makers can still make their cut. Spread will tighten again to a quarter above 24p, or for short periods of time below. Once we go back above 24p, will funds continue to sell? Probably. Think of it this way – is a 20% return in a year a good return (i.e. selling a bit above 24p and taking an 8.5% coupon)? Of course it is. There will be plenty of other convertible loan notes to invest in next year, and bluntly $400m is not a lot of money. Sure, they could hold for 5 years and convert at a much higher market price, but that involves a much larger degree of risk for them, and hopefully as I’ve illustrated it will be pretty straightforward to make a very decent return in a much shorter timeframe. The reason I did not sell my shares above 26p is that whilst we know there to be 1.3bn shares to sell (well, it’s actually nearer 1.1bn now) – that represents around £264m. To my next point - I would hope that at this time, Thomas Staley should be knocking down the doors of both JPM and Liberium (hopefully Liberium to a lesser degree, and no offense to them). They were the joint managers of Stage 1 financing and as such should now be providing introductions to portfolio managers, investment houses, pension funds etc etc. He should be selling the Sirius story to anyone who will listen, and indeed, even those who won’t. I believe the Stage 1 financing was a brilliant success; some here will disagree – but those I assume had bought in on the hype above the placing price. In time they will be made whole and then some, so it’s a lesson frankly. If Mr. Staley is successful in attracting a large investor, £250m is a drop in the pond to most fund managers who are worth their salt. Had I sold, and had one of these investors decided to buy shares – we wouldn’t be at 24p today. We would be much, much higher. I’m investing for years in this company and it’s not worth a 3p gain to me to risk what I perceive to be much higher returns in the future. I don’t have a crystal ball. I can’t predict if or when a large investor will take a stake in Sirius. All I will do is reiterate my belief that these shares are a steal at this price, and indeed upwards of here. It’s also important to remember that without investors taking shares at 20p / $0.3076 (representing a higher risk profile as it is these bondholders that are having to do all this work to recoup their investment), they too have belief in Sirius and they have a lot more information than us. Without them, we would have a field, some plans, and lots of potash that we can’t do anything with because we wouldn't have a mine. So our market cap would basically be nothing, though we would have fewer shares in issue which I'm sure would please some (but they would still be worth nothing). Stage 2 financing should, by definition, carry more of a premium than the Stage 1 financing since it should have a lower risk profile (inferring a higher price). All the above being said, my beliefs could clearly be very much wrong and the company could go bust – and it’s also important to remember that.
The reason I posted last week was that clearly a lot of shareholders at this juncture are private individuals investing their pensions / making a few quid on the side / etc etc. Because of market dynamics this move was all but inevitable, and simply explaining in a (hopefully) transparent way what is happening behind the scenes enabled some to make what I believe to be more informed investment decisions. As I said at the time, I have a not insignificant amount of shares which I did not sell; in a few years time I believe the 3p move this week will be a daily, perhaps even hourly fluctuation in the price of this company. Shareprice movements at this time have no bearing on my investment – so what’s the harm.

[hazl] 05/5/2017 09:58

I see....this is the best thread.
The alternative seems just about using it as a trading-vehicle?

[casapinos] 05/5/2017 09:57

PPVN - I fully endorse what you've said in previous posts- what i'd like to engage in now is a discussion of what strategy the bondholders engage in - ie convert all now at small but firm profits(not possible because of the inevitable suppression of the SP?), wait until they've collected al(most)all of the 8.5% interest and then realise a substantial "trading"profit on shares priced(substantially? ) higher than now, manage the steady conversion over time hoping to eke out capital appreciation at higher than 8.5% pa. or another strategy which hasn't occurred to me?

I recognise (as i have pointed out on another board), that the variable include share price behaviour, FX rates, interest rate changes, market sentiment, the price of potash etc etc....
As you are clearly well-informed , an holder and either no fool or good at concealing that fact!! i would welcome a view - and if you could extrapolate the share price trajectory that would be welcome!!!

[not my real name] 05/5/2017 09:29

Svenice,

We won't be producing anything for 5 years! I suspect the price of Sirius will be moved up or down by far more significant factors that an Opec meeting.

All IMHO

NMRN

[svenice7] 05/5/2017 09:20

NMRN if you dont think there is and will be a correlation between oil price and potash, then I think you are on a different planet.

[investment dave] 05/5/2017 09:19

Yep may well do today closed at 23.75 .

[ppvn] 05/5/2017 09:13

Time for a victory lap I suppose. No theories can stand in the way of facts.

[mr.oz] 05/5/2017 09:11

Congratulations Dave. Turn off the laptop and enjoy your weekend infront

[ccr1958] 05/5/2017 09:09

hazl...are u a nut job ? ;)))))

[not my real name] 05/5/2017 09:06

hazl,

Easy solution to your boredom. John has his own thread next door.

Bye bye.

NMRN

[hazl] 05/5/2017 08:57

Thank you John FOR THE ONE FACTUAL POST
above......yawn...... how boring and pitiful the rest are.

[investment dave] 05/5/2017 08:50

Haha fair enough Booon

[ccr1958] 05/5/2017 08:48

Lol nmrn ..... Daaaaaaave I meant general market down old boy ..

[investment dave] 05/5/2017 08:47

Must be that twice a day I'm right again haha mr oz

[not my real name] 05/5/2017 08:35

Svenice7,

I suspect you are on the wrong thread. If not, then the wrong planet!

NMRN

[not my real name] 05/5/2017 08:29

Hi Benstyles87,

This is a copy of my reply to the originator of this thread when he proposed that Sirius would have a mkt cap of 10bn in five years time.(Post 26535)

I still stand by every word and invest accordingly. Hope this helps.
....................................................................

Mr Oz,

Totally agree with 10 bn mkt cap in 10 years.

IF, they can prove to the city that there is a viable market for the product (which they have addressed with the new sales team).

IF, they can raise ALL their capital requirements through debt (as plannned) and not have to issue more shares to raise funds.

IF, the construction phase goes according to plan (unlikely, but always possible).

IF, they do not have to issue more shares to cover overspend due to unexpected delays.

If all is achieved on time but requires a share issue to do so then we may well have a mkt cap of 10 bn but suffer severe dilution in the process.

Whatever happens, as long as the mine gets built and they can sell the product at $150 or more we will all make exceptionally good profits on this share and at the end of the day, that's all that matters.

NMRN

[svenice7] 05/5/2017 08:22

Remember these is an opec meeting on 25th may, so it will go back up.