Sirius Minerals Share Discussion Threads

[11_percent] 10/11/2019 16:37

The mine has a value, but only to someone with the cash (or ability to borrow it) to complete the project and get it into production where they can start to get some income.

The banks have shown they are not interested in financing the mine......as they think the risk is too high. The high risk, IMO, is due to the market, or lack of it, the Banks perceive. They do not believe that the worlds farmers will go out and buy Poly4.
The Banks engineering consultants will also have pointed out the risks associated with the build.....over-run in both tome and money...with particular attention to shaft sinking through the aquifer zone.

Basically....the Banks are saying, this is not a business, it is not viable, it is worth zero......it is a liability....not an asset.

You talk about a partner. This seems a bit optimistic, given that someone who does want it, can get it at a fire-sale value...….certainly nothing like the NPVs that CF has talked about.
I don't see why anyone would want to partner.

One of the big mining companies, Rio, AAL, and similar.....might want the mine if they think there is a market for Poly4. They would have the cash to complete the mine and the marketing team to sell the Poly4.

Gina has the cash (or is able to get it) to complete the mine. Given that her first-port-of-call was a Royalty Agreement.....she must believe that there IS a market for the Poly4. So...she is a believer....where the banks are not.


The market for this half-built mine is a very mall one.


And....another problem is that JPM bond salesmen could not even get this away at 12-13%.....plus some warrants.....SXX is tainted.

[holidayfunds8] 10/11/2019 16:09

Happy to have the discussion buddy, but I've laid out the basic structure, with the key variables to play with.

So, rather than panic at seeing my post, you need to just walk through this play step-by-step.

So, step 1: what do you think the overall mine project is worth? Answers could be:
a) nothing, i.e. you don't think the mine can be constructed, or you don't think the mine can extract & sell the polyalite in anything like the tonnage that is forecast;
b) or a cash flow NPV someway north of nothing - maybe you don't like the £5bn, £7.5bn and £10.0 bn scenarios I put forward, but you'll need to give us a clue what value you place on the mine, i.e. future cash flows LESS the EXTRA cash that is now needed to get the mine constructed & into operation;

Your one-liner above obviously does not really tell us anything, not least because issuing 28 bn new shares @1.5pence only raises £420 million, which would not be something that would take anybody anywhere. To be sensible, you've got to think this through, step by step.

Anyway, given the panic suggested in your speedy one-liner response, I am guessing you are not really in the market to lay things out in a structured way, and you're just pinning your hopes on a vague idea that the overall mine project just has no value at all - i.e. that the NPV associated with the EXTRA cash outlay now required and the expected net cash flow from the income stream from the completed mine is not materially worth north of NIL. It's OK with me if you hold that view, but I'd suggest you don't need to panic when you see somebody who holds a distinctly different view. And I am guessing that we will both see who has called this broadly right (or wrong) sometime within the next few weeks. We can then have a nice drink to toast the victor, whichever one of us that turns out to be.

[11_percent] 10/11/2019 15:37

So let's play around with the idea that 28 billion new shares get issued at 10.7 pence per share, to raise £3.0bn in new funding. So new partner controls 80% of the voting shares (28bn / 35bn, existing shareholders retain just 20% 7bn / 35 bn).

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HF8,

Les play around with the idea that 28 billion new shares are issued at 1.5p....

[gibso6767] 10/11/2019 15:19

All contractors have been asked how long it will take them to remobilise there workforce !

[holidayfunds8] 10/11/2019 14:56

Can some sensible souls check my maths, as I am trying to second guess what a potential partner deal could look like....

CF & team suggested overall project NPV at £7.6bn (for 13 mtpa), rising to £11.6 bn (if 20mtpa was mined & sold).

So let's play around with the idea that 28 billion new shares get issued at 10.7 pence per share, to raise £3.0bn in new funding. So new partner controls 80% of the voting shares (28bn / 35bn, existing shareholders retain just 20% 7bn / 35 bn).

How does the maths then work out?

NEW Total Number of Shares: 35 billion
Assumed Project NPV (£ millions): 5000 low, 7500 mid, 10000 optimistic
NPV per share: 14.3 pence (low side), 21.4 mid, increasing to 28.6 pence if you assume the overall project has an NPV value of £10 bn.

If the partner assumes just a £5bn overall mine value (which might be a conservative / sensible stance), would they cough up 10.7 pence for each new share, if they felt the share would eventually only be worth 14.3 pence? That would only represent an investment gain of 30+%, which I would guess may not be enough.

But I'd say playing around with the numbers in this way might suggest that the overall mine project has enough inherent value in future expected cash flow, to both:
a) attract a suitable partner with deep pockets; and
b) deliver a result for existing shareholders that delivers something north of 10 pence per share in the short-term, with the potential of 20 pence, or even 30 pence in the longer run, IF & WHEN CG & team are actually extracting (and selling) the polyalite tonnage they are now forecasting.

So I remain convinced that there is enough value here to get the mine properly financed & into production broadly as planned, in a way that suggests the current 3-4 pence share price may end of being viewed as an obvious buying opportunity.

But CF & team will only have any negotiating leverage if there is at least 2 potential partners in play here - otherwise, the single partner will be able to screw them down on any deal and just delay & delay, until the cash runs out and they can take then take control of 100% of the mine, rather than just 80% of it.

I would expect CF & team, and their advisors, are now solidly in the world of harsh reality, but I am still hopeful that a deal something like the scenario I outlined above will be announced this side of Xmas, and I'd then expect the share price to immediately move up to at least the level the new partner has invested at.

[kreature] 10/11/2019 10:46

Would it though?

Today: “A government-backed rescue package would send the stock flying to where it was and higher.”

[gingernut1] 10/11/2019 08:28

I’ve put a small punt in to SXX at this price as I think it worth the risk, but its pretty high risk, so IMO you need to manage that risk properly within your portfolio and manage your exposure. Getting the funding to take this forward is the biggest risk, and its fairly unlikely that the government will step in to save the project, although expect the government to be very supportive if a suitable backer can be found.

A couple of good links worth looking at. The first is long but worth the effort. That says that there is a 1 in 3000 chance of landing a 10 bagger in the mining sector, and gives good advice on how to better your chances of picking the winners.

www.cambridgehouse.com/news/4514/in-pursuit-of-profit-people-are-more-important-than-properties-rick-rule

www.investopedia.com/articles/basics/12/beginners-guide-mining-stocks.asp

GLA DYOR

[kreature] 09/11/2019 08:59

You could work on the trains.

[11_percent] 09/11/2019 08:54

Tell me what paper it is in.....when it happens.


Remember folks......this is Scam Central....

[carla1] 09/11/2019 08:17

Goose are you reading the press !!Happy days

[kreature] 08/11/2019 19:02

Wouldn't they just say that to encourage engineers not to fly off to a more secure job ?

[redirect12] 08/11/2019 18:47

I've heard the rumours too all on site saying deal nearly done.

[carla1] 08/11/2019 17:04

Could be goose...Did tell you the worm has turned

[11_percent] 08/11/2019 16:33

carla1
8 Nov '19 - 15:33 - 45552 of 45561
0 3 0
Weekend press leak should be good...

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Front page of the Sunday Times per chance??????

[the stinger] 08/11/2019 16:22

Rumours on site of a deal being negotiated !.. let's see if true

[kreature] 08/11/2019 15:54

I'll take a guess at 200m placing at between 2 and 2.5p. i.e. 2p placing this side of December. Plus an open offer for anyone who is into that sort of thing. Perhaps that's a bit too optimistic ?

[carla1] 08/11/2019 15:48

News spreading...Up we go....Should be a strong finish

[tomcollins37] 08/11/2019 15:45

So what you are telling me is that to get to 12p the company has LITERALLY got to grow 4 times. How do you suspect they are going to do that? That is the VERY definition of the share price. Are you delusional? or just down a hole bigger than the MTS shaft currently is. I suspect you think ol' Jezza is going to win the election too.

[tomcollins37] 08/11/2019 15:45

So what you are telling me is that to get to 12p the company has LITERALLY got to grow 4 times. How do you suspect they are going to do that? That is the VERY definition of the share price. Are you delusional? or just down a hole bigger than the MTS shaft currently is. I suspect you think ol' Jezza is going to win the election too.

[carla1] 08/11/2019 15:42

5p imminent for sure.... Everyone will say it was a bargain..

[deanroberthunt] 08/11/2019 15:40

12p very soon

[deanroberthunt] 08/11/2019 15:39

BOOM BOOM TIME imminent