Good Morning,
Sirius Minerals gave an s, update on the key proposal that make it difficult to
find any reason to hold the stock in the short-term.
- Approvals
close out work ongoing during government call-in window. Sirius
have perhaps created a risk for the Government to hold an enquiry by the expansion
of the production model being proposed. Although unlikely, it has to be
consider.
- Final
decision notices for key approvals expected by end of September 2015. This
timeframe may have to move significantly especially in light of a
Definitive Feasibility Study (DFS) being published in Q4, although this
may be Q1 2016.
- DFS
being finalised with input from approvals and key contract tenders.
- DFS
results expected to be published during Q4 2015
- Financing
to focus principally on debt provision, split into two stages. The
risk of performance is on stage one of the financing where there's likely
to be a significantly higher element of equity requirement than in stage
two. Perhaps most of the debt liability will be disproportionately
weighted towards stage two.
- Stage
one financing expected to be completed by end of Q1 2016. Positive
in so much as they wish to limit dilution, but...
- Good
progress continuing to be made on polyhalite sales to support financings. Expect
further news on this with some deals awaiting the "approvals"
stage. This will also go to support / derisk the "call-in"
possibility by National Government.
The expansion of the plan to near 10mtpa/20mtpa also brings
with it a significant increase in CAPEX, although with operating cost benefits.
Save for any corporate type event there's likely to be no reason to hold this
stock unless you're "very" long-term.
One has to wonder whether SXX may be considering a royalty
type model with an upfront payment.
Iron Ore was thankfully trading around 5 minutes ahead of Rio/BLT's stock with the spike overnight benefiting the miners. This brief rally will benefit Atlas Mining's fundraising efforts.
For those concerned about the AMC (Amur Minerals) position, its wise to revisit the 2007 SRK DFS and assumed pricing. Whether the project is profitable at $7.50-$9.50/lb is immaterial to the realities of today. Including amongst other things, rising inventories and all this whilst Indonesia restricts exports etc...the Supply Demand assumptions are warped.
A quick glance at LME nickel stocks over the past 5 years gives a good indication of why there's price weakness. With near 1/3 of total annual world consumption just stored LME. As shorts take their profits expect a bounce in the short-term, true value will out!
More later...on China's commodity grab (QE). Is Lonmin LMI heading for AIM? What is LMI's capital requirements for this year with PGM's near their lows $1030/oz. Some very interesting gold trades in Asia/America suggesting volatility is coming.
Atb Fraser
Hi Fraser- re SXX- the herd will move on after today, its true the superyachts have again been deferred as SXX confirm its a long path ahead for them, probably 2021 before they hit the new stage 1 production level, if they execute perfectly. It is sensible for them to move up to 10mtpa and 20mtpa, but we will need to see the revised capex figure later in 2015 before the numbers fit any form of model going forward. The lack of large cap mining devs will help them no doubt, but north of $3bn is expected now.
ReplyDeleteSo some sell today to search for the next Gatwick Gusher-- I did sell some in the mid 20s a week ago, but I will hold the rest long, and with SXX long is long, subject to top slicing if they spike on news, but news will now be well spread out but nevertheless interesting over the next 3 quarters. This will probably mean the share price drifts, short of a major corporate move.
Cheers. The Leggie