A Three Point Five Billion ...Pi?

Captain Black's picture

"The economic impact report, by leading consultants Quod, sets out the main impacts of the multi-billion pound project – to mine and export a vast resource of natural fertilizer called polyhalite. It finds that Sirius and its contractors have already employed 900 people in high-paying, highly productive roles across the project sites – including 66% from the local area – and supported a further 245 indirect jobs."

https://siriusminerals.com/latest-news/news-stories/sirius-is-bringing-s...

"Sirius expect to reach the polyhalite seam in 2021 and to be producing 10 million tonnes of fertiliser per annum by 2024."

https://www.yorkshirecoastradio.com/news/local-news/2896946/whitby-potas...

https://www.youtube.com/watch?v=3mMN693-F3U

https://siriusminerals.com/downloads/economic-impact-report-2018/

Three conflicting views on the cost.

Go Yo: https://www.thescarboroughnews.co.uk/business/campaign-there-has-never-b...

"Speaking about the Power up the North campaign and how Sirius is contributing to the economy, Mr Fraser said: “Our £3bn polyhalite mining project is already creating jobs and positive economic benefits but our project alone is not enough.

“To truly realise the positive knock-on economic effects of investments like ours, and to attract more like them to the region, urgent action is needed.”

Awesome.

https://www.youtube.com/watch?time_continue=129&v=3hhBxo1H5wA

Oops ;-) Conveyors. 

https://www.youtube.com/watch?v=wWPGAQBK9Xs

"Ammonia – a pungent gas that in large concentrations can cause stinging in the throat, eye damage and even death to humans – is associated with animal manure and nitrogen fertilisers. When these fertilisers are used on the land, the nitrogen can also wash off into nearby waterways, where it causes the overgrowth of some plants and the death of others, disrupting natural ecosystems."

https://www.theguardian.com/environment/2019/jun/18/ammonia-pollution-da...

"“We,” I take from this, are not big on vegetarians. And given just how much beef Gina’s staff are apparently consuming, I’m a little worried about the profits being, quite literally, eaten..."

Think. (A Cost Benefit Analysis..)

"Notes: 1) Based on indicative corporate financing structure. Production forecasts, pricing, operating costs and capital costsare as per the SRK CPR with the exception that prices and costs are nominal, inflated at 2%. 2) Commercial production assumed to be 10 Mtpa. Expansion to 13 Mtpa will require additional capital of US$367m which is envisaged to be funded from cash flows generated after reaching 10 Mtpa. 3) Includes US$50m Hancock equity investment to be received upon entry into definitive documentation for the Stage 2 Financing. 4) Based on the expectation ofUS$2,500m facility being available with US$1,000m in further liquidity provided after all high yield bond issuances. Amount shown represents the drawn amount in the indicative case shown above. 5)Operating cash flow illustrative based on SRK CPR pricing and operating assumptions, after reduction of sustaining capex and pre-completion operating costs. 6) Represents a conservative downside case for contingency and escalation on which the Stage 2 Financing has been sized to ensure adequate liquidity. Base case contingency and escalation is US$467m."

http://siriusminerals.com/downloads/agm-presentation-june-2019/

I guess its flexible...4/5ths... that will be 3.2.

Ah, So ... 

"From the St2 deal in totality there is a potential maximum funding provision of $4825m made up of $425m of cash from new equity issue plus a $400m CB. These monies have gone through and are with the co (though the funds from the $400m CB are in escrow). A $500m bond needs to be sold by the co's Lead Arranger JPM by end Oct for the rest of the provision to be confirmed and signed off. That consists of a $2500m credit facility plus, once Sirius issues a further $2500m of bonds, will have an extra liquidity provision of $1000m. Only the $425m of equity issue is available as spending cash until this first bond is sold. At present cash burn that would only last around 6-9 months. Cash burn is accelerating."

"Two options: 1/ they fail to get their bond away, alternative cash raising by end this year in 4 months not 2020. 2/ they suceed with the bond, then $4.4bn more is available to the co.  Major spends to First Polyhalite at end 2021:
Shafts, MTS/$m.
Woodsmith Production Shaft 246.1
Woodsmith Service Shaft 284.7
Woodsmith & Lockwood Beck MTS Shaft 148.8.
tot MTS inc fitout 1,498.6
Tot 2178.2. Less than half the money available from the St2 deal.

Add some 500 extra from other stuff, but take some twice as much off as having been spent already from St1 and from recent issue."

Thank You ;-) https://www.youtube.com/watch?v=mCDA-m-TQdU

"Although funds under the RCF are expected to become available to the Company at the same time as the proceeds of the Initial Bonds, the Company currently expects to draw upon the RCF later, in tranches."

"The Company is expecting to achieve first polyhalite from the mine by the end of 2021 and is initially targeting production capacity of 10 mtpa from the Project by mid-2024, at which point, the Project is expected to be capable of producing up to 7.0 mtpa of granulated POLY4 product at steady state, with the balance as coarse POLY4 product. The Company intends to implement the Project so that production capacity is phased to rapidly increase to 13 mtpa by early 2026 (under existing planning permissions/consents) by incremental addition of mining, granulation and harbour capacities and eventually up to production capacity of 20 mtpa by early 2029, subject to receipt of additional planning permissions/consents and the completion of additional infrastructure."

Bringing the Project to an initial production capacity of 10 mtpa will involve the construction of an underground mine to enable the extraction of polyhalite, along with the necessary infrastructure both above and below ground that will be required for transportation, processing and distribution. Construction comprises the sinking of two vertical mine shafts to access the polyhalite deposit and building the MTS, the MHF and the OLC, to transfer the product from the MHF to the PHF, which receives, stores and screens the final product and transfers it to vessels berthed on the RedCar Bulk Terminal (the RBT Wharf). The Company expects to progress the Project in two primary phases: the Initial Construction Phase and the expansion phase, covering the period from the end of the Initial Construction Phase until production capacity reaches 20 mtpa (the Expansion Phase). The Initial Construction Phase is intended to achieve first polyhalite from the mine by the end of 2021,
production of saleable tonnage by early 2022 and commercial production capacity of 10 mtpa by mid-2024."

"The Company is considering an outsourcing arrangement pursuant to which a third party would construct the harbour facilities and associated infrastructure needed by the Company to reach production levels of up to 10 mtpa and the Company would pay fees for use of the facilities."

"The RCF is expected to have a 7 year tenor and an annual interest rate of LIBOR plus 5.0 per cent."

"Subject to any prior cancellation or prepayment of the loans outstanding under the RCF, the total commitment under the RCF would be permanently reduced by 60 per cent. of the net cash proceeds of any Relevant Securities (other than net proceeds of any issue of common equity) issued, e.g., by approximately US$300 million for each US$500 million. As a result of such reduction of the commitment under the RCF, the Company would, for example, have an additional US$1.0 billion of funding available for drawdown under the RCF following the issuance of a total aggregate amount of US$2.5 billion of Take-Out Securities."

http://siriusminerals.com/downloads/jp-morgan-high-yield-conference/

£3.52bil  subject to sustainable construction & the Port Facilty.

http://siriusminerals.com/downloads/2018-q4-progress-update/

"RSV undertook a high-level review of the capital cost in the current estimate for the shaft and shaft infrastructure portion of the project scope. Overall the capital estimate is of good substance and the methodology applied in compiling of the estimate and the pricing used cannot be faulted. The estimate complies with the required accuracy level and the risk and range analysis was done to satisfaction. No major omissions were identified.

The total shaft & shaft infrastructure cost equates to USD 1,049 M of the total capital reestimate (before actual spend to 31 December 2018 and removal of USD 79.5 M assumed for mining equipment lease). In total 85.7% of the estimated cost on the shaft and shaft infrastructure scope has been procured. The contract for the major shaft & shaft sinking activities has been awarded to DMC on a target price based contract. The source of cost information utilised in the latest estimate are the pricing received from contracts that are in place for the various work packages. Where no contracts are in place quotations were obtained from the market and the pricing utilised. No provision, other than contingencies, could be identified for possible scope and contract growth.  The estimate is presented according to the project WBS. The WBS is well developed and all areas of the project are clearly defined. RSV identified a few minor issues for Sirius to address in future estimates in respect of commodity coding, foreign exchange rates, and splitting scope items by supply and installation."

"Mineral Transport System
The MTS equates to USD 1,499 M of the capital estimate (before actual spend to 31 December 2018)"

"Shafts 1,048.8 :  969.33
MTS 1,498.6 : 1,498.6
MHF 308.9 : 308.9
Port 272.31 :  29.24
Permanent infrastructure 70.9 : 70.9
Offsite works / utilities connection 18.9 : 18.9
Construction Facilities and support 203.7 : 203.7
Owners costs / Other 366.62 : 366.6
Escalation 119.5 : 119.5
Contingency 347.5 : 347.5
Total 4,255.7 : 3,933.1"

Pi.. Almost ;-)

https://www.youtube.com/watch?v=QU7QylajLbQ

In my humbly bumbly ... £ 3.146bil

"The way to an iron stomach” 

http://liberum.com/models/sxxj79vi8n502m

"That’s simple. But I’ll need her help on the main course, since I own no cows, or stations ...  Brutal. Buy a copy and support drought relief; it’s an important cause."

https://www.theaustralian.com.au/weekend-australian-magazine/columnists/...

https://www.ginarinehart.com.au/things-we-love/

About Phase 10 ... ;-)

https://www.youtube.com/watch?v=ZZ5IWRz78DY

Image ref: http://comicsbin.blogspot.com/2014/10/

The Consistant.

"It’s a niche audience."

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3 Comments

Captain Black's picture

Top Draw

"DMC is currently looking for experienced miners, electricians and deck operatives to help the company sink two deep mineshafts at Sirius’ Woodsmith Mine near Whitby."

https://www.yorkshirecoastradio.com/news/local-news/2901349/150-more-job...

"We encourage anyone who has the right attitude and the relevant qualifications and experience to get in touch.

A history of working in a safety sensitive environment is paramount..."

https://www.youtube.com/watch?v=HiMYifnHfGs

https://www.thisismoney.co.uk/money/investing/article-2654279/Meet-Jupit...

https://www.youtube.com/watch?v=a0woFSDQ-ik

The European ...

https://www.youtube.com/watch?v=A3b7lxhjw8U

https://www.gazettelive.co.uk/news/teesside-news/wave-jobs-sirius-minera...

https://www.youtube.com/watch?v=c95edsw17QE

Captain Black's picture

Cosmic Waves

"To get a sense of the mood among investors in Sirius Minerals, the casual onlooker need only pop into a couple of internet chatrooms. The web is alive with gossip and speculation about this FTSE 250 company, whose market value of close to £1 billion is built on the bet that in a couple of years’ time it will hit pay dirt through a mine deep under the Yorkshire moors.

Sirius Minerals was founded in 2003, initially looking for potash mining opportunities in North Dakota. Ultimately fruitless in its exploration endeavours in the United States, more than a decade later the company turned its attention to Britain, finally securing the licence to develop the world’s largest deposit three miles south of Whitby from the North York Moors National Park Authority in 2015.

Having started with a listing on Aim, London’s junior stock market, the company gravitated to a main quote in 2017. It raised $1.2 billion three years ago to enable construction work to begin at the mine, known as Woodsmith, and this year it has been pulling together an additional funding package of roughly $3.8 billion, which is approaching a pivotal stage.

There can be no mistaking the company’s ambition. It is digging a mine 1,500 metres deep in the North York Moors National Park and aims to transport the potash — or polyhalite, to be specific — via a conveyor belt through a 23-mile tunnel to Teesside, where the material can be crushed into pellets and exported overseas.

Successfully starting to bring Woodsmith’s 2.66 billion tonnes of proven high-quality polyhalite resources to the surface would be transformational for Sirius. It is a central ingredient of fertilisers, containing four of the six nutrients required by plants, and there is a high demand for the resource from countries such as India, whose populations are growing rapidly and where arable land is not expanding at any serious pace. Impressively, Sirius has made good progress with the initial construction work, having had to expensively alter its plans to win consent. About 1,000 people are working at the site and so far they have beaten targets for excavation work, such as sinking service and production shafts and carrying out the preparatory work on the tunnel.

The second, and final, financing round is complex, expensive and not without risk. However, raising the money would enable the company to complete the mine and fund itself until the potash starts coming out of the ground and the orders and payments start coming in.

Two of effectively four legs of the move have been completed. A deeply discounted equity placing at 15p a share has raised $425 million, more than initially anticipated. A net $400 million also has been raised by issuing bonds that convert into Sirius Minerals shares. These carry a fairly punitive 5 per cent annual interest, payable quarterly, until they convert into shares at the very latest in 2027.

Next, the group has to raise $500 million through a high-yield, or high-interest, bond issue, which it is aiming to complete by September. The miner is hoping for the bonds to attract a “single B” rating from credit agencies, which should bring down the likely interest rate, but it will be high, nonetheless, and certainly into double digits. The likely lifetime, or maturity, of the bonds is not yet known.

Assuming that happens, in will come JP Morgan, which has underwritten a $2.5 billion revolving credit facility that can be drawn on as necessary for seven years. The American investment bank is charging Sirius Libor — or the rate that London-based banks charge to lend to each other — plus a meaty 5 per cent to use the lending scheme. In addition, for every $500 million that is drawn under the loan, a corresponding high-yield bond has to be issued in order to repay it.

Although the JP Morgan facility far from cheap, it gives the miner useful options and financial flexibility. It doesn’t have to draw on all of the potential loan, but can use what it does take for whatever purpose it sees fit, from funding its capital expenditure to redeeming some of the debts it has built up — whatever proves to be most cost-effective.

At this stage, and having achieved so much, it would be a surprise if the high-yield debt offer failed. However, the uncertainty of it all has weighed heavily on the share price, which is down a third this year and was off 0.6 per cent, or less than ¼p, to 14p yesterday.

This is not the market’s only worry. Even once the financing is complete, there are risks associated with constructing the mine. Also, the group does not expect to begin extracting polyhalite until the fourth quarter of 2021 and doesn’t reckon that it will be generating positive cashflows before 2023.

This means that even though Sirius has secured committed forward orders — in the region of 11.7 million tonnes of the resource — it will be some time before the company starts turning a profit and can even think about paying a dividend.

Shareholders in Sirius have reason to feel aggrieved. First, the $425 million equity placing was carried out at a deep discount of 32 per cent to the price beforehand, fuelling the sense among investors that did not take part that they were left at a disadvantage.

At the same time, while issuing convertible bonds is understandable, the prospect of dilutive new shares coming into circulation when the securities are exchanged — at any time and at the discretion of the bondholders — is bound to worry investors and hold back the stock. With a floor for conversion having been set of 19.54p, though, little is likely to happen while the price is at its present level.

Even with all this to fret about, the shares look cheap.

Liberum, the house broker, reckons that they are worth 40p, for example, taking into account both the financing and construction risks. If the high-yield bond gets away, the broker is almost certain to upgrade.

The company’s valuation of £980 million equates to less than a year’s worth of the £1.1 billion of steady-state annual profits before tax and other items that Sirius should make based on the mid-point of its estimates."

https://www.thetimes.co.uk/article/sirius-minerals-backers-gamble-on-dir...

"Scientists were celebrating a groundbreaking astronomical discovery Thursday that they say could pave the way for mapping the outer reaches of the universe.

https://www.youtube.com/watch?v=yvlWcaXUyvw

An Australian-led team of international astronomers have determined for the first time the precise source of a powerful, one-off burst of cosmic radio waves.

They have pinpointed it to a massive galaxy billions of light years away, with properties that upend what scientists previously thought they knew about the formation of mysterious fast radio bursts (FRBs).

Exactly what creates these high-energy surges of long waves at the far end of the electromagnetic spectrum remains the subject of intense debate, though scientists now agree they originate in far away galaxies.

Since the first FRB was detected a little over a decade ago, a global hunt has found 85 bursts. Most have been "one-offs" but a small fraction have been "repeaters" that recur at the same spot in the sky.""

https://www.dailymail.co.uk/money/news/article-7195883/Mining-boss-wants...

"Fraser is wary of predators, but insists the company is not for sale. 'I used to do a lot of takeover defence,' says the former investment banker. 'Hopefully we don't have to call on that any time soon.'"

http://otp.investis.com/clients/uk/sirius_minerals/rns/regulatory-story....

The Company is not for sale... (that explains that)

""It's like looking at the Earth from the Moon and not only knowing what house a person lived in, but what chair they were sitting in at the dining room table," Bannister said."

https://phys.org/news/2019-06-astronomers-history.html

https://www.youtube.com/watch?v=BkzMuU6jnGk

Hmmm ...

""Greasy machinery, millions of volts, flames rising higher than the surrounding hills, a generator running on recycled chip fat, tens of thousands of revellers who perhaps aren’t all sober – are they worried things could go wrong? “We run a tight ship,” says Rush. “People are always amazed when they visit us during the festival. It’s a very sober scene. Not at all what you expect from a rave. We’re all in the zone. Well, until Monday morning.”"

Baldrick !!!

https://www.theguardian.com/music/2019/jun/25/inside-glastonburys-hottes...

I'll be Bach.

(I'd missed somin ... ;-)

"The European construction group STRABAG SE has been issued a notice of commencement to begin two further tunnel construction contracts (Drives 2 and 3) on behalf of York Potash Ltd. for its North Yorkshire Polyhalite Project. The two drives between the shaft at Lockwood Beck and the Woodsmith Mine will have a total length of 24 km and a depth of 360 m.

STRABAG had already commenced the design-and-build contract for Drive 1, a 13 km section from the tunnel portal at Wilton to Lockwood Beck in the first quarter of 2018. The total amount commenced to date is about €1.0 bn from the contract awarded to STRABAG, which also includes the construction of the underground material transport system, the contract for which will commence later this year.

Thomas Birtel, CEO of STRABAG SE: “We are proud of the commencement of the extensive tunnelling contracts for Drives 2 and 3 and expect to continue working well with the customer. Sirius Minerals and STRABAG have partnered to find efficient solutions to the project’s technical requirements. This contract also proves that, despite the unclear Brexit situation, significant investments in the UK are still being made and we were right in our decision to continue to see this market as a European market.”

https://www.strabag.com/databases/internet/_public/content.nsf/web/SE-PR...

https://www.strabag.com/databases/internet/_public/files.nsf/SearchView/...$File/20190627_PM_North_Yorkshire_Polyhalite_Project_MTS_Drive2+3_end_e.pdf?OpenElement

https://diepresse.com/home/wirtschaft/economist/5650823/Milliardenauftra...

https://www.youtube.com/watch?v=5qdIwsnDn8Q

http://www.northeastcoastalobservatory.org.uk/

Oh, OK ;-)

https://www.youtube.com/watch?v=7x6h96zs0Xc

One Fine Day...

https://www.youtube.com/watch?v=wf02wZ_Okw8

 

Captain Black's picture

No 'Frills'

"When you think of the stock market, do you feel bamboozled by the jargon?

Don't know your bulls from your bears or your dividends from diversification?

"No. You don't have to be Gina Rinehart to invest in shares.."

"The actual market is a box the size of your computer up in our data centre."

"You've got to think about why you're investing, what your goals are and what your appetite for risk is."

"It does require planning, research and understanding your financial goals, your risk tolerance and how potential investments might fit with them."

"Remember the higher the risk, the higher the possible returns — but you can lose everything."

"Don't take a tip from your mate or the taxi driver,"

https://www.abc.net.au/news/2019-05-24/why-are-fewer-women-investing-in-...

Hmmm ...

https://www.abc.net.au/news/2019-07-06/women-share-their-stories-of-fina...

The Department of Human Services.

Sounds like a ...

https://www.abc.net.au/news/2019-07-06/melbourne-professional-beggars-pa...

http://siriusminerals.com/corporate-responsibility/environment/funding-e...

A joint account with your nearest and dearest in which to dump your assets and encrypt your digital afterlife. 

Skills.

"The developer of a huge fertiliser mine under the North York Moors said yesterday that it was on track to secure $3.8 billion of financing by the end of September.

Sirius Minerals said that it was making good progress after the completion of a discounted $425 million share placing and a $400 million convertible bond offering. The company said that it would begin producing fertiliser in 2021...

The company suffered several setbacks last year as project costs increased and it struggled to secure government loans, forcing it to change its financing model.

Nevertheless, Sirius is in the process of achieving the $3.8 billion it needs to get the project into commercial production, with the backing of JP Morgan, the investment bank. After completing an equity-raising and convertible bond offering, Sirius is raising $500 million in high-yield debt, which would unlock a $2.5 billion debt facility with the US bank.

Chris Fraser, Sirius’s chief executive, said that the successful raising of $825 million in funds during the first quarter marked the end of “the first part of our stage two financing”. Mr Fraser, 45, said that he expected that stage two would be complete by the end of September.

If all goes to plan, the company will produce a fertiliser it calls Poly4. Analysts at Liberum, one of Sirius’s brokers, said that the completion of the $500 million bond and the JP Morgan debt facility would largely eliminate risk.

Shore Capital, its other broker, said that the coming debt event would catalyse a “major re-rating of the shares” and be the key to Sirius’s value potential."

https://www.thetimes.co.uk/article/sirius-fertiliser-mine-north-york-moo...

"12:00 am is midnight"

Oh.

https://www.thescarboroughnews.co.uk/business/sirius-minerals-to-hold-pu...