I think it is pretty clear to everyone who has invested in ssn over the past few years that the company is now at the crossroads. It is barely keeping its head above water with a low poo, maximum debt, low cash reserves, high overheads and an ever looming decline curve.
The only options in my view are:
1. Increase debt - unlikely any Bank will come to the party.
2. Another capital raising - not likely to be successful at current sp and will not be popular with shareholders.
3. Sell off some land holdings - TB has proved in the past that he can pull of this sort of deal.
In my view Option 3 is the only one that is viable. Think back a few years when TB did a deal with Chesapeake which resulted in $70 million landing in the bank and the share price jumping to 23 cents. Unfortunately, the 70 mill was not well spent with SOA, Gretel, AUSII and others churning up all the cash, however I reckon the lesson was learnt. Imagine where the company would be if they just concentrated on North Stockyard, built a firm financial base and then set about de-risking the other plays.
I realise that now is not the best time to be going to the marketplace, however if TB is as good as he tells us he is, here is an opportunity to prove it and justify his impressive salary package.
There is of course a 4th option - administration, liquidation and oblivion.
SSN Price at posting:
0.9¢ Sentiment: None Disclosure: Held
