This $2.1bn CAPEX will be funded via 60% debt 40% equity. There is no ifs or buts. There's no such thing as some 90%+ leveraged $2bn nickel laterite project. 60% debt is the absolute maximum amount of leverage possible for a project of this size and technicality. Quite simply if shareholders are squirmish about dilution, I question why invest in a nickel laterite project in the first place?
60% of $2.1bn is $1260m. Of which NAIF is $500m, EFA $250, KSure roughly $250m. That leaves just $260m in debt left. This will easily be taken up by a consortium of lenders. Why? NAIF is happy to sit as subordinate debt.
GM committing to debt is not an ideal situation, you would much rather they contribute to equity. Should something happen you would much rather they are a pissed off shareholder than a senior debt holder holding your balls in their fist.
Once the debt gets kicked off and the time comes to raise the equity, you will be surprised how quickly it gets raised. GM is in for the first $75m or around 10%. That cornerstones the raise. There are a heap of super funds who are investing in basically anything green thats doing a FID. Every payday they get handed cash that they need to deploy and the way the world is nowadays they need to do so in an ESG conscious manner. They will take a few hundred million and the rest will write itself. Guys who take equity can be in today out tomorrow.
Comparisons to AUZ SRL ARL are completely unjustified. ARL quite frankly are quite far behind from a development standpoint.
AUZ has not signed a binding offtake agreement for the product that they planned to produce, which their BFS was based upon. It did not receive any money from LGES.
SRL is not entitled to NAIF and has no binding offtake.
@Bomber78 trying to say that oh Sam is only going to sign an offtake if there's $600m attached and that's the way everyone should do it is not quite comparing apples to apples. SRL needs scale, Its processing nickel at 0.59% and cobalt at 0.10%. Its plant needs to be mammoth to take advantage of economies of scale. It has received support from EFA but wont be entitled to NAIF. By his own admission the CAPEX will be well north of $3.5bn AUD. These are the cards they are dealt with so they need that $600m USD and quite frankly need to shoot for it or sell off a piece of the project. I honestly wish SRL the best of luck, they aren't a competitor NAIF financing and all our production is accounted for so we aren't competing over offtakes. Lets one of us get built and it will help the other immeasurably.
The cards that QPM have been dealt are favourable in some ways but it is by no means a perfect hand. I think some shareholders had $$ signs in their eyes and thought this plant was going to get built with minimal dilution and they would be collecting dividends worth 30c a share in perpetuity. This was never going to be the case. What will happen I believe is the plant will get built, yes there will be a fair bit of dilution, but at the end of it QPM will be a free cash flow monster. With that free cash flow the opportunities start to open up. What should be obvious to shareholders by now is that management know how to close a deal, because they've done what others in the space could not despite been given a considerable head start.
Carn the Socceroos tonight!
(20min delay)