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Hottin

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22/07/18

11:42

Post #: 34502649
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Originally posted by triage ↑

The_Vet - I've been involved in a major development like Danakali is proposing at Colluli and know how the share price can gyrate wildly during the process. I suspect if you are not a trader of DNK then your time horizon for holding DNK should probably be at least 12 months.

I spent more time looking at the prospectus and this is how I think the funding will work:

A minimum of 60% of the funding (of US$322m plus costs required) will be raised by taking out loans from banks. They have allowed for as much as 70% of funding to be bank loans but they seem fairly certain that the banks will only go to 60%.

Any shortfall from the 70% will be covered by Danakali's subsidiary providing a loan to the joint venture at commercial rates.

Another 15% of the funding will be covered by Danakali's subsidiary providing an interest free loan to the joint venture.

And the final 15% of the funding will be equity provided by Danakali's subsidiary but deemed to have provided by both Danakali's subsidiary and by the Eritrean government's vehicle.

What I think this means is that:

: 60% of funding will be from bank loans at commercial rates.

: Danakali will raise the other 40% of funding through a cap raising by issuing new shares, with 15% being in the form of a interest free loan (so only the principal will be paid back), with another 10% being in the form of a interest bearing loan (so both interest and principal to be paid back), and with 15% being in the form of an equity injection (with neither interest nor principal being paid). The necessary cap raising will only take place after the 60% of funding is secured by way of bank loans.

They have indicated that whilst they expect to only spend about $12m on the project in the second half of calendar 2018 they expect to spend over $100m in the first half of calendar 2019 and that they will only proceed with this work after they have secured funding. As such, I think that we will know by this time next year whether this project is a goer or not. I have no idea where the DNK share price will go in the interim.

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Thanks for that mate.
DNK will only go north and as I mentioned before when the company asks for cash I have it ready. This project deserves it.
So far the company delivered all and we should be really happy, slow but all solid positive news. Unless there is a takeover we will enjoy dividends for decades.

DNK Price at posting: 79.0¢ Sentiment: Buy Disclosure: Held
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