Cheyne says,JL, that would be a scary scenario if it played out. It would be an epic failure by management to essentially giveaway half the company JUST to get pre FID funding. Particularly with such Favourable global conditions. Nevermind the shareholder approval that would likely be required to issue that many shares as a % of the current SOI (I would think even CNE would question such a proposal).Based on the recent interview with Justyn, his reputation would probably cop a battering. You can’t ooze that confidence, then raise $ to ensure “the best deal for shareholders” … then proceed to do such a revolting raise as the SP continued to slide.Yes, Cheyne and Suni too, a scary scenario it might be, but it's a base case scenario, and not a time to panic. Let's look at the original financial metrics used in both PFS and Pitt Street Research reports.
There is not a lot of wriggle room for NRZ to affect the Enterprise Value. PSR Report has not tampered too much with the original metrics other than to increase slightly the Net Revenue/Tonne. (20% premium to the original CRU forecasts) as part of the Bull Case. In view of the recent change in the global situation it's probably a more realistic assessment.
That would bump up the Enterprise Value considerably, lifting my assessment of the fair value share price to about 26 cents. I don't think that that's too bad as a base case.
Unless there is a significant "upward surprise", I can't see the SP moving all that much.
The Risks on page 23 of the Report, I think are very real. Global prices, competition and funding, along with environmental considerations, will guide the progress of NRZ.
IW has already alluded to "Secret toxic water scandal" and Linc Energy project. If this gets traction it could reenergize environmentalists and organizations such as Lock the Gate, which might have the ability to, at least, slow the progress of the project.
I think that the share price is largely out of the BOD's hands, so don't be too critical of them. And a share price hovering around 11 cents does not bode well for a CR meeting the expectations of shareholders. I just wish that they would stop talking about getting the best financial deal for shareholders. Get a rock-solid reasonable deal, accept it, publicise it, and hope it gives the share price a lift.
All IMO. Comments welcome. J L.
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