2020 make or break SRZ

It's hard to remain optimistic with SRZ (or indeed any stock at present) as markets through the world reel from the vagueries of COVID 19.

Of course, along with the need to grapple with COVID 19, shareholders of SRZ have developed expectations of the new board of Directors following on from reports of discussions with "corporates" for the development (or something) of the Heemskirk tin mining project (the Project).

With an existing value in the order of $3M SRZ faces colossal challenges when trying to attract investors or partners into its $50M US Project.

How will 2020 pan out for SRZ? One cannot help but think that the company is on its knees and holding its hat in its hand as it approaches the investors or partners to discuss the Project or its future.

However, readers of this forum know that there remain a variety of options open to the company beyond spending $50M US on the project. For instance, recent reports from Metals X (owner of Rennison) reveal lower grade ores. The lower grade ores lead to higher grade operating costs and lower profits. In this scenario is Metals X a prospective partner? Metals X has revealed that its plans extend to upgrading its processing plants and outputs. In short, it needs more high grade ore!

Another reader on this forum did once explain that there was another old mill nearby that is presently mothballed and could potentially provide another opportunity for SRZ to commence production. Perhaps that reader would care to explain more?

The above possibilities constitute the "highly speculative" future of SRZ 2020 from my perspective. Are they the most profitable? Most probably not. They are merely avenues to potentially breathe life into SRZ.

If the project is the big money spinner for SRZ then there are a number of ways to bring it to fruition:

1 taking on Debt;

2 selling (a shed load of) more shares;

3 entering into agreements with other companies;

4 take-over.


taking on debt

Let's face it. Money is cheap to borrow at this time and the Directors would certainly be hunting around for lenders. The risk to shareholders is that if costs blow-out or the project costs have been "ündercooked" the creditors will recover their money yet shareholders will get to bend over and take the (perhaps even long anticipated) pineapple.

However, the upside is that if the project estimates hold true then the creditors will recover their money in around three years leaving 7 good years for SRZ to prosper off the anticipated mine life.

(See the success of FND who took on debt to build a large copper plant in Indonesia. It was so successful its share price jumped and was eventually taken over).

selling more equity

Save for the occasional float to raise more funds then this cannot be a realistic option for a $3M company. Obviously it would send the value of the existing shares (tell me if I am wrong) about 16 - 17 times lower than their present value. Most of the directors in SRZ are being paid in shares and options and I hope would be very reluctant to do this.

other agreements

Presumably one of the best plans for SRZ and to bring the project to fruition is to enter into "farm in" or other similar type agreements with other mining companies who have track records of successful mining.

While entering into any partnership means giving up a proportion of the overall profits, this could be done without taking on the debt or raising more equity. In essence, a substantial proportion of the risk of developing the project is given to others in return for them receiving a proportion of the profits.

What proportion are we prepared to give up?

take over

This is a real possibility at the existing share prices (n my opinion) but it would mean that one or more of the larger share holders would need to agree to sell. I suspect that like FND, someone would be more willing to take-over a successful operation that can demonstrate and forecast profit, not one that is presently on its knees.



Certainly 2020 could be the make or break year for SRZ.

I look forward to further discussion.