Hi guys, I try keep a bit of an eye on here despite no longer holding (due to an interest in a contractor and past familiarity with AJM .)
And, as far as I can see, things have not improved regards spodumene pricing although every week there is the “maybe this week things will change to the upside” refrain in global media ( Maybe next week that boat will come in ?)
However - luckily for Altura - the boats ARE still coming in to collect Altura Spod ... with one due in late September according to
@nightflyer [here] .
In regards refinancing, in a recent update Altura said it was still working with Azure Capital - a process that has been ongoing since last September at least (?).
Fingers crossed it will score a deal as good as the massive 5% interest loan PLS secured recently, which has no repayments for two years. That was with French bank, BNP ... although I do not know if Azure brokered that deal.
Again re financing, I was looking up Castlelake the other day and happened upon a story about debt financing featuring Matthew Weaver from Azure and Hedley Widdup , from another entity called Lion Selection Group.
It was written early 2019 and I don’t expect things have changed that much .
[read the full story here] .
Basically they said refinancing debt was not as easy as people think and that the time spent trying to arrange it could stretch out from between six and 12 months.
They also said that lithium and other ‘speciality metals’ projects had a particularly hard time due to opaque pricing*
and that no financier wanted “projects that are projected to make ‘just enough’ to repay debt.”
Spoiler : More excerpts from that story here ... “Anything too ‘funky’ in terms of jurisdiction or commodity is off-limits for them,” Mr Weaver says. It’s also a lot harder for the so-called ‘speciality metals’, like lithium, cobalt, and vanadium, regardless of their growth trajectory and positive market dynamics. “This is largely a function of the opacity by which prices and other offtake terms are set for these products, which makes it harder for lenders and investors to understand and forecast the market (and therefore the borrower’s revenue line),” Mr Weaver says. What do lenders look for in a mining project? Hedley Widdup, director of junior resources focused investment firm Lion Selection Group, says regular and sustainable cash flows are very important. “Projects can pay back large capex quickly if a lot of cash flow comes in early, while even a small capex project can take a long while to repay if the margin is thin,” he says. “Projects that are projected to make ‘just enough’ to repay debt will struggle to get debt funding – bankers like to see enough cash produced to pay costs along the way, repay debt and interest (and costs) and then have a comfortable ‘reserve tail’.” Mr Widdup also says there is a fine line between raising just enough and not enough money. “No investor wants a company to have to top up part way through development. It is always a stressful situation and pricing is often tough,” he says. Lenders are heavily focussed on ensuring a project is fully-funded before being prepared to “release” their funding, Azure’s Mr Weaver says. These lenders require an independent technical expert to verify the borrower’s cost estimates, even if a project feasibility study has been completed by a third-party engineering firm. What do lenders look for in a mining project? Hedley Widdup, director of junior resources focused investment firm Lion Selection Group, says regular and sustainable cash flows are very important. “Projects can pay back large capex quickly if a lot of cash flow comes in early, while even a small capex project can take a long while to repay if the margin is thin,” he says. “Projects that are projected to make ‘just enough’ to repay debt will struggle to get debt funding – bankers like to see enough cash produced to pay costs along the way, repay debt and interest (and costs) and then have a comfortable ‘reserve tail’.” Mr Widdup also says there is a fine line between raising just enough and not enough money. “No investor wants a company to have to top up part way through development. It is always a stressful situation and pricing is often tough,” he says. Lenders are heavily focussed on ensuring a project is fully-funded before being prepared to “release” their funding, Azure’s Mr Weaver says. Lenders also look at things like management’s experience and track record, jurisdictional risk, and the company’s environmental and social licence to operate. And often, to ensure revenues are guaranteed to flow once the project is up and running, a percentage of production must be locked up in offtake agreements with customers....... .. People [also] forget that lenders’ primary objective is to receive their capital back in full (with a return commensurate with the risk).” “Unless they can be confident of achieving this, they simply won’t participate in the financing process.” The upfront capex estimate is only part of the story – the real funding requirement is often far bigger. “In our experience, total funding requirement can be somewhere between 1.5 to 2 times the upfront capex estimate,” Mr Weaver says.”
... In regards ‘expert analysis’ which may be scrutinised by potential Financiers’ analysts, AJM had Price Waterhouse Coopers prepare a report that supports an offtake contract with major holder Shanshan that may be of use in assuring contract and income security?
[AGM, Proxy Form, & PWC Report 26/08/20]
... I don’t think there is anything further that can be said in the refinance issue in terms of updating.
In the meantime, and I do mean meantime, the balance of etiquette and respect on this forum has taken some ugly turns of late with some posters ganging up against each other.
..
Whilst the self-confessed old and grieving man - victim of last night’s episode- turned the other cheek I wish some of the ‘gang’ here and those who support them would stop behaving like boils about to burst.
Hopefully things will turn out for the best
cheers
(20min delay)