Over-reaction by a few players happy to quickly re-set a new low price imo. Blind Feddy knew the divis were at an end with grades falling last 9 months into virtually cash breakeven situation and just enough cash to reach FID assuming Toliara deal is done. Before 2019 the market knew how much cash was required to fund Toliara pre-FID expenditure and various delayed vendor payments, land acquisitions etc... the divis were a welcome bonus from very high min sand prices, but for BSE to run cash down below what was required for Toliara to reach FID, requiring a CR over next 12 18 months, would be batsheet insane.
The cash on hand less closure costs/provisions looks nice but it will all get spent on Toliara if/when permits are finalised. lets say BSE retains US$100M cash after another 18 months production, small cash generation, run-down product stocks, paying out Kwale closure/rehab, plant salvage value etc. Either BSE is cashed backed to approx 10c, or Toliara is approved and that cash goes to reach FID and over vendor payments etc, in which case BSE is valued by Toliara at ~US$100M.... but cum-raise for finance/equity development.
Cash backing and Tolaira dead is unlikley imo, because Madagascar has too much funding and support from the west to just nationalise the deposit and gift to the Chinese. The prime minister has failed to extract corrupt money from BSE for obvious reasons over +5 years, his close personal secretary was arrested in Londin shaking down a mining company for corrupt payments, the country is looking very closely at Toliara as their best undeveloped deposit... I don;t think they can afford to wait another 5 years for a corrupt deal. I think the stars have aligned and the time has come to monetise the deposit through development, but of course in Africa I could be wrong. That is not to say the market is not now very wary of funding BSE because of the shady history and elevated risk Madagascar's approach has brought, but I think the deposit will get permitted on terms basically as described in last years legislation.
Cash backing or valued on Toliara at FID late 2025 , US$100M MC looks cheap. i might have to break my rule of not speaking with management to speak with TC and see whether his strategic plan accords with mine? 2ic's plan looks a lay down misère for aa share price re-rate...
GLTAH
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