My two cents in the current madness. In the 04/02 announcement...

My two cents in the current madness.

In the 04/02 announcement TNG states SMS is now moving towards the delivery to TNG of its EPC proposal which will include process and product guarantees. That suggests to me the FEED is all but done and they know the CAPEX - given there's been no announcement that indicates otherwise, you have to assume and trade on the basis that CAPEX is no worse than the $843m previously quoted. If there was a known blowout they are obliged to inform the market.

The fact that the LSE listing was cancelled suggests a couple of things to me too:

1. If the LSE was a means to raise working capital should the FEED and other preparation work for financing extend beyond what current our current cash balances would stretch, the fact they've pulled the listing is positive and our cash balances will get us to whatever financial close will occur (funding or takeover/de-merger).

1. If we are funding this project and TNG is going to production (I am rooting for the sale of Peake), no LSE listing means they have any equity component sorted (ie. project partner) which is a tick.

The refinery EIS announcement will be critical for timing of progress. As long as there are no 12 mth data requirements, the supplement is simply a process. I would hope that with the number of years of monitoring that I understand the many consultants have completed, there are no further data points requested. The board should walk if there is.

Now you just need to take a view on the liquidity of credit markets. Note in the Kfw mandate extension letter on 4 December that Kfw responsible manager makes a very bullish statement about the bankability of TNG's business case. Ask yourself when you last time (if ever) a banker came out under a mandate of a listed entity and made such a statement.

Further to this, I think we might read a bit much into the extension of the mandate when some perceive that finance can’t come until December 2020. Under a mandate, you generally pay the lead a running fee and you just need to put some bookends in for this to begin and end. 12 mth periods are pretty normal and would expect SMS and Kfw to have been working closely throughout the FEED. Kfw aren't going to start the process flat footed. they've been taken for the ride by SMS.

On the credit markets I got my hands on some Kfw deal data and they were open for business post GFC when most credit markets were dry, both in arranging and providing ECA covered loans in the years 2010/11 which were probably the tightest in the credit markets. They also take a long term view on miners. When FMG was on its knees back in 2012, they provided a $175m credit facility. Most of the market called the death of FMG at that time and almost occurred 3 years later. Kfw backed them.

I agree with the comment that TNG are bleeding however I am confident there's news flow shortly. It is still a 10 out of 10 on the risk scale though.