Maybe if STA took blue pills they could have got Coburn up long and strong... Alas, despite an impressive commissioning wood thanks to the CEF (Chief Executive Fluffer), STA wilted under the pressure to perform and couldn't do the deed... let alone make it to the money shot.
STA needs lots more cash to cover operating losses and capex to improve production, but for how many more months? How much cash and how long to try reach an acceptable operating cashflow that can repay debt and interest is what the 'New Plan' is working out. What odds Coburn needs even more cash in 3-6 months time if it still doesn't targets? The new plan and production improvements would want to be Lazarus like given the sort of production and operating cash shortfall they are stuck in.
Investors will only tip in more risk equity to a project with a credible, short path to profitability and comfort risks are mitigated, not if its likely to go into administration under large debts the next time cash runs out, water mounding stalls production again, or another equipment breakdown pulls the rug out from the recovery plan. Say they need $10M TSF for and other capex, and $50M to cover losses over another 5 month ramp up plan to nameplate and full MSP product (ie $20M losses reducing to positive cashflow over 5 months, $10M/mnth average) all while creditors agree to a debt repayment standstill... $60M is no small amount or risk equity to have another roll of the dice...
At 4.5c STA would have a MC $70M, plus ~$250M debt and unpaid interest, so an 'equity value' of $320M before suspension, or $380M after suspension and $60M CR. I don't think STA is worth $380M EV given the wafer-thin profits IF the new plan works out, or the probability of the new plan also failing to reach target and losing the lot. $60M own about half of STA sounds cheap compared to the heady days of a $700M MC, but it looks expensive on a risk-reward basis as things stand imo. More likely it is sold to new owners after wiping out shareholders and the creditors taking a sizeable haircut (ie gettting cents in the dollar).
No news on selling Tanzania projects, which is the first and most obvious way to raise cash and buy time, is telling after so long imo. Fungoni is so small it beggars belief STA sunk $15M into it so early and before any larger mine plan feasibility study was ready to roll. Frankly, the 16% free carried deal with this dodgy government and all these pre-paid compo payments etc was a terrible deal in the first place and has sovereign risk written all over it. I'm not surprised nobody is going to pay much for it, not enough to be worth selling in any case. Time would tell, if only they had some...
Unfortunately, without any good news relayed about Jan improvements in the quarterly, running out of cash in March, chronic low-grades and low production, poor zircon quality and unresolved MSP issues, ongoing water-mounding and tailings issues etc, Feb looks like the last chance to demonstrate the sort of improvements that will convince someone to tip in another $60M. I don;t know what is going on, just reading between the lines and making logical conclusions.... hope I'm wrong.
GLTAH
(20min delay)