It is extremely difficult to draft an appropriate response to the announcements today. I have experienced the full gamut of emotions. On the one hand, thinking I have done my dough for good. And on the other hand, trying to remain positive and brainstorm potential options management may have to salvage the business. At the same time, I realise that I am working from a position of incomplete information, so whatever I come up with is speculative at best (and should be read as such).
One thing I won’t be doing is getting into scraps with other shareholders. We are in the same boat, so one-upmanship is futile. No one put a gun to our heads and forced us to invest in a speccy junior mining minnow. We were all cognisant of the risks. And I consider rudeness to be the weak man’s imitation of strength. It doesn’t cost anything to be civil and respectful towards each other. We are all suffering here.
I’m connected with quite a few shareholders and we have been on calls, exchanging texts, trying to reach the company, etc all day. This has been somewhat helpful. We can use this forum to share as much info as we can glean - that will better enable us to make an informed decision once the suspension is lifted. There will be a natural rush to exit and see if one can return some of their capital. Others will hold on and see this out to its natural conclusion - whatever that may be. Let’s be honest - a bloodbath is pretty much assured, unless they can emulate Houdini with a last-minute deal. I’m not holding my breath, but can’t definitively say that they won’t manage to cobble something together - albeit encompassing huge chunks of flesh. It may be salvageable - I just don’t know.
Thanks
@ACEMINER for the heads up on Tuesday. You weren’t compelled to share that, but I appreciated that you did - even if I didn’t want to believe it at the time.
Where to start? Well, naturally I am as bitterly disappointed as everyone else in here. I recently added an additional two tranches to my existing position, such was my confidence that the bond would be secured by the end of this month. “Terms were deemed not commercially satisfactory to the Company”. Mmmm, I am not convinced that it was related to the coupon rate. I suspect there was simply little interest (conjecture here). It looks like they did everything they could to get it to the line, however, the risk appetite from fixed income investors just wasn’t there (in volume) at the moment. Interest rate rises to temper inflation have killed equities and with recessionary fears not abating, I guess the market is just risk off right now. And this is with the copper price looking strong & above the numbers used in their restart study, along with excellent LT fundamentals for copper.
We are bolted to the mast of Barry’s ship with the voluntary suspension. I “suspect” they are insolvent and as they can’t legally trade while insolvent - had little choice but to voluntarily suspend. It is out of our hands as of today. Critically, management will now need to pass around the hat for funds to keep the lights on, while at the same time formulate a plan on how they are going to finance the Nifty restart.
We can now say that running cash this low & punting the company’s existence on a Nordic bond being successfully secured was arrogant & seriously reckless if they knew there was even a slight chance that it would fall through. Had they secured more cash earlier & managed the funds better, we could have explored greater options if the bond fell through. The hubris involved in thinking it was a fait accompli. Not only that, ALL the directors have a fiduciary duty to us shareholders. Have they acted in the best interests of us shareholders here? What led them to believe that the bond was such a sure thing that they didn’t feel the need to shore up cash at the end of last year?
I put weight on runs on the board. Perhaps, management thought that pulling off a similar play on a remote Indonesian island could easily be replicated in Australia? I have backed them in to replicate this, but perhaps Barry & Co were drinking too much of their own bathwater. I was thrown somewhat by the smallish equity requirement (A$20m) to finalise the bond process. Took this as a positive sign that the conditions precedent to settle the bonds weren’t too severe. I was originally expecting double this or more.
These plays live or die on the access to capital sword. I knew this was right on the cusp of what was possible at this end of the market. I understood the complexity of the deal and all the moving parts. A$250m is a heck of a lot money to raise for a company with no balance sheet. But, they had assets to secure the loans against. The copper for the off-take facility and everything else for the senior debt. And they had done it before.
I have spoken with Barry via telephone & exchanged multiple emails with him over the past 16 months. Mates of mine & fellow CYM shareholders flew from Melbourne to Perth to meet with him & reported back to me. The message has always been consistent: “The senior debt is sitting there ready to go, but we need to sort the subordinated debt side first”. And they did that - via Transamine after the Glencore deal never eventuated. And they managed to link A$35m in equity to the bond. “Debt wanted the equity to go first. Equity wanted the debt to go first. So, we went out and sorted the equity”. I feel misled by Barry re: the extent/availability of senior debt options, how advanced they truly were in these negotiations and how close they were to closing.
All relationships are based on trust. I trusted Barry & Co and defended Barry on these boards. I now realise that I invested too much blind faith in Barry. I pride myself on being able to read people, but feel as if I have had the wool pulled over my eyes. It looks to me like a classic case of being strung along. The dates he consistently threw up re: when the finance would be sorted. I granted them the benefit of the doubt when copper prices collapsed last year, the pandemic was still raging, the Russia/Ukraine war, inflation ripping & interest rate rises, etc. But, I lost myself in the language. The “dotting of i’s and crossing of t’s” comments. His larrikin schtick. “We aren’t financiers. We are builders”. “Everything is now with the lawyers, etc.” The Samso vids. A million other Bazisms. This is all my fault, though. I am not going to transfer the blame elsewhere. I am a big boy and won’t sook over my decision to be sold on Barry’s confidence. I assessed the project’s merits on my own and still maintain that this is a solid project at the current copper price. I assessed 75 ASX-listed copper plays and this is one of the only ones that has a significant copper resource, a large amount of sunk capital and modest capex to bring into production. This is the best copper development play on the ASX IMO. If it doesn’t get up, nothing else is even a sniff - given challenges which are much greater than Cypriums.
What now? Have they played all their cards?
Why did they seemingly pivot from commercial bank lending to a Nordic bond? Was there a commercial loan on the table, but the terms considered too onerous (for example - a significant equity raise) and they went with the bond to reduce the dilution? Are any deals still available to them? Are there any strategic investors/white knights they can bring onboard in exchange for equity? Sell something? I'm going to do my best to glean answers to these questions in the coming weeks.
I really wanna keep backing in the company, but can’t shake the feeling that the finance hurdle is too insurmountable for them. And that they have killed a lot of goodwill now. I am undecided as to how I am going to play this moving forward. It is not in my DNA to give up without a fight, but unless they can put forward a viable alternative, my hand may be forced.
We’ll know our fate by the 31st March.
For those wishing to contact me outside of these boards, see my signature below and feel free to yell out. Most importantly, and for those struggling, look after yourselves. By all means, be prepared for all eventualities, but until we know with certainty how this is going to play out - I wouldn’t beat oneself up too much over it.
