While we wait for the information release to arrive, why not...

While we wait for the information release to arrive, why not ruminate on this deal and CR. According to information posted on HC, SFX are buying an option to buy 20% of a Brazilian project for US$20M, valuing the project at US$100M, funded with a CR of A$30M

Comments/Questions

Why dilute with a 15% issue at 50c now, if as some posters here say production will happen by end of year and the share price will breakout into 'producer' valuation multiples? Surely wait 9 months and raise at much higher prices.

Why dilute with such a large CR now? If they only need $3.5M for corporate largess, just raise a small lick and wait on all that spare contingency funds to come back (on record as saying SFX can run corporate for $2Mpa, so look fully funded past 18 months anyway). If the Brazil project DD goes well, SFX will be announcing spectacular grades, thickness and desktop studies demonstrating the upside value of this bargain growth asset... so share price will rise as market prices in growth upside in addition to pending TB cash machine turning on finally.

Is Growth Options a euphemism for covering end of development EPCM contractor claims and court dispute resolutions, STA style? It's uncommon that EPCM contractors don;t store up a huge amount of cost escalation claims that occurred over the project that only become 'real' once the post-handover haggle gets real.

From a little Google you can see this part of Brazil has min sand potential, and the interesting thing for me is a history of monazite enrichment along this coastline. A small option spend now to put foot on a potential winner growth asset is a savvy move, and the DD will provide much valuable data it takes 18 months to generate even if you bought the whole project straight up. However, using that US$1.5M option cost to justify a A$30M CR at 50c after the hard slog to finally hold 60c, so close to moving into producer valuation territory is vexing...

At least it's an interesting turn of events from what was otherwise a watching paint dry investment.

GLTAH