I'd rather see the first option. But I'd rather Lindsay had a...

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riverflows

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19/04/24

08:41

Post #: 73418474
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Originally posted by chuk: ↑

Watching the video again. From the 3min 40 mark he talks about firming up offtakes and says he expects something soon from countries outside of Angola. From 4min 15, he said that the IDC is a large stakeholder in a one of the large fertiliser produces in SA that are interested in phosphate rock. He says they (MNB) are in two NDA's (with two potential customers). Tie that in all together and it sounds like the IDC approval paves the way for at least one new offtake to a SA buyer probably being announced soon.
Also from just before the 5 minute mark he mentioned they might be going straight into stage 2 and will need to decide on that very quickly. I think that will likely depend on the size of any offtake for phosphate to the SA buyer.
So there might be a series of near term developments to help the sp recover from here.
He did also mention potential further equity as well as further debt.
They still need a further US$7mill for capex to satisfy the IDC precondition. Merch keeps calling for another cr.
If we were to allow for all of that US$7mill to be raised as equity at 7c again, the fully diluted number of shares and options would increase to 1.17bill.
What effect would that have on NPV based sp targets?
At 7c, the fully diluted market cap after that further cr, would be A$92mill.
The after tax, base case DFS NPV is A$315mill. Around A$44mill capex reduction was reported for stage 1 and 2. That increases NPV to A$360mill if stage 2 is brought forward just through the capex savings. The strongly upgraded post Carrihno sales guidance in the first 7 years would increase the NPV by more but I'll ignore that for now.
Based on a NPV of around A$360mill (and assuming a further A$10mill cr at 7c), that would give a NPV based sp target of 31c. That's $360mill divided by 1.17bill shares and options.
At the current number of shares and options (no further cr after this one just done), that sp target would have been 35c to reach the same NPV.
So while another cr for a further A$10mill would cause more dilution that some here might hate to see, it is not massive dilution and it reduces the NPV based target from 35c to 31c.
Not the best outcome if it works out that way but some here question how long will it take for the smaller Angolan bank loans to be approved. I don't know, so as far as I'm concerned, I'd prefer one more cr to a new large investor (not sophs), done within the next few months, hopefully after offtakes and stage 2 expansion news perhaps at a better price than 7c, perhaps not. That would mean that construction can start earlier and with a full year's production next year, a reduced sp target of 31c rather than 35c is a far better outcome than waiting for a loan which may or may not delay the project construction beyond July.
I wonder what others here would rather see if the choice was a further 11% dilution and full production next year or wait and see if we get the other loan/s on time and take that chance.

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I'd rather see the first option. But I'd rather Lindsay had a correct assessment of the current situation and took the action immediately. I don't want him to again bring MNB down on 2 knees and beg pathetically for money with huge discount when the 6m cash is about to run out again, like what just happened.

And I can say I have no confidence in him doing the right thing anymore. So far his judgment on finance and timelines have been unbelievably poor. The man could literally have his head examined by either a legal court or a doctor for declaring that commencement would still go ahead in November in September, when construction and finance at that time were non-existent.

MNB Price at posting: 6.3¢ Sentiment: Hold Disclosure: Held
9 Upvote

2 Great analysis

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