G'day all. Value your time effort there SS. Goodness me some...

G'day all. Value your time effort there SS. Goodness me some unhappy punters who appear to have just realized what's been going on since Dec 2022 when the substantial SPP arrived bringing with it critical Insto participation which at the time everyone was cheering - 37c wow. Since RE have been manipulated down - the sector has been on the nose and yes our cornerstone institutional investors have made a motza - paper and accumulation and continue to receive massages for their critical early contributions.
There is a great deal progressing in the background we are not privy to as the Gov - Insto's - debt providers and already advanced - soon to be off take equity partners are in knowledge of - please don't be fooled the remaining off takes are well advanced - management have brought in the heavy hitters - not 1 but 3 at considerable expense to secure a highly favorable long term outcome - as advised potentially by EOY - that's two years folks from the much earlier Aus Gov talks we were not even aware of in ECE eviction and HP and other arrived - 2 years - quiet amazing really - well except for the manipulation as those in the know accumulate and are supported by our management - why? because if we do not get a satisfactory amount via equity then we could have a negative or delayed FID. Of all parties globally involved and we share holders no one wants that - more later on that equity.

We share holders often have many more questions than answers as we try to piece together what is/could be happening behind closed doors that can not be delivered until binding. We share holders often make judgements and comments only to end up with egg on our face - yep myself regularly yet often we can be near or spot on as individuals or a collective.

Here is one I could well be wrong. Current noise around dilution and lowball entry is premature in my view - we simply do not know and we are currently based on assumptions. The little topper to Insto just recent which has taken great hits from posters and myself is justified. Yet I am ok with it - managements often reward cornerstone investors - BUT when will it stop we ask?

Sorry however this will be long!
The price of equity closure is a current unknown. But the size is very, very substantial and much more than many considered - prob all of us - why?
Page 8 again I will refer to. In my view there is an abundance of clarity management would like to reduce the debt component some usd427 hence the huge usd717 million equity advised target.
WHY?
1055usd billion/1.617aud billion in full utilization of debt is not what they would prefer. Even with tax credits etc it is placing their heads on the chopping block. It will bog us down for years - limit profits/cash flows going into debt payback/growth/expansion which in turn increases sp value - and I tell you what for those that reckon shorts are a pain now - I can hardly imagine how the likes of State Street - Aus Super etc will end up on our books and loan/short the bejeezuz out ARU for a decade as we struggle with the debt and expansion funding. Even a reduction of debt use of usd427 (page8) will leave debt facilities at 708usd million = aud 1.08 billion. Significant however on the best of terms from those facilities exercised more manageable - and we have a brand new shiny massive mine to ore oxide facility that adds considerably to the value of ARU. The creditors annual payback of usd1.055 billion when fully drawn down is very substantial and very, very restrictive. There are other advantages in reducing the debt component - lost me atm.

So they target a whopping usd717 million in equity. Is this a sky high Boeing number they plucked when they looked up and said firk we need a lot of equity? No it is a well planned - informed strategy that has long been their preference - it's just new to us retail shareholders.

HTF do we achieve USD717 in equity/cash. Well I'm glass half full and see things a little different - perhaps dreaming - expect when you least expect.

1. I may be wrong here however the way I read it and ask someone of higher intel to double check - 7 billion package with beautiful tax credits and debt provisions to support refining and processing of critical minerals in "FUTURE MADE IN AUSTRALIA BILL" - the Aus Gov also stated they will also make available funding for exploration AND 1.2 billion available for "STRATEGIC INVESTMENTS" into priority critical minerals projects - therefore I see that as similar to US - IRA as cash or even taking an investment stake - we have already secured never before seen Gov debt support of such magnitude - first time ever as Iluka flounder around - why not cash - equity stake? (I do not see USDOD/IRA support as a real opportunity and I am confident management went that path however US do things - they took the best ex China in Lynas with support not a wannabe in ARU and likely said to Aus Gov we are doing a lot of heavy lifting - you guys down under need to do similar - as big KimB categorically states).

2. ARU have 30-40% (50% if they wish for first say 7 years) of production to leverage to advantage. I say that because if terms are highly favorable they can simply reduce the spot % and get this equity closed. Given the very high interest in supply security as advised they may do this however even the 30% is excellent. To secure so much debt and have so much production remaining has been an excellent outcome - how much is that 30-50% worth in both offtake equity and spot - if spot could be seen as minimal in first 7 years as we ramp to full production and scale to stage 2 - this could be a more favorable decision now to secure the critical equity and future growth - stage 2 of ARU - remove the risks - lock in 7 year strategy.

3. An increase in production. Perhaps a modest but critical 10% of 440T at marginal CAPEX requirements. The demand is there - so to is the financing if full equity is realized and essentially that equity contributes to an increase in production.

4. The old worn path of Insto's. It is critical. Along with our BUCKET 1 completion and I am not going to guessing terms - I just wait for confirmation. However that will be the remaining catalyst for the final Insto/retail component again on what terms - no one knows currently, Deal with it when it happens but I do feel far more positive than many.

We are in a very tough project financing environment and an even tougher market to enter. I am sure ARU management are doing all they can to achieve a positive FID and on the best positive terms regarding equity. The 2 recent SPP have been little fish - sweet and tasty but nothing more - well perhaps even a final supper before those cornerstone investors return serve by ways they can - dreaming again. We do not know what terms for the major equity required so for now I entrust the board - the Gov - the 3 amigos and our original cornerstone investors to yield a very positive outcome.

One last scenario/hypothetical nonsense.
If we went full debt utilization - no Gov cash - we would require aud536 million circa 20c (I anticipate higher) equates to 2.68 billion issued shares.
If we reduce debt as per page8 and what they are trying re 717usd - no Gov cash - we would require the aud 1.1 billion equates 20c to 5.5 billion issued shares.

I have suggested previously they will go significant dilution as Lynas and others Paladin did at highly favorable market conditions that always arrive at some point after full production achieved and do a consolidation. Some will cringe - but there is no material financial loss to share holders BUT it is market perception that is most critical and access to many more institutions that will arrive and progress the SP as ARU progresses and ARU are now in these new Insto investment window having ticked their requirements.
There will be more renewables funds arriving and monies leaving iron ore and such. Anyway that's for another day.

Again just my take - rambles and never buy/share a single share on such. BWTAH. Expect it when least expected.