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31.0¢ salt lake potash limited

Your analysis makes a lot of sense and explains why the sum...

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sevo

7,080 Posts.

526

16/10/21

09:37

Post #: 56845009
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Originally posted by Detector07: ↑

I think you misunderstand, cash sweeps are optional on SO4's part. They are available for SO4 if they choose to use it to reduce debt faster, not as a facility for the syndicated lenders.

I find it absurd Metro Mining are able to raise 25M on an operation which will burn that money by December, and is beholden to China, but SO4 are struggling so hard to raise what should be at most the 2022 Taurus repayments (you'd hope they're making cash by 23..) ( and the 40-60M in Works).

The board are either not telling us part of the story, or this will destroy SOP sector sentiment (coupled with KLL's 2 blowouts) for the next few years.

Anyway my rambles on their recap efforts

92M Bullet in Sep 2024, so they need to pay off 46M in the interim years from Mar 2021 to Sep 2024 (30 months). Plus with the hefty rates charged, you'd expect around 30-35M in interest to accrue and be paid in the period too. so ~ 77M by Sep 2024 (30 months) and then a big bullet of 92M at the end date. They have a minimum amortization of 42M total over that period.

They'd need around 2.5M per month in repayments basically. Now keep in mind the last raise, 11M USD was intended for early payment... Meaning they should be starting from a base of 66M required. over 30 months or 2.2M per month. If they want to fulfil their debt obligations to Dec 2022 with the raise 2.2*9 = ~20M needed.

The other part of the equation is, assuming plant runs at full rate from 2023 Jan to 2024 September - 21 months - then can they earn the 92+46 M required. That's around 200M AUD @ 0.70c exchange rate. The short answer is probably not, I see them earning circa 80M in that period, enough to fulfil their quarterlies and some part of the bullet. If SOP remains around 650-700, it would net them an extra 50-75M, but still a bit off the bullet, but they don't need to necessarily pay the bullet off as long as they're chipping away. It's likely they'd need to refinance in Jan 2024 for about 50-100M AUD.

Capital works required is a wild guess since the clowns on the board have kept all investors blind. Flotation circuit, some new bores? 50M?

50+20-22 USD (or 30M in AUD) + 10M WC changes/breathing room, etc seems to bring us to the 90M Rumours.

Now how Tony Swizercrook and Ian Middleman ever though the project would be so flawless as to meet the ridiculous repayment schedule is beyond me, but I find it absurd investors who've tipped in cash at over 40c, would know be willing to get 0, yet a cash firepit like MMI can get 25M @ 100% dilution (both management just as incompetent to boot), when investors know the can will be shaking at them come December.

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Your analysis makes a lot of sense and explains why the sum required is so high.
If what you say is true then the use of debt by this company and its board has been a complete disaster.
The debt:equity was already low and now they are potentially raising equity to repay debt when the project should have been working for them.
It has been a complete F up and the potential returns per share will be heavily diluted.
They would have been better off raising 80% equity at the start.
I can see why they are having trouble raising fresh equity. There will be investors on the terrace that know that AMN will be looking for money soon. Ditto APC and a little later RWD. All potentially far better places to place money than SO4 who have shown a high degree of incompetence.

SO4 Price at posting: 31.0¢ Sentiment: Sell Disclosure: Not Held
2 Upvote

0 Great analysis

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