Hey bud,
All IMO and obviously not financial advice …. But yes I’ve put a significant investment into NRZ.
I do believe that they believe that they’ll get a deal done and that this project will get to production. The question for me becomes, how much will shareholders be diluted in the process.
Back in the OCT interview, I believe Justyn was referring to 3 possible options on the table for pre-FID/Stage 1 funding. This would likely have been around the $100M mark, I’m guessing.
Those “3 options the company is doing DD on”, has now turned into negotiations with a “strategic partner”.
I find it highly unlikely that a “strategic partner” would be entering the project for an odd 3% of CAPEX … or that you’d use that term to refer to an issuer of convertible notes (an option mentioned by Justyn and one that appeared favoured IMO).
Nevermind the “hopefully a deal by Christmas” having come and gone 5 months ago ….. which leads me to speculate that they could be working on the 30% (as the 70% will likely come from Korean Financiers).
If it were simply just another offtake, they’d still have to be concurrently working on the preFID funding, and that’s not how the recent 2x quarterlies have been worded (though an offtake could easily form part of negotiations for the funding).
Daelim is what gives me the most confidence. Nevermind the sheer magnitude of our partner …. but they’ve thrown in $15M cash (now at a loss), signed a huge binding offtake (which will likely be used to secure funding via Korean financiers), are completing the BFS without having been paid yet ($25M odd of time/labour)….. plus they have a board seat and were a main visible presence when the company rebranded and had their launch last year.
Aside from them being about as supportive as you could hope for… let’s assume that they are also quite business savvy. .
If they wanted to, at any point, they could have made life very difficult for NRZ pre offtake and perhaps even forced a fire sale, if they had of pulled out of the HOA last minute and decided not to assist the company. But they didn’t.
Now what about current negotiations ? …. One might assume that perhaps at the current MC, the company would need to issue 1B odd shares (so 50% +) of the company…. Just to get the $100M for Stage 1.
Now if I were Daelim and I was already after half the total production via offtake … why on earth would I pay big bucks for the privilege but allow someone else to get HALF the company for a petty $100M ?
You would assume that Daelim would come in and either match the deal, double it and offer to buy out the entire company, or even improve on the deal so they were frontrunners. They’d make a fortune.
If current negotiations were along these lines, I’m highly doubtful we’d be 7 months odd in, with Daelim happily watching other entities edge closer to equity at basement prices.
Now with management, I do believe they somewhat felt that we’d have a much higher SP now … particularly after the binding offtake.
I personally believe we should be around $250-$350M MC currently (relax all, it’s a spec stock so MC is speculative).
The truth is though, the extraordinarily high cash burn and timelines being missed by huge margins, have definitely hurt the SP and investor sentiment.
Let’s see what the next few weeks bring, but yes I’m still quite confident.
Cheyne
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