Well now that the DFS milestone has been achieved , assuming binding offtakes follow and I have no doubt they will, then we move to the most important part which is FID and financing...
" To achieve the range of outcomes indicated in the DFS, funding in the order of US$99.4 M will likely be required for capital works, owners’ costs and contingency. It is anticipated that the finance will be sourced through a
combination of equity and debt instruments from existing shareholders, new equity investment and debt providers from Australia and overseas."
Each of those options will carry some dilution all though it would effect the Company in different ways.
1: Debt has more effect on the Companies initial earnings , it also poses some risk to both the lender and the borrower, so probably 50% would be the limit there...if that were the case then that accounts for $50 Mil.could be more...
2: Bring in a JV partner which has the effect of reducing WI, not adding shares to the register but reduces future earnings..
3: A CR , that increases the shares on offer but helps retain WI and cut down debt hence has a lesser effect on earnings..I have no problem with a CR if it's done to further the progress of the Company and is done at a reasonable price.
4: As a wildcard NH could end up in the mix as well.
Some of these options affect shorterm holders more than long-term holders.
"The Company has 137.4M options which are exercisable between AUD$0.10c and AUD$0.11 (to acquire one fully paid ordinary share) in 30 June 2018 (50M options at AUD$0.10c) and 30 November 2018 (87.4M options at AUD$0.11) and if exercised would raise AUD$14.6M in cash. These funds would be applied to early works and construction"
So with a shareprice North of 11c we can account for another $14.6 Mil from the options but adding another 137.4 Mil share to the register..add that to $50Mil debt we still have another $35 Mil to raise either by bringing in a JV partner or a CR or both..
The reason for this exercise is to get a reasonable feel for how many more shares would likely be on offer which can give a feel likely MC at any given price...MC then can be related earnings expections and comparisons with peers..
SYR was fortunate it has always had a fairly high shareprice at has managed to fund itself with no debt for relative minimal dilution...
Personally I would I prefer as much WI and a little debt as possible and would be happy to take a one off hit to the register but again only done from a reasonable shareprice...whats reasonable, well for me 11-15c , obviously I would like it higher but I prefer to be realistic....so I'm factoring in 1bil shares on offer finally which would raise around $30-45 Mil including the options, retaining as much of the project to ourselves as possible...a lot is going to depend on the shareprice reaction to Binding contracts ...the fact we have financing ahead will create some headwinds...
Away would be interested in anyone's thoughts as we are going to have to get funds some way regardless..
Cheers Whisky
