How I see things from here for HFR.... It's fair to say...

How I see things from here for HFR....

It's fair to say shareholders should be unhappy with the lack of domestic market presence / broker presentations by the company off the back of what's deemed to be one of the most significant milestones for the company in a number of years. I am aware of only one that has occurred with Foster's last week.


If the view of the company is that our market 'just doesn't get it' then the company needs to take proactive steps to dual list on an exchange where they believe strong shareholder support and understanding of their project will occur.

I believe the broader market is certainly of the mindset now that the company will seek to tap markets in the short term for an equity raise to fund the majority of capex requirements. It makes no logical sense for the stock to be sold down circa 30% post this significant de-risking milestone being achieved also against a backdrop of highly favourable potash pricing.

What is the logic of staking the offer with multiple lines of 100,000 shares in a stock that is fairly illiquid and trades in small volumes? I would like to say it's a broker being lazy or a punter with size using an online trading service that doesn't give them much flexibility to manage their orders effectively, however I tend to think it's someone with an agenda.

So where to from here for the company?

I don't think the company is looking to pull the leaver on a substantive equity raise in the near term and gee I hope Iam right, because in the absence of the following potential catalysts being delivered, it would truly be detrimental for the price and dilution for shareholders on the expectation a decent discount would be offered to complete the raise.

Catalysts that could be delivered in the near term (this quarter) and add meaningful value for shareholders by seeing genuine on market / insto interest:
- Syndicated debt package on favourable terms (of up to ~$200m?),
- Binding offtakes,
- Binding offtakes with a capex prepayment contribution of $20m - $50m (certainly the preferred),
- A strategic partner coming on board via an investment in the business either at the equity level (hopefully at a meaningful premium to the current share price) or at the project level (and paying a substantial premium for their stake in the project than what the market is valuing the total company).
If the right partner and deal can be struck here, the handbrake could well and truly come off for the company in terms of share price suppression.

- Finally the wild card here that could play out as a result of the dithering share price / market cap is a takeover offer, all be it a low ball number at around the $1 mark. I wouldn't be surprised if it came from the largest shareholder in all honestly. If it were to come from a party external to the business it would need to be considerably higher for the largest two shareholders to even consider walking away from the potential value to be unlocked here over the next 2+yrs.

These are just my musings, feel free to reply with other thoughts or scenarios in respect to the above.