Replies to post #11264 on Allana Potash fka AAA

[RErobot]

I follow you. Also thinking aloud here:

They get their financing arranged by their deadline, subject to equity contributions etc., etc.

Would this not support a higher share price? I suppose it may not, but it appears to me that most of the scary risk here is not securing financing, not necessarily the loan being advanced by then. If the terms are set the risk from the capital structure and dilution is vastly more quantifiable.

I am imagining by the time they make an offering it's pretty much going to be a done deal they are selling to investors.

Am I missing something here? Is just the securing of financing not the critical issue?

[justin_a_lyesse]

ertwo said:

I do not believe that the banks would advance money (debt) before the the equity part is in place. That is not how the banks operate, "your money first" it their mantra.

Really? Are you in financing? As far as I know, banks lend money on the economics and feasability of a project. The lender in this case (Afreximbank) requires that a junior partner with an established miner in order for the loan to be aproved. They also want all relevant licenses and agreements in place, hence the delay in financing approval. Allana has also stated that the lender was looking for further hydrological testing.

Rising equity part of the capital right now would be brutal to the current shareholders.
In reality there is only one way out of this death circle and it is FA patented preferred shares or similar structure, subordinated to the debt, but above the common shares.

Death circle? I believe the proper term you should use id "death SPIRAL". The basher's handbook states that term clearly. Of course raising equity now would be catastrophic. That's why FA has repeatedly stated that dilution would be kept to a minimum and any equity raise would be at a much higher SP than today.

I think this is the real reason for the SOP PEA, Farhad may be able to securitize a take-or-pay off-take from Yara (somehow) on SOP.
He definitely knows more about these things than me.

The real reason for the PEA on SOP is to increase the value of the deposit and to increase shareholder value. How much is SOP going for these days? $600 + per ton?

Or may be a small scale MOP operation, sell it to ICL, hell and high water. This would buy time needed and provide cashflow to securitize....
Afterall there are blending plants in Ethiopia already, ICL is building even nitrogen fertiliser plant there for $600m.

It will definitely take time (Neither Yara nor ICL is in a hurry) and the time is the greatest enemy for the current shareholders. From the logic of it, the financing will not happen this year

In case you didn't notice, "this year" is almost over. And besides, the financing is not expected before year end or early next year.

Without it, the share price will go to below 10 cents.

Nice scare tactic. Goes hand in hand with "death spiral".