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SBM - ST BARBARA LIMITED


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And how many shares does Newcrest or DOM have? Why do they need cash anyway, I thought they would be a 1million ounce producer in 2010 lol

 

Maybe they are just selling Tarmoola and it's not a cap raising?

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The number of shares issued is irrelevant. The market cap is what's relevant.

 

The key issue is whether $0.27 is a reasonable price to pay for the shares, and this comes down to whether you believe the new management forecasts, and how you value the company. Retail investors will have the benefit of watching and waiting until December to make a decision, whereas Institutional shareholders do not.

 

Institutional Entitlement Offer

 

Existing Institutional Shareholders will be invited to participate in the Institutional Entitlement Offer under the Offer documentation that was lodged with ASX with this announcement. The Institutional Entitlement Offer will open today (11 November 2009) and is anticipated to close at 12:00pm (Melbourne time) on 12 November 2009.

 

Eligible Institutional Shareholders can choose to take up their entitlement in whole, in part, or not at all. In addition, under the Institutional Entitlement Offer, entitlements not taken up by eligible Institutional Shareholders, together with entitlements which would otherwise have been offered to Ineligible Institutional Shareholders, will be offered to eligible Institutional Shareholders who apply for New Shares in excess of their entitlement, and to certain other eligible institutional investors. St Barbara expects to announce the outcome of the Institutional Entitlement Offer to the market prior to the start of trading on Friday, 13 November 2009.

 

We have the choice of buying more, or seeing our holding diluted, knowing that Macquarie will stump up the money to cover the Convertible Notes debt, plus $23M working capital if there is a shortfall. Can't see an Institutional shortfall the way the POG is behaving today, but what would I know.

 

Seems to me that small shareholders are getting a better deal for once.

 

h.

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All rights issues should be renounceable. If shareholders are not in a position to partake for any reason they get diluted and lose value. It's fundamentally inequitable system, as is S708 of the corporations act.

 

I understand your comment about irrelevancy of shares on issue, but they do matter as an essential part of the MC equation.

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Not really but sort of right, because less shares means a smaller market cap, and then if it grows it can go up higher. The reason why Newcrest is over $30 is that it kept the number of shares on issue small, have a look at the long term chart. If SBM keeps adding shares all the time it'll be pretty hard for it to break $1 in the longer term.
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Let me rephrase.........

 

"The number of shares issued is irrelevant - in isolation. The market cap is what's relevant and that also takes the share price into account."

 

Whether a share is worth $0.01 or $100 is also irrelevant - in isolation.

 

Making comments about the number of shares issued, or the price of each share, without referencing any other metrics is a waste of your time and the reader's time.

 

As for the SBM rights issue, and other's comments, the relevant question is whether it's worth buying at $0.27. If the answer is yes, and there is no cash in the kitty, then there's a second question to ask - is there something I should sell to take up my SBM rights? If an investor doesn't have the cash to take advantage of an investment opportunity, then bad luck. That isn't unique to share investments. Do you get a renouncable right to buy the house next door when it is listed - because you are a shareholder in the same street?

 

As I've said, in this case I think the retail shareholder is actually getting an advantage, because they will have seen the results of the institutional takeup and had a few more weeks to evaluate the opportunity.

 

h.

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  • 6 months later...

GOLD producer St Barbara has established a $A25 million performance bond facility and a 250,000-ounce hedging facility at $1425/oz for its King of the Hills project.

The three-year, non cash-backed performance bond facility with the National Australia Bank replaces an existing cash-backed facility, which is currently drawn down to $22 million.

The performance bonds provide security for performance obligations incurred in the ordinary course of business, including environmental bonds.

St Barbara has also established a hedging facility with Barclays Bank for all production from its non-core King of the Hill deposit.

The facility has been implemented in the form of a collar structure starting in the June quarter of next year and finishing in the June quarter 2015.

The put options ensure a minimum price for King of the Hills gold of $1425/oz for the full 250,000oz expected to be produced from the underground project.

The put options were financed by selling call options over 250,000oz at a strike price of $1615/oz.

If the spot gold price drops below $1425/oz at any time during the three-year facility, the company can exercise put options to achieve a minimum price of $1425/oz.

Alternatively, if the spot gold price exceeds $1615/oz during the period, the company may be required to sell gold at $1615/oz.

The total capital cost for King of the Hills, part of the Leonora operations, is estimated to be $40-45 million, while cash costs are expected to be $850-880/oz.

The deposit has probable reserves of 1.4 million tonnes grading 4.3 grams per tonne for 195,000oz gold.

The decline into the orebody will be located in the wall of the current Tarmoola open pit, with ore being hauled 42km to the Gwalia processing plant at Leonora.

St Barbara says it has no plans to hedge core gold production.

Shares in St Barbara were last trading half a cent down to 30.5c.

http://www.miningnews.net/storyview.asp?st...ectionsource=s0

 

 

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  • 1 month later...

Hi Dory, personally dont like any company that has any hedge book. With SBM their forecasted gross margin in KofH is $AU545 per ounce, which is relatively skinny, any big increases in operating costs could see SBM getting very marginal, maybe the rest of their operations could support any King of Hills cost blowout, SBM is likely now to be hard work IMO. Lets see what Q2 report has to say--due in 6 weeks.

-----------------------------------------------------------------------------------------------------------------------

 

The put options ensure a minimum price for King of the Hills gold of $1425/oz for the full 250,000oz expected to be produced from the underground project.

The put options were financed by selling call options over 250,000oz at a strike price of $1615/oz.

If the spot gold price drops below $1425/oz at any time during the three-year facility, the company can exercise put options to achieve a minimum price of $1425/oz.

Alternatively, if the spot gold price exceeds $1615/oz during the period, the company may be required to sell gold at $1615/oz.

The total capital cost for King of the Hills, part of the Leonora operations, is estimated to be $40-45 million, while cash costs are expected to be $850-880/oz.

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