Deal It is a massive positive for Wpx that they have closed this deal. Financially , this money will keep them going for a considerable time.
I'm going to go on record and say that this mine will never be built. It is a $4B plus project.
the interest costs alone make this unworkable.
If i am wrong and it is built, I do not believe that Wpx shareholders will survive in any shape or form because the dilution would be massive.
I personally believe that this is a back door way for th Chinese to own Wpx for cents on the dollar.
Someone earlier compared this deal to the KRN/GFSC deal.
Some glaring differences that you forgot to mention.
1) The Krn deal involve the Indians committing $60m which is twice as much as the Wpx deal.
2) The company(GFSC) actually signed the offtake directly with Krn. They did not create a shelf/holding company that provides arms length safety in the event they wanted to back out of it.
3) I haven't seen the Wpx off-take sheet yet, but the Krn one was a take or pay deal directly with the Indians. Meaning, that if the Indians don't/can't accept delivery, they still pay for the potash and that is huge. There is no mention of take or pay with the Wpx deal.
4) there was no need for the Indians to send any more senior/more experienced board members because Krn already has a management team that has built, designed and ran several potash mines in the past. They also did not need a panel to help them with the financing as they were already well along in the due diligence phase with their lead banks and have now entered into an engagement letter with them for $300m to be underwritten.
Jonathan, I wish you well. I genuinely hope that I'm wrong and you make money on this, i know what it is like to lose momey on a company that promises the world, but I believe that one to two years from now, if they haven't progressed this project, your investment will be worth less than 50% of what it is today.
If I'm wrong and they do progress it, the dilution will be unbearable and I will wager your investment will be 20% of what it is today.