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  • SirTom99 SirTom99 Dec 9, 2010 3:57 PM Flag

    Think about it, if they didn't run low on cash

    But they are showing $120 dollars so why more money?

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    • That's $120 million on the books

      • 1 Reply to SirTom99
      • Sir Tom, et al -- I could give you a very detailed response ... but let's see if I can be brief. 1st, in addition to the current $120M .. they have been / are generating approx. $11-12M of operating cash flow quarterly. However, in order to continue growing revenue by 20%+ over the next 2-3 years they need to continue making the $commitments on the Hanshan County project. Shortly, they should announce the completion of ZIBO phase 2 which will bring "capacity" to 300K (vs. the current 260K). The ZIBO project itself will insure SDTH goes into 2011 with 20% more added capacity. Very important, since they were operating the current 260K capacity @ 108% listed capacity in Q3. HOWEVER, the Hanshan Co. project will add another 200K of capacity by Jan. '13. That's another 66% added capacity which will be added in phases over the next 8 quarters. The project estimate for both processing facility & operating source limestone mine is approx. $176M. This is the commitment they gave to the Government in order to secure the land & mining rights (and significant tax concessions). Thus, even WITHOUT the added cash which will be generated by the added Zibo Phase 2 40K capacity comming on-line this month .... the Company's $120M + approx. $85-100M from 8 operating quarters through 2012 .... the Company only has about a $25-$40 cash cushion.... and with the major caveat is that my "cash-out" assumed a level spend of $ over the 8 quarters .... the cash required will likely be front-loaded, on average by 1-2 quarters. Thus, over the next 6 quarters they have almost no additional "cushion" ... and it would be wise to have $20-$30 cushion ... and that's all they'll be raising "in-excess" with the announced Placement today. The announcement today, from my perspective was right in-line wiht what I expected. Further, I believe the embedded cost of the new Placement will have credit terms/costs more favorable than the retired note. This is a positive to the current P&L. In conclusion, their running the "play" thats been ennunciated for months -- at a lower cost ... to continue ensuring, at a minimum, 20% annual growth in Revenue and Net. The best news is the new facility, with the new source limestone mined processed at the SDTH site will enjoy much higher GM in the final consilkidated results -- I factored none of this into the analysis above. I JUST WISH THE MARKET WOULD UNDERSTAND THE DETAILS AND NOT TRADE THE EQUITY ON A SHALLOW "DILUTION-BASED RALLY-CRY" ...and scaring the retail investors out of their positions like today. This Placement was very well justified... and we picked-up another 27K shares between 5.07 - 5.15 today. The dip was/is beneficial to us. Good evening.