I have been reading about Subsea resources, and I will be keeping an eye on the stock, as their first salvage operation is imminent, and it will be interesting to see what level of sucess they can achieve, measured against their expectations.



SubSea Resources has been formed to salvage cargoes from cargo ships that have been lost in deep water. Only a handful of wrecks have been salvaged in water depths exceeding 1000 metres, whereas hundreds have been worked on in depths down to 300 metres. The barrier to deeper work has been a lack of technology, which is now available mainly due to developments in the offshore oil and gas industry.

Sonar scan of wreck

SubSea Resources has identified at least 70 commercial salvage targets and has identified twenty major target vessels containing cargoes with a gross value of over $450 million (based on recent LME metal prices and contemporary lading records). In the first phase of the companys business plan it aims to raise the cargoes from six of these vessels over the next three years.


In addition, it is anticipated that certain historic cargoes may be integrated with the commercial salvage operations. Some of the historic targets have potential values of many millions of dollars each, bringing the combined value of identified historic and commercial targets to well over $1 billion.




Initial Salvage Targets

SubSea Resources has an initial programme to salvage the cargos of six commercial wrecks in the period to 31 March 2008. The gross value of these six wrecks is estimated at US$180 million.

The wrecks allow for a mix of weather conditions - allowing for both northern summer and winter working conditions. All wrecks are in international waters and all of the cargoes will be recovered through contracts with the legal owners. The water depths range from below 1500 meters to 5000+ meters.




Corporate website : http://www.subsearesources.com/index.php

bust , pity was going to have a a bit of this big boys toy

sorry to sound smug, but i did warn that this was exceptionally high risk at Day 1 ...... comes as no surprise

NOT bust (yet). Major cash flow problems & no revenue on the horizon.
Still watching, but thankfully not holding.

"major cash flow problems and no revenue on the horizon" - wats your definition of bust then Harry :-)))

Hmmm... Well they have a few assets (Survey vessel) & er, um..........

:-))))

Morning all.

I have been sniffing around SUB since Shares' tip last week. Unfortunately, Shares seems to have an unerring instinct for adding companies to its list of screaming buy recommendations just before they announce the need for a sudden fundraising.

However, one shouldn't panic too much. Of course there will be some dilution involved, but this doesn't necessarily mean that the co won't be a good investment
as there are clearly large sums of money involved with the recoveries.

Am still DMOR but am defeinitely interested.

Harry, MD, an equity fundraising seems likely. Its definitely too early to talk about this co going bust. Look at SEO: they were in a really bad state and still managed to pull off their fundraising, which nearly trebled the amount of shares in issue.

I could also see a bank or investment company putting up a loan in return for a share of the spoils, or alternatively a convertible bond might be on the cards.

.........plus only they have the map of where the treasure ships are.

Ah ha, ah ha, ah ha!

Splice the mainbrace, shiver me timbers, hoist the yardarm, let go sail

It's off to the treasure where we be goin' or my names not Red Beard

Oh it's not!

soul , think company has said no to rights issue , just jesting in part as i know they have a nickel cargo in view and so may get a loan of some sort on the strength of that - where there is an entry on the sp tho i have no idea and worry shareholders may be locked out of profits from next salvaged cargo

MD, I wasn't arguing for a rights issue (although you may be right in saying that the company won't use one - this tends to be a last-ditch measure in the case where not enough willing investors can be found to subscribe to a placing). An equity placing is a different animal and was going by today's RNS as being a possibility.

Just to be devil's advocate, the wording of today's RNS doesn't exclude the possibility of a rights issue, as the words "equity finance" cover a variety of options. However, I don't think that SUB will be so short of takers that they'll have to go to the lengths of putting the squeeze on their shareholders.

same question really on the sp , at what price will we see a placing? could be very damaging

MD: Off the top of my head, possibly 50 - 60 million shares at 10 - 11p in the worst case. That assumes they have to raise minimum 5 mil, including a premium of 10% to cover the placing costs.

That's a 60% dilution, meaning the SP would have to hit around 10.6p to equal current market cap (17.2 mil at SP 15.5p). However, it's possible there will be at least a partial recovery in the SP, a la Stanelco, once the bad news is out of the way.


I still think there might be some mileage in a convertible bond, but they don't seem to be issued all that frequently and do present the company with more of a problem if they find themselves facing bankruptcy. However, I don't think this is likely - the recent problems have been incidental rather than fundamental IMO and can be resolved given time and funding.

How can their problems be incidental soult?
Revenue from salvaged cargoes should cover operating costs, payment of debts & produce a % profit to finance future work. It doesn't.

What I mean by "incidental" is that the problems are due to issues that are happening more or less by chance, rather than issues intrinsic to the company's business model. I refer to Stockdog's excellent post a couple of pages back in which he points out that there is a lot more certainty with this co than with minnow oilers, who mostly find dusters all the time. Also they are able to outstrip miners (perhaps the best direct comparison due to the fact that the end product is identical) in terms of time taken to get to production and sales.

Looked at like that, a bit of weather trouble and the fact that one of their supposed contractual partners in the financing has either got cold feet (for what good reason?) or is severely lacking in competence are trifling issues. SUB will arrange financing; with all small co's you have to expect some dilution along the way, so SUB will hardly be a unique case if they have to go to a placing.

If this co is really going to make a 12 month op profit of 35 mil on 50 mil revenues, you may as well make an appointment with the TVR garage now, because the potential EPS is huge.

At the point of the last results, the co hadn't had any revenues, but they are now selling salvaged cargo. As long as they just keep bringing up the goods, the rest should take care of itself.

Crikey, I've almost talked myself into buying on the spot . . . !!

The unfortunate thing about that is, you are obviously unaware of the recent demise of TVR in the U.K. I rest my case :o)

soul,

It's tough raising cash in the city at the moment apparently, so I would see an equity finance as the only option here.

So relieved I sold and took my profit, but I will consider a tranche in any placing if I have the chance, as at this low market cap, there really could be some value IMO.

LOL - you have to be joking! My brother just bought a (fairly old) Cerbera about 4 months ago! I don't believe it!

Still, my brother knows nothing about investing. And I want a BMW 1-Series anyway.

Andy, thanks for the insight; I agree equity placing looks most likely.

Wish I had the readies to get a toe in on the placing; will have to settle for grabbing some stock via the usual channels, but I agree that the market cap (even allowing for a 60% increase in shares in issue) looks cheap.

If they seriously manage to make 35 mil op profit, deduct a generous 5 mil for admin costs, leaves 30 mil, minus tax at 30%: 30 - 9 = 21 mil net profits. PE 10 gives you a market cap of 210 mil, divide by 162 million shares = SP 129.6p.

Am I being silly?