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He’s put a certain mr putin and idie armin on the board
Been away for a bit, I see we are at 3p - WTF has Mike said this time?
It doesn't take a rocket scientist to see the threat of a placing is looming over this stock. Read the last couple of releases.
Well if good news drops the price maybe bad news will raise it
I suppose the question is now, how low can we go without some substantial news
The issue being is basically we have had our “Good news” for the quarter and the SP is at an all time low, if we continue to see 3-5% drop a day this will basically be worth beans
Not sure another MR sound bite session will change the sentiment , we now need some actual progress that is worth hard revenue.
GGP don't have a free ride on their residual 25%. But I take your point. Such a deal would put a light under BRES and the entire project. Problem is, there's no-one within a few hundred kms of Orom-Cross with quite the urgent need for feedstock as NCM has at Telfer.
Securing the required $62M funding required for full production giving away only 50% would be a massive win for BRES, valuing its other 50% at a similar figure.
I would expect that we will first hear about a much smaller agreement for the funding needed for the pilot plant and would expect this to be a much smaller percentage give away, Mike did mention that a proportion this could be covered by loans from the bank rather than having to give too large a proportion away at this stage. (This would also give us an idea as to what the perceived value of Orom-cross currently is, as the bank due-diligence would surely want to know what it was lending against)
We wait to see what BRES can pull out of the hat, one thing for sure though is as soon as they have secured pilot stage funding and a number of off-take partners declare an interest 3p will be long in the rearview mirror.
Giving 50% or even 70% of the initial project away, but then keeping the future expansion (or a greater % of future expansion) would be fine. But suspect any major will want to share in the future upside as well. Much depends on how much interest they get, which then enables Bres to negotiate from a stronger position, or not, as the case might be.
I would be happy with that. I would be happy with giving up 80% to get a free ride on the 20% given our mcap. Look at the deal GGP have with Newcrest.
Think BRES will have to give up at least 50% of this project to end users / majors to have a hope of getting it funded and developed. They have plenty of scope for expansion later. They need to take an initial hit to get this derisked.
There is no interest from any majors they can buy graphite from china,much like germany bought oil from russia untill it was too late. Hey-ho!!
"What stops a greedy major just stamping over the minnow?"
We can see from the volume that not many shares are moving at this level, if they wanted to buy the whole issued (and non-issued) equity it would cost them a lot more than 3.1p
When you look at the current mcap against the capex that is required, how much of the project will Bres need to give away in order to secure funding from a partner? What stops a greedy major just stamping over the minnow?
I also asked that question: (And whether any raise would be open to PIs)
Q: "It is looking increasingly likely that BRES will require a cash injection and I do not want to be rewarded for backing the company by receiving a dilution, without also being offered the same discount as institutes that have yet to offer similar backing to BRES"
A: "The company is not presently in any talks relating to an equity raise nor is it an immediate focus. Do note that the last equity raise was set at a premium to the price at which it was negotiated in the days prior to that raise. Open offers are something which I am happy to mention though but again the focus is marketing to end users and strategics at present"
Make your own interpretation of "Immediate" i suppose
It's clear when the Nickel acquisition was agreed they expected a sp much higher than 3p based on completion of stage 1 (still to be announced) and Orom Cross JORC update and PFS. They state in the acquisition they expected to fund stage 2 out of warrants exercised. There's over £6m of warrants at average 7.5p. So they clearly expected what they had would be worth more than 8p per share by the time they get to stage 2 and that these warrants would be the next source of funding. And to be fair, what they have delivered it should be above 8p. But for some reason it's lagging at 3p. It seems to me that people just can't understand how BRES can raise the funding. But the funding isn't driven by BRES balance sheet, it's driven by the quality of the asset, and the PFS has proved the value for investors. The best thing they can do is deliver on this Pilot plant funding which cannot fail to provide a rerate and then get the warrants away. Big few months ahead and it's all about partnership and customer interest in the Graphite.
£2m raised at 5p in Nov - pre nickel acquisition, pre JORC pre PFS upgrade, pre RAB investment also at 5p. You see a lot of resource stocks decline after a fundraise after burning cash for little progress, but in this case, BRES have delivered on value added milestones and are ready to move towards the Pilot plant and production. It's not unreasonable to expect that they have added value from the capital they raised based on the milestones achieved. Yet it is valued as an early stage exploration company, not an early stage production company. Gap in MCAP to the NPV of £6m - $482m - they have to figure out how to start ensuring the market is ready to price some of this upside in.
That means they will need to incur £410k of expenditure in the second half of this year. That is half the current budget. The other half will be needed for day to day costs and progressing Orom Cross. So, imo they WILL need to raise funds and its a question of whether they come back to the market, or manage to secure cash from a strategic partner for Orom Cross. Until the market knows which route will be taken, the current decline is understandable. All imo
My assumption is that each decision to move into the next stage is done at the end of the previous stage, not sure if there is the option to delay or pause the start of any particular stage, (i.e extending the overall life of the earn in)
Also its worth clarifying that the current cash in the bank according to MR is £800K whilst the stage two requirement is $500K, at the current exchange rate approx £410K
Computer909 - that clarification from the company is very helpful.
What happens after the completion of Stage 1, do the company get to "pause" the project, or do they have to make a decision on proceeding to stage two?
@Legalwolf : "I think the first tranche of 350k shares will in fact need to be issued at the conclusion of stage 1"
I asked directly that question:
Q: If the SP remains pinned at current levels, By the end of August 2022 BRES will issue at the current SP 10.6M shares to Rio Tinto / Spia after spending $250K on Akelikingo, representing 5.625% of the enlarged equity of BRES?
A: "This is not the case and the company won’t be doing this, if you refer to the terms of the acquisition details SIPA ONLY get paid first acquisition shares AFTER BRES completes Stage 2, which is the completion of $250k spend (Stage 1) by end-Aug AND the completion of $500k spend (Stage 2) by end-Feb 2023. The company specifically set up this agreement to allow for them to have break-points at every step along the way so we could walk away if we do not see enough value in continuing. Up until end-Stage 2 there is no payment to SIPA whatsoever. So quite a runway from now until any shares had to be paid. "
Computer909 - thanks for your response. I think the first tranche of 350k shares will in fact need to be issued at the conclusion of stage 1, but only IF Bres decide to proceed to stage 2. The Stage 1 period concludes this month, so my understanding is that Bres will have to decide by then whether they wish to proceed to Stage 2, and if so, they will need to issue the first tranche at that point i.e. in or around August. Of course, what we don't know, is whether Bres can choose the pace at which it moves through the stages and triggers the different earn in points, or whether they have to commit to the timetable in the RNS. I can't see Bres spending 500k out of a 800k budget, because they will have burned through some of the 800k by then anyway. So unless they do a deal on Orom Cross, which brings in some cash, they will have to raise? I think the market might well be expecting that as well. But if it does happen, hopefully it will be the last one before they secure a JV, and share price growth. All imo
@Legalwolf, I have taken you comments regarding AK commitment at tried to get some clarification from the company.
As MR stated in his recent presentation we should get some drill results in the next couple of weeks, this is part of the stage one commitment to the project. (Stage1 = Feb 2022 --> August 2022), the committed spend in that period is basically done.
If BRES decide to move to stage two (I assume we will hear when we get the drill results) they will commit to spend a further $500K on the project before the end of this stage (Stage 2 = August 2022 --> Feb 2023), the first $350K worth of considerations shares will be issued at the end of the stage, i.e in Feb 2023.
If BRES decide to move to stage 3 (Again based on what they have discovered in stage 2), they will commit to spend another $1M on the project before the end of this stage (Stage 3 - Feb 2023 --> Feb 2024), an additional $500K of consideration shares will be issued at the end of that stage, i.e Feb 2024
If BRES decide to move to stage 4 (Again based on findings but we hope that this would be a no brainer by then), they will commit to spend the additional $1M by the end of this stage (Stage 4 - Feb 2024 --> Feb 2025), the final $650K in consideration shares will be issued at the end of that stage, i.e. Feb 2025
So basically immediate concern is that BRES need to spend $500K before February 2023 (which they have in the bank) and that the progress on Orom-Cross needs to push the shareprice forward by that time so as to minimise the effect of the first tranche of $350K shares.
Indeed Computer909.
The movement isn't volume driven, as you say very low again today and 3% drop, £750 sold one day last week and a 5% drop. The MM are just working the poor sentiment
The market sentiment at the moment is they want to see immediate progress, that isn't what we are going to get with BRES in the near term. Whilst the PFS was outstanding that is basically a presentation/spreadsheet we need Mike to now deliver on some financing that turns BRES into a much more attractive proposition
It’ll probably go sub 1p but if they succeed it’ll blow these mother’s away
Computer909 we have dropped to a new low after an excellent PFS, I am not sure any news, other than something incredible, is going to shake this malaise.
It's fallen back on very low volume too. I still think there is something not quite right here but I can't put my finger on it.