The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Being a long term investor here or indeed in any plc is difficult and frustrating. It can make one think to sell as soon as there is an uplift. It’s disappointing loyal shareholders are not treated with more respect/security!
GLA
I’m sorry but I reluctantly agree and I have to say Investor Relations are dire at responding to a shareholder . . . they don’t. I emailed back in February and I’m still awaiting a response. So if that’s how I’m treated as a long term private investor, that says it all.
They seem to be stuck on repeat when it comes to updating the markets and the markets are getting fed up - it isn’t reassuring or having a positive impact - far from it. A recovery to the placing price seems a million miles away.
At a time when a project closure is desperately needed to give credibility and to turn the heads of the bigger investors, this company are left wanting.
The research going on in the background is an absolute given, they need to continually strive to be the best, adapt processes and respond to current demands. But they need to put more focus on getting the North Fork and UK projects completed and they need to update on time. Leaving things to the eleventh, moving goal posts, really isn’t doing the business any good.
We are all aware of the constraints and the impact of global events but it is high time we made some decent headway.
You can claim to have the best technology in the world, the biggest order books, a large pipeline, but if you struggle to get just one flagship over the line, those decision makers look elsewhere for solutions and collaborations.
When you peel back the onion that is D.P's rhetoric there just isn't much good news from EQT at present.
The three major UK projects are either no further on from when we started or have actually taken a step back, the financial position of the company and the SPVs now look very concerning.
No one really cares if the paid for study at the university of Lorraine shows that DP is the new messiah or that the Technology can turn water into wine, we care about how he's spending the little cash we have and how we are going to make more without him thinking the shareholders are the magic money tree to be shaken whenever he wants.
To be brutally honest it has become a bit of a sh it show in the last three months. I know DP's plan extends to 2035 but i never realised we would have to wait for then to get anything delivered in the UK and see any type of SP recovery.
And the arrogance of the BoD to not provide an update on the Deeside project before the very last minute is not a good look.
The measure of a good CEO is not what he does in good times, but what he does in times of strife, at the moment I'm not impressed with DP's performance.
RoR. Yes, that Q&A statement 26/4 on Kibo is the latest from EQT. It is a diplomatic way of saying Kibo is off the Billingham project but the company is looking for a project SPV sale there.
"conditional term sheet", "potential investment", "Since then, the project development strategy and potential has significantly changed", "on hold"
these are the significant parts of this statement and certainly require updating along with a full explanation of their reasoning if the decision is made to continue with Kibo. If not then an update on their efforts to find a replacement is an absolute minimum
The latest word from EQTEC on KIBO (as far as I know) was in the Q&A from the Investor Meet 2021 Annual Results Presentation on 26th April,
Q3: Does Kibo hold an option to become the major shareholder in Billingham and if so are they funding the ongoing costs?
The announcement we made in late 2021 indicated that we had signed a conditional term sheet with Kibo for a potential investment into Haverton WTV, the SPV (special purpose vehicle) for the Billingham Project. Since then, the project development strategy and potential has significantly changed. Both Kibo’s and EQTEC’s business priorities have resulted in the parties’ putting on hold any such investment. It remains EQTEC’s intent to sell project SPVs to one or more investors at the earliest possible stage of project development, provided such sale supported the advancement of the project and EQTEC’s interests in it. EQTEC would consider any future proposals in that context.
Today's news from Ceres of a partnership with Shell to economically produce green hydrogen should give fresh impetus to the whole renewables sector.
Having a big name like Shell take your tech seriously is just what Eqtec need going forward and would be a game changer, not to mention that they would provide a much needed capital injection.
"I doubt Kibo's involvement with Billingham is current"
Well if it isn't we need to hear from EQT, and honestly after Kibo's latest financial statement we should really have an update from EQT anyway, This head in the sand approach is not getting us anywhere.
I doubt Kibo's involvement with Billingham is current. Coetzee is desperately trying to 'big himself up' after one failed project after another for 10 years. MAST like all the rest has produced nothing but was hyped up and then cratered .....
I can see other historical reports elsewhere for Mast prior to April 2021? Not sure why, maybe they weren't a public company yet? Anyway, they hope to make £2.3m 2022, £3.3m 2023. Not bad from a starting point of £0.
This doesn't help Eqtecs cause much but just proves to show that they are very involved in the backup power industry and have their sights on revenues from this year onwards.
Debts and board Saleries eating away at the share prices during recessions, wars and pandemics is unfortunately a fact of life we have to deal with. Whether D.P would have agreed to work with Kibo had he known they were about to lose £20m of their asset value due to the policies of COP and wouldn't be able to ride the storm remains unseen.. At the time, I would have imagined Kibo looked like a good partner, £30m worth of assets... Knowledge of the peak power markets... Short of selling out to a major, not sure which other routes were available at the time?
The worry now is, of Kibo can't afford the SPV right now, are we being held back with the engineering and design plans at Billingham? Or can the Kibo/Mast engineers happily work away on a promise and a prayer?
14th April 2021, first day Mast energy started doing business. I guess it takes more than 8 months to buy, recommission and bring online backup power projects.
Mast being 50% owned by Kibo.
https://www.lse.co.uk/rns/MAST/general-update-cn5nl58pyjg3qpy.html
"Current Status of Energy Market in the UK
The management of MED remains of the opinion that the UK energy markets provide highly attractive economics for flexible power investments supported by unprecedented record high power prices and the current energy market structure. In February 2022 the price was £162 per MWh compared to site economics of £66 per MWh when MED listed. The recent capacity market auction clearing price underpinned the role that flexible capacity will have over the coming period to reduce market volatility and mitigate substantial end user price increases, while enabling the necessary transition of the UK energy mix to achieve the stated net zero goals. MED continues to explore potential new flexible power sites and assets in the market on a regular basis and will closely evaluate such opportunities to build a selective pipeline of operating & development assets that could provide the greatest potential for value creation for its shareholders."
Do you have a link to the AFC report so we can see forecast revenues 2022/2023?
"That's Kibo's area of expertise. Load Ballance, peak power sales etc"
Total revenue from Electricity sales in YE December 2021 = £3,245
Some expertise, and there was me worrying we had a lemon for a partner on our biggest project !
The concern is Kibo's financial situation an their shenanigans they have carried out in the last year, they are mortgaged and financed up to their necks
The most interesting statement in the AFS being
"Kibo settled outstanding fees owing to directors and management through the issue of a 7% convertible loan note redeemable instrument. The convertible instrument provides for the issue of unsecured redeemable convertible loan notes of integral multiples of £1 each to the aggregate amount of £672,824. The subscriptions for the notes shall be used to fund the Company's working capital requirements related to outstanding salaries and fees due to management, directors and former directors who are the sole subscribers to the notes."
So basically the directors took CLNs in order to give the company enough cash to pay their own salaries !
Billingham could have 25MW batteries installed? That's Kibo's area of expertise. Load Ballance, peak power sales etc. See artist's impression below of what Billingham could look like, a boiler, electrolysis for hydrogen production, and 25MW of battery storage.
We could potentially import power during windy days when electricity prices are low, charge the batteries then when the price of power is high again we sell the power back to the grid. We could also produce excess hydrogen on windy days also, making the hydrogen produced even more green.
https://ibb.co/zsHkn00
Yeah £20m impairment hurts, that's the value of the coal assets they intend to sell. That value may have recovered a small amount since as coal is back again due to the Russian oil embargo? Is that the right word?
End of 2021, Kibo had £2m in cash, not sure what the cash reserves will be now... They do have access to a further £3m loan.
Net assets, £12m. That's a big mismatch between market cap and net asset value... Many green sector tech companies right now are around 1:1, eqtec, Anaergia, some are even massively in the other direction, Velocys, ITM, with market caps far exceeding net asset values.
Anyway, Kibo have a new financial director, and they just announced a new broker... So they may come into some cash soon?
The interesting thing about Kibo I always found is the synergies with their back up power tech. Read into Mast energy in your own time, but here is from the Longspur research note on eqtec back in May-
POWER PRICES
Electricity prices are high across Europe thanks to high gas and carbon prices. Taking the
UK as an example, the forward curves, while not forecasts, tend to bear out an expectation
of electricity falling two years out although still remaining high by historic standards at c.
£90/MWh.
We think that this overall is a good picture of how average baseload prices may behave two
years out. However, dispatchable units should achieve better pricing than average baseload
and we see the average peak load (weekdays 7am to 7pm) pricing as more indicative for
biomass. This averages a 9% premium, so we see the £90/MWh forward price for 2026 as
closer to £100/MWh.
THE BENEFITS OF FLEXIBILTY
As electricity markets become dominated by intermittent renewable energy and as demand
becomes more volatile due to heat pumps and EV charging, pressures start to build on the
networks. These need to maintain a stable frequency and voltage in order to operate
efficiently; or even to operate at all. Meeting the needs of frequency management especially
requires generation that is flexible enough to add or remove supply at very short notice.
The flexibility of gasification working with a fast responding generator can provide this.
Demand for grid support is sometimes termed ancillary services and this demand looks set
to grow as electricity systems decarbonise.
The need for flexibility was recently underscored by the recent IPCC Working Group III
(WG3) part of its sixth assessment report (AR6).
“Flexibility technologies - including energy storage, demand-side response,
flexible/dispatchable generation, grid forming converters, and transmission
interconnection - as well as advanced control systems, can facilitate cost-effective and
secure low-carbon energy systems (high confidence).”
Additional revenue streams for providing ancillary services to grid operators will vary from
location to location but in most locales will add to the available revenue.
------------------------------
Now
The big question is whether Kibo are in any fit state to progress Billingham, With a £20M impairment realised last year their financial position is not the best and with regards equity their share price is less than half it was 12month ago (with a mcap of £3M) which is what their stake is meant to be.
Latest AFS released today " Total revenues £3,245 (2020: £ nil);"
I really do think that we need a statement from EQT with regards the Deeside progress and the financial situation at Billingham, and we need it now.
https://www.londonstockexchange.com/news-article/KIBO/audited-afs-for-the-year-ended-31-december-2021/15513874
From the Annual Report linked below,
"Billingham Joint Venture – Waste-to-Energy Project (UK)
In September 2021, Kibo signed a Heads of Terms with AIM-listed UK company, EQTEC plc, a world-leading gasification solutions company, to acquire a 54.54% interest in its proposed 25 MW capacity Billingham waste gasification and power plant at Haverton Hill, Teesside, UK. Under the Heads of Terms, it is expected that Kibo will acquire a 54.54% equity stake in a new project company (Project SPV) to be incorporated with EQTEC holding 45.46% with the final holdings to be confirmed following a follow-on shareholders’ agreement which is currently being negotiated.
Billingham is at an advanced stage of development with a concept design for the full plant produced, planning permission approved, grid connection secured & technical due diligence with technology insurance providers completed. The project is expected to annually process 200,000 metric tonnes of non-recyclable everyday municipal solid waste into 25 MW of green electricity, enough to power 50,000 homes. Under the Heads of Terms, Kibo's initial funding contribution will be £3 million paid as an equity subscription, plus convertible shareholder loan facilities, and Kibo will have the option to provide additional convertible shareholder loan facilities to the Project SPV and/or convert future project development fees into further equity in the project in the future.
The Billingham project rights will be held by the Project SPV and will include all technology license agreements, all equipment supply and maintenance agreements with EQTEC and all rights to the site under the existing agreements with third parties. EQTEC will remain as the lead development manager on the Project, providing the design and core Advanced Gasification Technology and subsequently retaining the maintenance portion of the O&M contract upon commissioning."
https://kibo.energy/wp-content/uploads/Kibo-Annual-Report-2021-Final.pdf
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https://northforkcdc.org
Monthly meeting is being broadcast on zoom later tonight if anyone is interested!..