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That wasnt news as such - the consultation was published in March I think. Tim also tried to talk up 'discussions with government' about CfDs when they missed out in 2017. Agree that is a positive sign but until the pot structure change actually gets made and Atlantis manage to win a contract, Im not counting any chickens. I think there will be stronger than expected competition from ACT generators who will likely be in the same pot. I do still have high hopes for tidal long-term. I see it as something on a par with geothermal - a really helpful niche technology for parts of the world where it makes sense and its time will come sooner or later. For the next 12 months though it really is all about Uksmouth for me. That one alone as an enterprise value of £100m+ and would justify a SP multiples higher than where we are now. Meygen would do the same if they had a reliable route to market but that still feels a few years off and relies on a lot of external factors going their way.
The other news is that offshore wind will be its own pot of cfd’s and things like tidal will get a look in as they will be a different pot of cash
My take on the recent price rise is CEO's comment on fuel testing results being due in a matter of days. He also told us the price was set for the mother of all corrections a couple of years ago and that failed to materialise. The fuel test was the event I had pencilled in as the trigger for increasing my stake. If the results are positive then the odds for the conversion coming off look pretty good to me. The SP has been at bargain prices for a long time but that was understandable given the absence of a route to market for tidal and unproven nature of the subcoal fuel. I do really like this company though. I think they have fantastic deal making nouse and would fancy them to be able to leverage the Uksmouth model globally if it comes off. I thought the deal structure between Liberty Steel and N+P group was genius - win, win, win for all three parties.
Good post Simms but do you think the appetitie is there for subsea power? Was this floated so to speak at 100p? I know the SP went down not long after listing. It is only with Uskmouth that the SP is currently starting to fire again. Although they pulled off good deals the subsea energy idea never really worked in SP terms to date.
i really like Simec and can see its non visible turbines with predicable tide based energy really really striking a chord with those that consider sea based turbines an eyesore and where wind turbines are prone to changing wind. The technology, if that is what it is, to link multiple turbines together through to the power generation makes complete sense and potentially has wider sales opportunities and their repurposing of a power plant as a pellet powered power plant also makes huge sense. The value of the company is £42m so that seems extremely low but there are some concerns also. The maintenance and depreciation on the subsea turbines looks to be more than the electricity generated so that needs some refinement in scaling up probably to make the economics work , the power station is a massive project and will is prone to delays because of external factors and is a one off highly capital intensive project. I do wonder if they are not focusing perhaps as much as they should be and try to scale one of the 3 main technologies and become a global powerhouse. Lets hope the Equitix investment comes in for Uskworth to finish that project but there is clearly some great projects but hope that transpires into shareholder value. Often companies that focus on too many opportunities often lose out to more focused competitors and i would like to see their sea turbine being that full focus. Therefore I would hope Simec sell the Uskmouth project at a profit and go all in on the subsea turbines and get it right as if they can do that it would compete with wind energy then its a huge win.
the cost-cutting referred to by simms45, i mean
sounds very sensible
Regarding a holdup. The RNS stated 18 months but it looks like it is going to be Q4 2020 before all the necessary approvals are in place, so about a 6 month delay.
is there a holdup as that RNS was over 19 months ago so not normal for any agreement to take so long? Also on their website they talk of lots of cost cutting so sensed a cash crunch scenario and they put most staff on Furlough so just checking where things are as if that sort of money was coming in they would be talking about it in recent RNS but cant any.
"To support the Company and preserve liquidity through the current period of uncertainty, the Chairman and all Non-Executive Directors will take a 20% cut in their fees and will defer payment of the remaining fees with immediate effect and the Chief Executive Officer and executive team will take a 20% salary deferral. Management are also actively implementing additional cost saving measures across our business including further reductions in project, overhead and people costs in order to preserve cash and provide the business with maximum flexibility. "
I would also assume that Uskmouth development will be financed by debt assuming all the hurdles are successfully negotiated. The further development of Meygen might be a bit more problematic and require some new equity to be raised.
As far as I am aware there is still £32m to come from the equity stake in Uskmouth sold to Equitix. Part of RNS below:
20 November 2018
SIMEC ATLANTIS ENERGY LIMITED
("Atlantis" or the "Company")
Atlantis signs Heads of Terms to sell 25% shareholding in the 220MW Uskmouth Conversion Project to leading UK infrastructure fund manager, Equitix
Highlights
· Atlantis has signed Heads of Terms to sell a 25% shareholding in the 220 MW Uskmouth Conversion Project in Newport, Wales ("Uskmouth Power") for £32.9 million in cash to leading UK infrastructure fund manager Equitix
· This implies an equity value of £131.5 million for Atlantis' current 100% shareholding in Uskmouth Power
this is a fascinating company that caught my attention and i am keen on renewable energy companies as they seem to be now at the cusp of change in many cases. My question is not the tech and potential but more a question that the company raised £5m last March 2019 but it is losing more than than that. This year will they need a further rights issue to cover the forward period of investment? I can see income from its tidal project that will increase revenue but wondered what the general consensus was as the current market cap of £47m is potentially low for this company but i suspect some of the problems it has faced historically is the constant need to raise money. is that not the case?
The CEO has been saying it is undervalued for years. Must be something brewing.
Wow. If all it takes for a 50 per cent rise is for the CEO to announce the company is undervalued I wish a few more in my portfolio would do it. ??
My guess is this: https://theenergyst.com/simec-atlantis-ceo-share-price-set-for-the-mother-of-all-corrections/