Sapan Gai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
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Try talking to the directors. If you approach them as a genuine, polite, true investor, you'll get a very different perspective. They want the company to succeed.
Hey, they can wear gimp suits for all I care as long as they do their job properly!
Just a thought. Since we've been on a pivot since 2021 shouldn't this now be more accurately described as a pirouette?
I can just imagine the directors in their gilded offices wearing their pink tutus, flexing in front of the mirror.
SloppyG - similar sort of numbers, yes
Administrative expenses (2,124,280)
Operating loss (1,921,665)
Loss before taxation (2,424,606)
So from Sept 23:
Board members took a 24% reduction in salary (probably salary as the lions share of admninstration costs 2.1m) as at the interims 2023 so let's assume 20% drop, then an additional drop of 20% is on top of that in November. Could be if using admin costs (*0.8*0.8) are below £1.4m at the moment for 6months, so £225k/month, yes I think we are about equal (£1.4m vs £1.5mln per half year as per your estimate).
I think the value of strategic pivot away from high-risk, large-capital project development should be counted as what will pull this out of the bag. Awaiting the £1.5mln verde input, plus the 250k draw from syndicated facility. Agree they are not there yet and this is either equity or debt but this looks to be a much better position than even 6 months ago. In addition it isn't as if this was not public knowledge so i would guess it should be mostly priced in. They also state early 2025 revs from 1 project will be £15m so maybe around £4-5mln revenues on that is likely what helped turn the financing around.
Some red flags here for me.
£600k Q1 rev is not remotely close to covering overheads. They say 30% gross margin on the rev which is £180k Gross profit to go towards covering oheads + other costs.
Overheads have apparently reduced by 20% which puts them at circa £3m p.a or £750k per Qtr (based on FY23 interims). Possibly a bit lower if run rate was already lower in H2'23 but for sure not by much.
So fairly simple maths and lets be generous and say they lost 500k in Q1 (on 180k GP and 750k opex). For context they require Revenue of circa £2.5m per Qtr to break even at 30% gross margin so currently miles off achieving this.
They have also effectively warned of a large pending impairment review no doubt at the bequest of the auditors. Be prepared for a significant reduction in Net Assets when the AR is published. I note the company say "expect" this to be published in Q2; well actually they have no option if want to avoid suspension !
Personally i don't think they out of the woods yet even with the Logik settlement landing which is no doubt why they continue to pursue the Verde "Strategic" investment. We really need to see the published AR to better understand the latest debt/cash position after all the convoluted RNS'.
The burnrate is about 1/6th of that, FJ.
I based the £600k covering overheads as we have barely drawn down any more loan and we had little to start with. We have been told revenues are rising so i hope with Idex £15m penciled for early 2025 and other works leading to this we are in a better place. They have reduced overheads by 20% so i suspect we are all square or they need to trim a bit more fat. Lets hope the £2m comes in from Logik and prey DP does not come up with some plan to throw it all at Southport as not heard anything about that one in nearly 2 years so just hope CFO is going to sit on this money and make sure we target profitability to revalue shareprice back to £50m. At 3.5m its just madness to raise cash especially if we get the £2m, which looks likely in June.
Looks like the Verde could be just a single drawdown but it being there gives the business some financial back up in order to smooth the book. Means they can concentrate on the business and order book rather than finance. In addition appears only to bridge between now and the £2m refund whilst equipment orders increase in H2 2024.
Was quite a refreshing update imo and for some reason, as opposed to 2020 when I didn't this touch with a bargepole (but was on my radar), now happy to have at least some exposure to this share.
Let's see how the rest of the year goes.
In July 2022 the shareprice was .8p (pre con) 1 week prior to a .5p placing Palumbo &co were singing from the rooftops in a webinar about the Italian MDC all going to plan and should be up and running by November 2022.
My they even bought some shares in that placing as a gesture of their confidence which worked a treat as bait hook .
18 months later the Italian MDC is allegedly just about to be up and running continuously in a few weeks time .
Palumbo and co have since July 2022 thrashed the shareprice by 97% with their monthly burnrate of £400k to keep the lights on .
What is disappointing about today's more honest approached RNS is they are still determined at rolling in the dirt with Verde and yer more dilution.
Simms45 look it's great to have positivity but stating €600K a quarter covers all overheads is just plain wrong, look at just the board remuneration for 2022 and that's not including all other costs. The Verde investment is not strategic or anything other than an equity raise because the business still has far more going out than coming in. The 2023 YE's will clearly show what the true costs of the business just existing are and it's not €2.4M... double it and you might be getting close. They have consolidated and raised because they were unlikely to be rubber stamped as a going concern.
Comment from Palumbo....
'Our pipeline remains strong and we are now more selective and deliberate about where and how we do business'
He means he isn't throwing investors cash around like confetti, now the corpse is bled dry... You couldn't make it up.
Looks to me this draws a line under the bottom as the revenue generated so far is all services so will have covered overheads. The outlook will look a lot more impressive once we get equipment sales plugged in. Drawdown on the loan is minimal but there is no news they are planning to drop Verde although the subscription price is now 150% higher than current share price for most of it. Eqtec should wait for Logik £2m to clear, hopefully in next 4 weeks, and then kick Verde into touch as Verde is only investing £1.5m so when Eqtec did the deal with Verde it would have been on the basis that Logik might never happen so better to wait to see outcome and put Verde in the bottom drawer. i am also not very trusting of DP as most of his strategic investors have been selling into news. However i am a lot happier that Eqtec will deliver and the market cap today is nonsense. Full trading update will give a lot more information on all projects as this was a bit thin on the ground but does draw a line under Italy that it is now fully operational and operating as it was originally expected so we can park 2023 for Italy as a dry run. hopefully future projects do not suffer the same issues but this is looking a lot more promising.
Just had a little bit of a nibble into my portfolio, £3.7m MCAP and expecting £2m cash, plus rev 2023 of 2.5m. May add more depending on 2023 FY accounts. Assume due to drawing down facility that there isn't a lot of cash in the bank however Q1 revs of 600k is a good start to the year for such a small company.
GLA
NF wasn't mentioned. Not especially relevant. So much speculation over Italy, clearly board decided to concentrate the conversation on that. It was a short update, there's loads of other work it didn't cover as well.
Did I miss something
Any mention of Northfolk
Idex signed for a waste to energy plant in French Guiana. I wonder if Eqt are involved??
Southport is still a live project Simms.....
Its very hard to fathom all the shenanigans going on withb Deeside, Southport or Billingham. Obviously all canned but we do still have some equity in these projects and sunk costs. Last valuation was £15m in 2022 so we dont know exactly what the price is. Shame Eqtec are not part of this as that was the whole point but i understand that up to 2022 we had expected to invoice £2m for services so this is almost the belated payment. The twists snd turns on all these deals all seem to make Eqtec worse off however. Not entirely sure DP is the deal maker he made out to be as he has a catalogue of investing our cash and then finding it very hard to get it back. Trusting fellow. However todays market cap laughably low but DP must make sure he stops further dilution and investors selling into news. I doubt he will ever accept responsibility but in time i do hope to see a strong recovery.
Likely a prudent decision foxy, given the current financial situation. Better to take the £2M now rather than wait forever for £4M from an expensive and protracted court case.
That's pretty pathetic then Simms45 if logik are getting £15m while eqt only get £2m or half what they put in , any wonder they've burnt £50m of shareholders money with investment strategies like that.
Think we're all in agreement they need to ditch Verde and the further dilution and shareprice destruction that Palumbo has managed so far.
A bit of friendly advice C909, when you're in a hole, stop digging!
Simms, I agree, there is no need for Eqtec to continue with the Verde deal, if Palumbo still goes ahead after receiving the 2 Million it confhttps://www.lse.co.uk/ShareChat.html?ShareTicker=EQT&share=eqtecirms what most of us already know,
Good to see exchange has happened but i suspect market will react when we have £2m in account. Logik already played games with us once so you never know. Buyer is supposed to be top tier investor so hopefully Logik got a non refundable deposit to help ensure Completion and solicitors will not release funds to Logik until Eqtec gets their cut. As i understand Logik will get around £15m so sadly while Eqtec did most of the work we are only getting a proportion of our original investment. I would hope we can kick Verde deal out as we have too many “strategic investors” offloading into news. At some point these bucketshop investors will be cleared and we can start the long climb back. Will certainly help financial results. Just need to churn through the sellers until we get back to those investing for the bigger picture.