Member Info for Agricore

H1 2022 numbers out in the morning.
We are looking for BELL to be on track to its 4000 unit target for 2022 (i.e. at 2000 units in H1 ideally)
Forecast (Dowgate): Revenue £2.7m, GP £0.5m, O/heads £3.5m, EBITDA -£3m. Cash should be at around £12.4m.

Past, Present and Future
Equity raise £6.6m net May 22
X-Plor launched in June 22
Direct to Consumer (D2C) launched June 22 (will we see unexpected one off costs? but higher margins later on)
VGM (a DME) Product Supply Agreement Aug 22
Discov-R launching Q4 2022
Innomax Master Supply Agreement launches Q1 2023 - says it "doubles capacity" - yet 2023 unit sales forecast increased from 14000 to 18000.

The last update increased the TP to £2, yet here we are 22% below the market price at that announcement. Tomorrow's update will be very interesting.
GLA

It will be good to see the H1 results in the morning.
Forecast results for 2022 H1 are Revenue £68.3m, EBITDA £21.4m, PBT £14m. (using WH Ireland's numbers)
It'll be interesting whether these are exceeded based on the trading update in June for 1st 4 months of 2022 which showed a 52% growth in the average vehicles on hire compared to 2021. In fact ANX has dropped 10% since that trading update despite being cash generative going forwards and defensive (unfortunately people don't crash vehicles less in a recession, and arguably the quantity of poor housing could increase in a recession).

Lots to digest in today's Q2 update and funding update.

1. The first point I'd make is that the phase numbering is confusing. There are 4 phases.
a/ Phase 1 - reopening Uis Mine, establishment of process
b/ Phase 1 Expansion - increase in tin production through the screening circuits and concentrator - nearing completion
c/ Phase 1B - previously called Brandberg West&B1/C1 and also confusingly referred to today as Phase 1 Expansion - today's announcement costing $50m+ to achieve a doubling of tin production (to 200 tonnes/month by 2024 from 105/t/month), and pilot tantalum and lithium plants. Which will provide unknown quantities of by product credits. Given they are pilots I don't think we can expect to enjoy -$5000 AISC just yet!
d/ Phase 2 - This is the 10X (or 5X from Phase 1B) in terms of tin and commissioning of lithium and tantalum circuits.

The mix of equity, royalty and debt at 12% will cost $0.8m/year (royalty), plus $1.2m year (interest), dilution is about 4%.
Conclusion: I am taken aback that we "suddenly" are faced with a substantial cost to prospect, and to build pilot plants. Anthony said "We will fund the expansion out of cash flow". I guess he must have meant cash flowing in from financing.

Q2 thoughts. Obviously the drop is disappointing. It is also with some horror that I had overlooked a simple truth. I have been writing on here for a while and no one else has picked up on it I guess, but the horror is this. The quantity of "Tin Concentrate" is somewhat irrelevant. The real figure to read is the "Contained Tin". That's what ATM sell. At $21k/tonne currently. Telling us the plant can achieve 105 tonnes of concentrate a month is meaningless. Telling us that the contained tin for Q4 will be 190 tonnes so 63 tonnes/month is the magic number. I've remodelled based on what we now know (albeit my estimates of production costs and admin costs were way too pessimistic too) I am now seeing a small loss for FY2023 of sub $0.1m and around $4m funds flow on a cash cost basis.

That is where I have taken today's 6 month "actuals" and factored in the Q3 downtime of minus 50 tonnes for the shutdown to average 47.5 tonnes in 1st/2nd triennial. Then 63 tonnes in the 3rd triennial (T3) and revised selling prices of $38k T1, $22.5k T2 and $23k in T3.

It's not as good as I thought and you can say ha ha if you like. But I'm just being open about my own insight on today's news - and where that leaves us. Remodelling for FY2024 with royalties/debt etc is for another day, but I suspect the $2m penalty vs an increase of CONTAINED tin (!) to 126t/month should come out favourably, even if byproduct credits are small.

So my analysis is Anthony has done a good job and it's good news. But it does come as a surprise and none of the analysts Tamesis, Hannam or SP Angel seemed to understand that Phase 1B would be so expensive. Re-reading their reports they appear to think the byproducts could "just happen" and the next capital cost woul

Clever, also Orion are financing BMN - Bushveld Minerals (Anthony's old company).
Mulling today's news.

LordLolly,

Once again I find myself disagreeing with you. TopCatz is right that while the price drop is disappointing the objective was met. What objective? Raising funds. That is what happens in an IPO. Plus further funds when/if warrants are converted.

The point is LUCY now has funds to grow and prosper. As it does the share price will reflect. I’ve confidence in its mgt team and indeed all 4 mgt teams in the portfolio.

Gla

Eyewatering loss. But the rationale remains the same.

TSL confirm it makes no financial sense to keep TSL running (will lead to further shareholder value destruction).
The 15% discount to the conversion price in November remains the same. i.e. TSL's drop 36.5p to 30p corresponds perfectly to SQ's $85.94 -> $69 price. This is interesting because TSL previously wasn't correlating.

i.e. the market has cottoned on. So the question now is do you buy TSL and get a 15% return in November 2022 but run the risk that shareholders are the turkeys that do vote for Christmas - i.e. do vote against the scheme to shut down TSL and convert shares to cash at a 0.5% discount to SQ's price in November. The 2nd risk to consider is SQ drops lower than $69 in the next 6 weeks. Analyst consensus is that SQ offers upside, and is both profitable and cash generative albeit at a low level.

GLA

Today's AGM announcement: "Trading for the current financial year remains in line with market expectations, with the business well-placed to deliver on our strategic aspirations, supported by the recent acquisitions of vaping businesses"

There's the magic words: In Line. Based on my prior estimates where we see an uplift due to the recent acquisitions for about 9 months for y/e 31/3/23. I'm estimating numbers something like this:
Revenue ~£143m
EBITDA ~£23m
EPS ~13.3p
FY2023 PE of 6.7

Too cheap at today's 94p buy price. GLA.

- Portfolio up 1% for H1 2022.
- NAV 99.5p (so the ~32% discount to NAV is maintained)
- Dividend covered (using IFRS EPS) 1.7x
- ROE of 18% is impressive!

Lots to like in today's news.

Interims should be out tomorrow.
Quarterly Dividend is 4 weeks away.
Holding steady in a down market today.
Steady as she goes…..
GLA

I'm optimistic. Shore Capital say "it's worth 85p". But let's not get starry eyed. Let's go with the pessimism.
Yes let's just assume the worst. Let's assume the next 2 Romanian drills are a duster. Let's assume the 2C reserves are zero. Prospectively 61.8p/share but let's say zero.
Let's assume management are shockingly bad. Yes they can only achieve the destruction of shareholder value. (How are they destroying value? Well they drill 2 holes that have a 30% chance of success which don't recover economic quantities. They allegedly misinterpret seismic data. They are beholden to a Tunisian government contractor probably still dealing with post covid disruption and which is a delay to starting workovers. The Tunisians earn royalties from SENX. They make fewer royalties until their rig shows up.). Let's also assume the 2.9p of 2C Tunisian reserves are worth nil too for consistency.
Meanwhile in Tunisia SENX's competition is dwindling:
https://www.reuters.com/article/tunisia-oil-int-idUSKBN2BI2CM

Is that all the bad news out of the way?

Ok so here's the good news. Despite all that. The proven 1P/2P reserves in Romania have a value of 4.6p/share. The Tunisia reserves have a value of 38.6p/share. Net cash at last update was 5.1p/share (50% of the market cap!). Less Present Value of Central Costs is minus 30.3p/share. That nets to 18p/share. So double from today's price (or triple if you strip out net cash from the market cap). With everything negative possible baked in.

So if SENX is fundamentally worth double/triple in a worst case scenario, so does it stink at 9p? Stinks if you paid more than 9p I guess. Sorry about that. But shouldn't what matters be where SENX goes from here? Even assuming the worst?

LordLolly, comparing TEK with Allied Minds is like comparing a Diageo Fine Whiskey with a Poundstretcher ValuPak 4 pack of carbonated Larrg-ah.

TEK have achieved more in a year than ALM did in a decade. If you actually look to buy a BELL oxygen concentrator or some LUCY glasses you're getting a first class product and a first class experience (go to their web sites if you haven't already). I love my Lucyd glasses which I bought. If you go to ALM's web site you find out of date info from 3-4 years ago, broken links and the stuff of pipe dreams (or nightmares). If you tried to investigate any of their technology it was just smoke and mirrors e.g. the multi optical commmunication array? Nope no one has ever heard of it. Look at their presentation from about 15 months ago - dreadful. Activist Crystal Amber got rid of ALM's CEO but extremely poor performance. Cliff is a good presenter, knowledgeable, self-deprecating and a determined character. It's no wonder ALM has failed so utterly. Any such comparison is an insult frankly.

I've been delighted to average down here today at sub 37p.
There is an insatiable demand for power and this will only grow. I think you need to think about TINA (not in the context of equities but in the context of power). TINA if you don't know is: THERE IS NO ALTERNATIVE.

Look at coal prices, look at gas prices, look at oil prices. Particularly, look at US natural gas prices. As LNG ramps up those prices are not going back down. Au contraire. Look at uranium. Look at coal. Keep going. Now look at offshore wind. Latest production cost for plant coming online in 2023. 4.3p/KHW. That's not cost - that's the price they can profitably sell at!! Storage adds a further 5p+/KWH so let's say 10p/KWH. Now look at everything else. It's either more expensive! Or if it's not then it's scarce - which guess what? - makes it more expensive!

IES is a no brainer stock. At 37p it's a bonkers price. Cleantech Lithium (CTL) was similarly at a bonkers price. Now it's triple and going higher. Crucially for IES is to drive the cost of production down. Once they announce this (Q1 2023) then we'll see the analyst forecast price of 181p and beyond. If IES can capture a larger share of the storage market then the upper valuation case is much higher still.

This blog article from IES in encouraging too:
https://invinity.com/inflation-reduction-act-and-other-impacts-to-us-business-energy-prices/

Polywold - it’s not just about the resource estimates - look at the per KG lithium AISC extraction costs and the serious ESG credentials to boot. Very exciting share. GLA

Boohoo much as I’d like to agree I don’t see any other Tin equities moving today. Spot price is 21k still. I think there’s been a lot of short covering today - a strong sign that a rebound in tin prices ahead. V.glad to have topped up last week on ATM

I feel I learned more in that 1/2 hour presentation about TXP than I had in the 5-6 years I've held it. That includes past interviews, analyst reports, reading commentary on here - the lot.

I’ve been seeking to ascertain international Tin cost curves. Using ITA data and extrapolating for 2022 costs then my estimate is only 30-40% of tin producers are profitable on a cash cost and 10-20% on an AISC basis (net of byproducts). ATM fall under the 30-40% group so this is positive however it would be treading water. Clearly the current price has to rebalance upwards from here.

CM, I may be wrong but the appetite for risk is far less about exchange rates and much more about the perception about where we are in the economic cycle. Are we now in capitulation? Or just in a bear market rally? Do you really think that a better FX rate by itself will make everyone start to go out and buy shares when the media are saying hey, stock are about to crash again, it's just a bear market rally. That theory sounds bonkers to me. Do you have any evidence that that can actually happen?

A strong dollar (and a reasonably resilient US economy) can continue and if it did this is beneficial to TEK. But ultimately what will be will be. Interestingly Bill Gross (who has an excellent track record) thinks GBP will strengthen from here. This is a link to his Bloomberg article - written by none other than ex-Moneyweek's John Stepek: https://t.co/Sr3Ip9mo4t

So Mick may get his weaker USD. But it won't (by itself) benefit TEK. Genuine capitulation will generate hope and a new economic cycle. But the two aren't inter-connected.

No Mick. No you don't.

A weaker dollar translates TEK's mainly **U.S.** assets lower. i.e. if you are a TEK shareholder then a stronger dollar is better. It better because your TEK assets are worth more (in GBP). If your point is that the portfolio companies can more easily export then the answer is they don't (yet). They do import components however, mainly from China. Once again a stronger dollar and a weaker Yuan means those components are cheaper.

Why do think there's a correlation between UStech100 and TEK? Apart from sharing a similar name they don't share any significant statistical correlation that I can see?

The origin of "how energy prices are calculated" and particularly the marginal pricing was established under Tony Blair and was intended to ensure a wind or solar power operator wasn't disadvantaged versus a coal or gas operator. I think it's about 25% of power supply operates this way.

Today it's completely inappropriate. Newer power contracts use "Contracts for Difference" CFDs which are fixed rates but not fixed to fossil fuel rates.

I would also add the problem lies in the fact we rely on a centralised "national" power supply system where we expect power at the (literal) flick of a switch, rather than democratising, decentralising and incentivising local forms of storage. (And legislating to enforce this). As energy users (and taxpayers) we are paying the equivalent of 52p/KWH in 3 weeks time. Yet can earn a maximum of 7.5p/KWH to supply that same power (more typically 4p/KWH).

This article is one of the best which explains the phenomenon of decentralisation (and how this would reduce electricity costs by around a third). It would certainly be of benefit to users of EQT's technology - to keep my post on topic :)
https://institute.global/policy/energy-transition-achieving-decentralisation-distributed-technology

Even the telegraph concurs:
https://www.telegraph.co.uk/investing/shares/germany-faces-bleak-winter-makes-stock-even-appealing-investors/
While many of the worries about the prospects for German businesses apply equally to companies on these shores, so too do the counter arguments: Regional too had an excellent record of collecting rents during the pandemic, to suggest that its tenants were able to survive that crisis, while the British Government said yesterday that it would help businesses as well as families to cope with sky-high energy bills.

This looks like another share price that has been driven too low by the sense of doom that is hard to avoid at present. We suspect that long-term investors who buy Regional’s shares now will be glad they did in a year or two’s time. As with Sirius, they are a hold for our portfolio.