Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
For those that don't read Twitter (X) Invinity's Matt Harper was answering questions from the Science and Technology Committee today on energy storage. It is well worth a listen as questions about the opportunities and challenges in the UK grid were dealt with. Matt was clearly the most engaging respondent and was very well-received by the committee members.
Most important for me was Matt's confirmation that the 30MWh LODES project is "expected" to enter manufacturing and construction in Q2 2024. I was becoming a little concerned about project timescales and cash flows being pushed out so this was very good to hear. Following Larry Zulch's recent comments I am confident there is still much more to come but with this project now expected next year's workload is already shaping up to be a marked increase on that seen in 2023.
https://parliamentlive.tv/event/index/9571cdba-d30f-4979-af73-9d29f95bb012
https://x.com/BigBiteNow/status/1704085494756245661?s=20
There is an August presentation on the Shield Therapeutics website which I certainly hadn't seen before as they are normally recorded in the presentation section.
Worth a look.
https://www.shieldtherapeutics.com/application/files/6416/9243/4592/Shield_Corporate_Deck_Aug2023_Final.pdf
@Frankie1x
Thank you for this. I will certainly be cautious with any read across this time around given how wrong I was in Q2 but whichever way you look at it is a positive.
He adjusted his Q2 result from the previous 30% (which was also shared before the period ended) up to 35%.
That's a big hike for a leading rep when overall numbers were 'only' up c. 50%. We were told the 16 retained reps operating in Q1 achieved 8,500 sales. Even at the average of 531 (which he looks to be above) that would equate to 717 sales in Q2. That's over 4.5% of total sales. So if this is true then he is an exceptional performer.
If he then ups this by the 50% that he is currently claiming then that indicates that he's already running at 1,075 sales in Q3. He is of course far more established than his peers having been with the company since July 2021. But still, it helps support the notion that significant growth is coming in Q3.
This aside whichever way I run the numbers they point towards substantial further growth in Q3 as more and more reps become as bedded in as Drew clearly now is.
Thank you once again.
Hi Daveboy19,
I assume you were replying to my post?
If so then I never said revenues from other markets didn't matter. On the contrary, such funds can greatly extend the company's cash run and would be welcomed. But it doesn't matter in terms of the cash run stated by STX because those funds aren't specifically mentioned in the going concern. If growth in Norgine royalties or the Chinese approval had been taken into account then I am sure the auditor would have made STX management highlight it.
That said there may be an allowance for a small uplift in Norgine sales but it cannot be material enough or as I say it surely would have been highlighted.
The most likely cash injection comes from Korea ($2m) and Canada ($0.5m). Both milestone milestone-driven and capable of landing in 2024. But they alone would only extend the cash run by a few months.
The big one is China at $11.4m for regulatory approval but that cash isn't likely to land before STX achieves additional finance in H1 2024. So yes a great future cash injection but unlikely to be a major help in the next 9-10 months.
2/2
At that point even a small raise to see the business through 2025 (if required). Say £10m at 15p would be of little consequence because it will likely be the last one we would ever see prior to the inevitable buyout/sale of the business. It would also likely represent less than 10% of the total shares in issue. Such dilution if it delivers them to positive cash flows is well worth it in my view.
But quite frankly if the numbers are improving as rapidly as I have laid out above then a debt finance/royalty package could well be in the offing. I am merely pointing out what I feel is the worst-case scenario here and its one that investors really shouldn't be feeling negative about.
Whatever the case something will likely be in place around about May next year and certainly before the HY24 report is concluded. This likely gives the team 3 more quarters of reports (assuming Q1 2024 is issued in late April again) and so growth to deliver and demonstrate before it is finalised.
This is a big holding for me because of the above. I expect a much improved Q3 figure to be reported in October if we don't hear something at the interim and with each update I expect te share price to find a new higher base.
Nothing is a given in this game but percentages wise STX is a very good shot at a multi-baggereven from these levels.
After that, it's all about sitting back and waiting for the growth to hit and the SP to catch up.
1/2
Right now the STX valuation is all about the US. Improving royalties in Europe or indeed other regions would of course be welcomed but growth there isn't really factored into the cash run. So focusing on those markets as some sort of potential failure point is incorrect in my opinion.
In terms of the actual cash run, the going concern from the FY22 accounts is key.
"The recent fundraise should provide sufficient cash to allow the business to continue in operations for at least 12 months from the balance sheet date." They are dated 5th May 2023.
In addition, the same going concern statement says that,
" The Directors have considered scenarios in which sales revenues fall below base case forecasts. In these circumstances
mitigating actions such as reduction of discretionary selling and marketing expenditure could be taken to preserve
cash. The Directors also believe that other forms of finance, such as debt finance or royalty finance are likely to be available to the Group."
Personally, I wouldn't want to see a reduction in selling and marketing expenditure as it contributes to defeating the object here but I see that purely as an auditor requirement because finance options will be available. Hence why debt finance/royalty finance has been highlighted as it is clearly their go-to option.
As for sales numbers the clues are in the Q2 update.
Total prescriptions "over 15,800" and "May grew 28% vs. April, and June grew 30% vs. May."
This gives the following approximate monthly figures.
April c. 4,010
May c. 5,133
June c. 6,672
Total = 15,815 (over remember).
Based on the June figure alone with zero further growth, Q3 has a starting base of c. 20,000 prescriptions.
But growth through Q2 came in at an average of 29% MoM. Maintain even 25% through Q3 and 20,000 becomes 31,800 US prescriptions.
This outcome is in part backed by Hardman who after the Q1 figures came out forecasted the following average effective number of reps for each quarter.
Q1 = 22
Q2 = 34
Q3 = 65
Q4 = 100
50% growth in effective reps in Q2 delivered a c. 50% increase in sales. Q3 sees a 91.2% uplift in effective reps which would mean a figure around 30,200 prescriptions.
However, this figure ignores the progress that will have been achieved in the business (e.g. earlier reps expanding their customer base. Self-driven repeat prescriptions through the time elapsed meaning more doctors will have witnessed the full cycle positive results and so likely increased their willingness to prescribe without sales rep pressure. Remember also that "73% of the HCP's who wrote an Rx in Q1 '23 wrote another prescription in Q2").
On top of this, we have the effects of the marketing campaign which remember only began in May.
Whichever way one looks at the available data a much bigger number is coming in Q3 and an even bigger one in Q4
and that lends itself to a share price much further north than that we see today.
@RetiredBanker it is important not to lose sight of the fact that Serabi has hedged 10,215 oz of production at $1,800. Something the market seems oblivious to.
As of 2nd May that allowed Serabi to soak up a gold price as low as $1,585/oz before things got painful. Since then Serabi has enjoyed 4 months of sales at c. $1,954 average half of which is reported on today and has helped drive the $6m uplift in cash in HY23.
In the two months since then (July and August) gold prices have averaged c. $1,940/oz which just happens to be the exact same level achieved in HY23. This will inevitably have further strengthened their balance sheet and added further protection on the downside should gold prices dip hard. But let's face it this really should be all about a dip rather than a change of trend because a significant recession is coming and after said dip gold tends to do very well during such risk-averse times.
In addition, such pain in gold prices still takes time to play out. In 2008 it took 6 months for gold to complete its top-to-bottom phase in Oct 2008 before it started its major surge through until 2011. One could argue that the process has already started this time around with the recent high coming in early May ($2,049).
What I am seeing is a far more resilient Serabi with a strong enough balance sheet to ride out any pullback in gold (if it indeed comes) certainly until the point the Coringa licenses are received and finance secured + the Vale alliance results are well underway. Great risk reward at these levels given the fact that a lot of assumed bad news is already priced in.
For those who perhaps haven't seen it yet.
https://www.cruxinvestor.com/posts/serabi-gold-posts-strong-h1-2023-results-advances-growth-projects
Here are my thoughts.
https://twitter.com/BigBiteNow/status/1697211764964745305?s=20
Clive is a true poker player and so gives little away but that is perhaps better than some of Mike Hodgesons pumpy displays.
Key takeaways are the Vale set-up and the fact that any gold deposits the alliance finds revert back to Serabi. This is worthy of note given where the drilling rigs have been active the last few weeks or so.
More importantly, Clive is clear that the Coringa licenses are coming. The Indigenous community agreement was clearly a key milestone. So now it's about getting the paperwork completed to allow the courts and public prosecutor (both of which have seen and accepted the indigenous community agreement) to rescind their block on new licenses to allow the installation licenses to be issued. A big moment in Serabi's future. Expected before YE it appears.
On Coringa
Debt is c.$5.4m less (inclusive of interest) due to repayment made in May 2023. See Q2 update.
SRB EV running at c. £11m which is utterly ridiculous given their net assets and progress now on scorings + Vale.
@Mikemine,
Check out this enclosed slide which demonstrates the path for Mistral costs per MWh between 2024 and 2026. Starts at c. $60-$70 öper MWh and then reduces down below the US DOE target of $50 by as early as 2025.
https://twitter.com/BigBiteNow/status/1673263288812032001?s=20
For those that haven't seen this yet. Looks like a really significant 3 months coming up for Invinity.
https://www.bestmag.co.uk/flow-battery-maker-invinity-unveils-next-generation-product-at-ifbf-2023/
I will be attending the STX AGM shortly as a means to get a gauge on how management is feeling about progress.
However, it is important not to forget that management told us when they will update on half-year trading in the last Investor Meet event. Please see 31 mins 30s in.
An update is scheduled for Aug 2023.
https://www.investormeetcompany.com/investor/meeting/final-results-for-the-year-ended-31-december-2022-1
I will be attending virtually.
The key takeaway in all my waffle there is that those 16 reps achieved 26% growth in Q1 2023 vs the average set by 22 reps in Q4 2022. So only 4% behind Drew (30%) who is clearly one of the top performers.
Average Q1 sales in that group were 531 per rep.
If the others have kept pace with Drew then at 27% average growth (674 sales per rep) that group is capable of delivering nearly 11,000 sales.
That would be a fantastic base from which to add the other 82 reps.
Lastly, Hardman has the average number of effective reps running at 34 in Q2 2023. If they all achieved 674 in sales then we are talking 23,000.
Interesting times.
Excellent thank you.
Drew writes that he is in the top 5% of the sales team since hired in 2021. So some discount is required there. However, as I posted in late April the 16 reps posted an average 26% improvement in Q1 2023 vs Q4 2022. Drew is stating he achieved 30% so we are 'only' talking about 4% above the group average. So the discount doesn't need to be too significant.
Very simply if the same gap was applied to Q2 then the group average should be c. 27% vs Drew's 31% which is very healthy.
Not trying to solve everything here just attempting to make some worthwhile points.
Funnily enough, if you follow my thread through I also came out at 24,000 and I deliberately didn't build in any growth for the first 16 reps in Q2 (a safety buffer if you will.).
I ave since learnt that some of the numbers from the first 14 new reps were likely free or heavily discounted samples which will be adjusted out in the interim. Still,
STX management will have planned for this in their cash flow forecasts and a large element of this remains about getting the product seen and prescribed. So the total number remains valid in my view.
Thanks for sharing. I plan on attending the AGM and posing one or two questions on progress and confidence in the numbers. Whatever happens, the August update should be interesting.
https://twitter.com/BigBiteNow/status/1651842133504978946?s=20
Hi Frankie1x,
That's perked my attention considerably. Could you provide a link to the Linkedin page that makes this statement, please?
Also, we were told in the company presentation that the 16 top reps achieved 8,500 sales in Q1 which equates to 531 per rep.
Thanks in advance.
Thanks, 2phevs.
This one is a serious winner. Got everything going for it. It's now just about hanging in there long enough to realise the true rewards.
I think one last decent-sized raise when Mistral lands. Likely as a basis to let Gamesa in and pay for the next expansion phase but it shouldn't matter by that point because the market will have got it and it likely won't dent the valuation by much. A recession may throw a few curve balls but it's not getting in the way of battery storage rollouts for too long if at all. You can't save the earth if you aren't signing contracts and utilities have limited focus on-short-term economic tides.
Hold and wait for gold is my view.
Have a lovely weekend.
Invinity is in a really good place now and I am extremely excited about both the near and longer-term prospects here.
We already know that the pipeline has increased significantly and that should come out with the results. It was already at +2GWh so a significant uplift must be compared to that existing number.
Furthermore, there are multiple references towards the US DOE long-duration programme and other recent US legislation designed to support battery rollouts. The IES category has funding up to $50m per project available. I suspect this is where US Vanadium comes in and why IES recently made a commitment to training union electricians in the US. The US funding demand minimum 40% local content and job creation. This is why Invinity is also hinting at setting up US production which is clearly further along than we know about. There is a strategy in play here which we investors are yet to realise but it is coming.
Then we have Mistral whose chances of success received a big shot in the arm recently wit the pilot project. If the market was focused enough it would appreciate the enormity of this milestone because it says Mistral is going to arrive. Security in that knowledge should have the market repricing Invinity purely on the fact that its JV partner builds 100s of MWh in one sitting and needs this battery option to help it return to profitability. Meaning significant work is going to be realised once it is commercially available and I suspect that is where we will see the most uplift in the pipeline even if it's not marked down as purely Mistral.
Lastly, my belief is that the serious Mistra pilot projects are still to come later this year. They are the ones that Mistral needs to market the product properly. So I expect them to be larger than the 1.2MWh seen to date. But that part is my view only at this time based on my research.
In previous years Invinity has always given notice of when the results will come out. Clearly this year the auditor has picked up on the cost of fulfilling previous contracts which has led to an extended audit and financials sign-off process. Today's announcement looks to be designed to highlight this and explain that (for once) the extra time is centred around an actual improvement to the report.
In terms of cash burn, it's important not to forget that IES raised £23m before expenses and then almost immediately settled the outstanding CLN payment of $2.1m (c. £1.65m). Making the actual cash raised closer to £21m.
YE22 Invinity had £5.1m in cash. So the current cash position of £15.4m indicates a cash burn of c. £10.7m since year-end. However, it's important to appreciate that this is merely a moment in time and is heavily affected by front-end payments suppliers to execute the increased workload both this year and into FY24. The message from the company has been consistent that the cash raise was sufficient to support the company through until the Mistral launch which is c. mid-2024.
Also from 23rd Feb RNS,
"In its announcement of 22 February 2023 the Company set out that a minimum Placing of £16 million was sufficient to satisfy the Company's working capital requirements through to the end of H1 2024. On 23 February 2023 the Company announced that the Placing was oversubscribed and subsequently increased to £19 million. The Company is therefore comfortable that the additional £3 million to be received in the Placing combined with the £2.5 million Subscription, the Company's existing cash resources and any proceeds from the Open Offer provide the Company with a robust working capital position."
£16m was deemed sufficient to reach HY24. The company raised £5.5m more than this and then spent £1.65m on repaying the CLN. That repayment then gave them 97% ownership of the remaining shares issued to the CLN provider (1.78m) and they control when they are sold. So yet more be it relatively small financial support.
The LODES £11m award is just that until such time that the client and matching funding are announced. IES won't have received anything yet.
On top of all this, the Vancouver facility has recently been expanded to 200MWh. Sufficient we are told for the next 24 months of operations. So CAPEX has been covered and plays its part in this recent cash burn.
What's truly key is that project sizes/workloads are increasing and they are now providing positive gross margins. Meaning cash burn decreases markedly going forwards.
Finally don't forget that the Australian 8MWh project rolling out this year was won in November 2020. I suspect this is the loss-making project which automatically skews the cash burn in HY23 as it is finally completed.