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Apologies I missed a point around production in H1 (April to Sept 2022).

TGR had a big problem with the rainy season last year. This led to the whole processing plant being restructured including introducing the pre-concentrate plants. Therefore, production was essentially sacrificed in H1 in order to reset the mine to avoid future weather issues. The operational updates give insight into this and show that the real production only started in Q4 2022 (Q3 for TGR).

The market only has the half-year report (up to Sept 2022) to go on at the moment. So things like output and costs look well out from where they should now begin to move to. The Vatomina project at 12,000tpa has been in full operation since late December. So in theory it should be having it's first truly strong quarter as we speak. At 3,000tpa per quarter, in theory, it is capable of delivering EBITDA breakeven based on the numbers delivered in the half-year report.

Much of the focus is on the Sahamamy expansion and so this fact gets sidelined because the market wants to be told that everything is ok. That last year's problems are behind them and that the production and cost reduction is coming through which is fair.

So whilst the next update should hopefully put the expansion to bed it really will be the update post year-end (c. April) that will deliver the real news, With Mozambique hopefully sandwiched somewhere in between.

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That aside, I am a big fan of the tenacity of this management team. They are very careful with their available funds and squeeze a lot out of every dollar. Plus they manufacture their own processing equipment which I still find extraordinary which will no doubt be applied to Montepuez when the time is right. Again, if they can just guide the market better on the above key production elements then such skills and competitive advantages will be better priced in.

That all said I expect a really good year for TGR once these initial but key milestones are behind them.

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Afternoon Neavo246,

Some thoughts in response if I may and in no particular order.

1. TGR management is on record in an interview that they have a significant customer list which can be triggered once additional supplies to come through.

2. The recent Hanwa visits to the site in December are a clear sign that TGR is ramping up sales in Asia with the site visit likely instigated to witness the capacity expansions.

3. CEO Poddar in his last interview mentioned that off-takes were in the 'near term' news category although that can be stretched somewhat with TGR at times.

4. Current costs to produce as seen in the last half year report bear no real resemblance to the reality at 30,000tpa because they only produced c. 1,700MT and were already carrying much of the fixed cost for the larger operation. The message is that 50% margins are targeted when producing closer to the revised capacities but we do need some guidance on this. I have encouraged the company through written correspondence to provide production and cost guidance for the new financial year which begins in April.

5. It is important not to lose sight of the fact that the two advanced-stage assets in Mozambique come without any project debt. So TGR has a clean slate from which to finance them moving forwards. The fact that both are fully permitted, at BFS stage and one has had several million dollars of construction completed on it should allow TGR some solid leverage on debt financing. To be so advanced on a project and be debt free is a rare opportunity for a small player. The market is yet to give any slack to the TGR share price for this fact.

6. I agree on the 30,000tpa point. It may not be ready for end of Jan but the fact is it is in its final stages and the Capex has been spent. So now its purely about delivery. So again it's a solid valuation driver from here. Once its bedded in then TGR should be ready to agree a debt package for the Madagascar assets which can help drive the next expansion phase. Once TGR reaches that point and the market appreciates that they are growing without further burden on shareholders then a substantial re-rate is on the cards.

That, therefore, makes two very significant valuation drivers.

In the meantime, TGR needs to get its corporate governance house in order. The website is not up to date and requires some attention. Something I have again raised with management. I would encourage others to do so too. Where I can't fault them is in responses to enquiries. A rare trait for a junior miner.

That said the market needs to see production and cost guidance laid out so the business can be properly valued. In addition, some clear direction on capex for the coming year is also required.

Yes having followed the progress of the storm very closely I can concur that its main influence was on the North to North West coast before dissipating prior to reforming off the South West coast. Heavy rain was experienced across the north of the country but it looked to me that the Tirupati mine areas were spared the worst of it. They may still have had decent rainfall but as others have already said the works carried out in 2022 should have mitigated any past problems. Although the two storms simply aren't comparable in terms of strength and destruction.

The key here is that the pre-concentrate units avoid the need for large mining trucks to move around the site during periods when it is very wet. So production shouldn't be the problem. Additionally, the team reinforced the 40km stretch of road from the Sahamamy project to the N1 highway. The actual plant that is in full operation sits at Vatomina which is much closer to the highway and further East.

This isn't to say that unexpected smaller interruptions haven't occurred because only the company can say that for sure but my almost daily analysis tells me this particular storm wasn't the true test of the new protective measures. I trust we will receive an update shortly that will confirm Sahamamy's completion.

@DD77 I don't believe admin costs will reduce I believe the margins on the batteries have and will continue to improve driven by lower inflationary costs, Chinese contract manufacturing and scale. The cash burn from last year is based mostly on a lack of production. If you review the Oct webinar you will note that the finance director talks about $3.7m for the cost of goods but that $2.1m is fixed costs which will better shared out as more units are produced. The same will in part be applied to actual production costs as larger contracts awarded to Baoja should receive better pricing. Or so the theory goes.

Sorry, that should have read (H2) 2023 funding for 2024.

On that point and as a focal point the house broker and nomad Cannacord has Invinity making a profit on its batteries at the production level in 2023.

In 2024 they have them booking 68MWh of sales for a total loss of $3.6m (US dollars not pounds) with a widening margin on the batteries.

In both years they have them raising $12.5m (£10m) in funding and then no more from 2025.

I believe they may well require more funding because I expect the orders to now rise steeply. But that's a positive for me. The above demonstrates that the expectations for further funding are not that high. By the time we reach 2024, Invinity could well have secured LODES and the fanfare around Mistral will be in full swing. So 2024 funding for 2024 should come at elevated levels to what we see today.

That leaves 2023 where we have $7.5m in available funding vs $12.5m expected. So again the funding requirement may not be that high. However, if I was Invinity and the launch of Mistral and the pilot projects with it are as good as I trust they are then that would be a great time to secure what would be a fairly limited raise compared to the valuation.

@DD77 I'm not being precious I am just tired of all the unnecessary negativity that is swimming around at the moment in the markets. Great stories are being trodden on for no good reason. That there are risks is clear and should be highlighted and people should indeed be challenged on false information. But with all due respect, you are guilty of the same thing with this reliance on 2022 financial information to project a future similar outcome. So your view isn't actually balanced.

But that said I fully respect your words in the second paragraph and am more than happy to debate with you with that in mind. For the record, I absolutely welcome criticism because it tests my viewpoint and my investment case. It's just the way it's presented that I have no time for.

@DD77 again a totally unnecessary antagonistic response. I gladly interact with other investors so long as they are cordial and respectful. I am happy to debate all points on IES including any errors I may have made so long as it's done in the same manner I would expect in the corporate world. Because this is work. This is people's money and many have a lot on the line. So I believe the whole approach should respect that.

I have seen your approach many times before over the years. Allow someone to pour their precious time into lengthy well thought out responses and then just shut them down with an antagonistic one-liner that ignores the true content of what was written but insinuates it can't be trusted.

If you think the VRFB rental market will be a small market then I'm afraid you haven't done your homework properly. I was around when Avalon and Bushveld Minerals first proposed and employed it together. It is THE advantage for VRFBs vs lithium-ion because lithium cannot compete due to its degrading nature. Vanadium does not degrade and can be sold for re-use even after a 20-year rental cycle. Giving finance companies a non-depreciating element of their product. Something I doubt Dawsons has anywhere else in its stable. It is the reason why Largo is also pushing so hard on a rental model.

There are a great many potential customers out there who would never consider or even afford a large upfront Capex cost for energy storage but would gladly take a rental option that spread those costs over 20 years. The trigger point and so greatest achievement was convincing a leading UK rental group that the product can make money and that the demand is there.

I expect this segment of Invinity's offering to grow significantly from here likely supported by this agreement because it will act as a benchmark for others in other businesses/countries. Just like the demonstration projects are opening up new larger work through their proof of performance. A thriving rental market that gives Invinity long-term recurring revenues is exactly what is required to secure lower-cost debt agreements for future growth.

If you want to debate this politely and respectfully then I would be more than glad to. Perhaps I am wrong and you have knowledge beyond what you are prepared to show me to date. If you just want to rubbish my name and spread insinuation then you can do it on your own.

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I still have them down to drawdown one more $2.5m of the CLN in H1 2023 but its not guaranteed. However, I trust (no further delays anticipated) that with the additional 5.4MWh also due for delivery in H1 2023 + that small additional funding, that they can likely get to Mistral launch without a significant further raise.

At that point things get really interesting because its launch comes with pilot projects and I am intrigued to find out what size they will be given the fact that Mistral has a starting design size of 50MW (c. 200MWh).

Finally, this whole subject of cash burn. Yes it was higher in H2 2022 but one cannot employ a 6-month period where only 1.3MWh of projects were booked and then project it onto the following 6 months where 22MWh will be delivered and likely also mainly booked. That's not a fair comparison. That cash burn remains high is clear but it must be about why and for what. Invinity has booked +30MWh of projects in just 1 quarter. Their advanced category for projects has more than doubled in 4 months. Their trajectory is steepening. In such a scenario I really don't mind heightened cash burn so long as its put to good use and there is a clear sign of improvement. That I sure we will see in the interim which is the correct point to judge funding levels etc.

However, I do see Invinity raising a decent sum later in the year likely off the back of the Mistral launch and I see it as a defining sum that puts the whole finance question to bed. At that point, the true re-rate should be allowed to take hold if it hasn't started already.

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Excellent post-Agricore but I would go much further on the importance and so achievements that Invinity has delivered on the partnering front. This is for me a classic case of the market knowing what is coming but flat refusing to buy into it properly until it is in black and white. That in my view demonstrates a strong opportunity for investors.

Yesterday I posted a long piece about cash burn and the road to positive cash flows. The response from DD77 and disrespectful. Agreed I didn't include the actual overheads cost (because as I said I wrote that off the cuff) but I explained enough to demonstrate that it wasn't included and that Cannacords estimates (which are the most conservative at 75p and in my view best thought out) placed breakeven at around 85MWh (my estimate using their figures).

That aside I wasn't attempting to portray Invinity as getting ahead of itself. More funding will be required. But I think the market expects more funding and perhaps sooner than is the reality. That is why I explained the rather unique inventory build-up which has seen over half of the work Invinity has contracted in the last 2.5 years delayed. What that means is that the cash burn does not relate to the work completed. Invinity, therefore, has a one-off (likely spread over H12023) sizeable cash injection that should prolong their need for further funding.

This is why I believe they took the CLN. Note it came just a couple of weeks before the project update on 30th Dec. The interim going concern from Sept was clear.

"Should existing contracts be delivered more than three-months late or the Group fail to win LODES, or an equivalent contract, early next year then, assuming the Group maintains its current operational capacity, it will be necessary to raise further funding within the next 12-months in order to continue trading and delivering on the current strategic objectives."

Dated Sept 2022.

What's happened is the two biggest contracts have been delayed by c. 3 months or more by the customers meaning a short term cash flow problem centred around feeding new work. It is on this basis that I believe they took the CLN because the first payment is interest-free and there is no commitment or even terms associated with further drawdowns (yet).

Now that we know that they have £5.1m in cash at YE (including that first drawdown) it makes it more clear that these significant payments should now extend their front-end cash run. No, it does not solve their funding for the FY but what it should do is buy them time to further execute their strategy, deliver more contracts including perhaps LODES and so build their story and the confidence in it.

Morning everyone,

Long-term holder here since 2020. I rarely post on these boards these days as I tend to focus on Twitter but I still read them when I can. I just wanted to offer hearty congratulations to all those that have stuck by YU and believed this sort of turnaround would come. Especially you sparky333. You are an excellent example of what patient-supportive but well-researched investing can achieve and I thank you for your contributions here over the last few years. Enjoy today it has been well-earned.

Just to clarify because I wrote that off the cuff I am saying that the broker sees IES being cash positive on each 1KWh at the manufacturing level in 2023. So on that basis when we talk about loss-making projects it is at the overheads/shipping etc levels. With shipping costs down and a major Eastern manufacturing base started those costs should also now come down.

Throw in scale and we can chip away some more at that overall cost. All of this enables a path to profitability which using the broker's figures should come at around 85MWh. I believe IES has an excellent chance of achieving that level of project work in 2024. Especially if LODES comes in which would see them at c. 54MWh already.

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Point 1 is why I think they have solid working capital for H1 2023 even with a markedly increased workload but I have allowed for one more drawdown of the CLN also. Project wins and their sizes will affect things but if IES is announcing enough work then who genuinely cares?

When a business is rapidly expanding into such a significant and recessionary-proof market a need for funding to support it is never going to be a fundamental problem. Yes, it may affect how much of a return I receive but it's no showstopper given just how large a MC this company could one day command.

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Afternoon everyone,

A few things worth considering when looking at IES cash burn and working capital etc.

1. Note that 16.4MWh of batteries that were contracted in 2020 (8MWh) and Feb 2022 (8.4MWh) are majority manufactured and so paid for cost-wise. So they are about cash receipts.

Important to appreciate that the Australian project from 2020 was delayed by the client having an issue with the project site. So the batteries were manufactured and recorded as inventory in Canada. Because at that point there was no manufacturing in China.

In the recent project update (30th Dec) note that the Australian batteries are now being shipped direct from China as opposed to Canada. Those batteries are now staying reasonably local in Alberta. Along with the round trip on shipping costs which would have been allowed for in both contracts the cost to produce and ship these projects should be markedly reduced.

What it also means is that at least 52 batteries out of a total of 79 are manufactured and therefore one way or the other paid for. As a marker, the Australian 8MWh project was priced at £6.7m. Despite cost savings since the 8.4MWh is likely the same.

Invinity pays for its batteries out of China upfront. Given the fact that the remaining 27 batteries are scheduled to be shipped out of China in Q1 2023, there is a strong chance they are also majority paid for. So whatever the concerns with cash burn and working capital for new projects Invinity should be about to receive a significant cash injection and they have rather cleverly minimised the remaining costs by switching production around.

2. Important also not to forget the milestone payments for Mistral which totalled $4.62m. I would think the completion of the product is the biggest trigger and a quick look at the revenues and grants sections of the FY2021 and HY2022 accounts shows limited if any allowance for this payment. So the majority of that should be landing this year.

3. The broker and Nomad Cannacord have IES making a profit on their batteries in 2023. This is interesting because it is based on 32MWh of sales which have already been secured and includes the 16.4MWh of delayed batteries. They could well be wrong but moving forward there is a margin on the manufacturing cost (Be it that it starts small this year at c. 11% rising to c. 38% in 2024). Of course, admin costs and R&D aren't included but as a basis for profit, it is certainly interesting when one considers the speed of the scale-up that should now come through. That said the Mistral product should be much cheaper for bigger projects and so the margin should be lower but that's not going to be a worry because the project size wins will do all the talking valuation wise and then any remaining funding will be a side issue.

Thanks for sharing GoodGrief. I wonder if an official update is going to be given on Gamesa. Seems strange to have a Gamesa representative at an institutional roadshow without updating the wider market.

Yes, and the private investment element would be the party that is deemed to be the developer or end user.

Morning all,

I think there's a little misunderstanding here. Invinity isn't in the habit of building and owning battery installations.

The LODES funding should therefore be to support a 40MWh battery project for a customer. That customer is effectively getting up to £11m in financial support for the project. So finding a willing entity that will put up the remaining funding shouldn't have been too difficult. That entity and location must have been submitted with the feasibility study and phase 2 application. Otherwise, what would the LODES committee be deciding upon when the criteria states matched funding? I would think (if they are wise) they have chosen a project that answers the worries of the UK government and is driving that whole supportive scheme.

So a project that "maximises the use of intermittent renewables, balance the system at lower cost and defer or avoid costly network upgrades." (See slide 8).

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1002842/All_Longer_Duration_Energy_Storage_Slides__1_.pdf

Time for me to go on my Christmas holidays now but just wanted to drop in and offer this before I go.

On 12th Sept 2019, the MOD announced Bab**** as the preferred bidder for the Type 31 frigates.

https://www.navalnews.com/event-news/dsei-2019/2019/09/bab****-team-31-selected-as-preferred-bidder-for-uk-type-31-frigate-programme/

By 15th Nov 2019 (so just two months later), the MOD had formally awarded the contract. As this article demonstrates the Prime Minister formally announced the preferred bidder in Sept 2019 but there is no mention of any further government announcement for the contract award. I have searched high and low and found four articles. None of them refers to any further government announcement. The article below merely quotes a MOD spokesperson. That was a £1.2BN so similar in many ways to the FSS contract.

https://www.forces.net/news/type-31-bab****-signs-ps12bn-frigate-contract

As a reference point, two months would place the FSS formal award at around mid-January. But of course, it could come at any time if it's merely concerned with the finalisation of a process between Team Resolute and DE&S only.

The important point here is that any expectation that the UK government is required to complete this deal is perhaps incorrect. The PR came with the preferred bidder announcement.

My view is this contract award is not yet properly priced in but the numbers will ultimately help do the talking.

Some food for thought if nothing else.

Have a lovely Christmas everyone.

No problem at all Stokey12 and I want to thank you for all you provide for this BB. I do read them when I can but don't often get involved these days.

Island Magee is a nice headache to have but yes right now it is difficult to value. I have a previous HARL guidance figure of £35m in my head which could well become the reality if/when the judicial review completes in HARL's favour.

Right now I allow basically nothing because I am valuing the business purely on its revenues/debt position.
Every £10m we can add at 210m shares in issue would in theory add c. 4.8p to the valuation.