Member Info for Blubay

“ The clear negotiated sell at .32 will reset the SP and VWAP for the next week or two to allow for part 4 of this magical merry go round (if the recent conversion history and trade profile is anything to go by)...”

It doesn’t reset the VWAP because today’s VWAP is the same as the day it replaces in the ten day window. The available conversion price remains at 0.23p and sales today at 0.28p retain a 20% notional profit.

The maths remains fairly plain until something changes, still penning a 30% profit margin on today's sales

Lowest daily VWAP 0.27 (today)

Average of 10 daily VWAPs 0.306

92.5% of Average 0.283

Higher of (Lowest, 92.5% Avg) 0.283

Conversion Price (80%) 0.227p

Richie - "Don't they have another 6m odd to covert yet to get their full 11m cash as far as I understand that is .."

£5.625m debt remaining to convert, probably in tranches between £1-2m each, depending on liquidity, so 3-4 tranches likely

Just quoting averages, it's not an exact science, all depends on market liquidity. Most CLN investors work on short-term liquidity recycling. Most AIM CLN facilities are mostly converted within 3-6 months, with each tranche being monetised in days rather than weeks, although they slow down if there's illiquidity to avoid crushing the market. The HE1 conversions have been typically aggressive so far although maybe a bit under strain this last tranche.

I have no idea, too much uncertainty for me until the bulk of the CLNs are converted or there is a concrete roadmap to near term revenue.

Is that where you're in?

The funders don't have a holding, they sell the shares to monetise their credit, which is why the price falls as more shares are distributed in the market. It's true that the lower the price falls the more likely it is that new holders start to appear but I'm not sure how far that happens while less than half the debt has been converted. You'd have to expect 3-4 further tranches of debt conversion at £1-2m per tranche. Maybe there's an accumulation tipping point somewhere but it's hard to guess when/where.

Punter, yes the dilution might have been around 30% in a quick scenario if they'd done a cashbox but there's simply no way to predict the CLN spiral as there is has no floor protection or lock in to this agreement and it depends solely on demand liquidity in the market, which is why I felt it was too unpredictable and risky to hold any shares through it, and why I'm more interested in 'when' the overhang will be cleared than 'what' the price might be.

"No one expect this SP drop from 0.93p on the 18th to 0.27p"

Really? Surely anyone with a cursory knowledge of CLN debt structures for pre-revenue AIM companies would have expected a pattern like this? Which makes it doubly questionable why some people with that knowledge continued to tell everyone here to buy and hold through the process.

Would you like to expand on your valuation? At the moment, on paper they appear to have £5.375m free cash for project investment (with £5.625 debt remaining). They have indicated a full allocation of that cash and debt between two projects, plus working capital. One of those projects is projected to achieve first revenue in the next few months, and hopefully is fully funded now to become self-sufficient and realise an annual income of perhaps £2m per year in the medium term, hopefully more as the phase two development progresses. The other project is entering the appraisal stage, hopefully leading to a future decision on investment (potentially an investment of c.£70m for a return over say ten years). The independent CPR suggests a contingent recoverable gas value perhaps in the region of £100m over that period. They have additional assets and liabilities in the drill rig and in the licence areas. Lots of unknowns and plenty of scope to speculate. What sort of valuation did you have in mind?

Sure, it's very likely it will hit a low and will then climb or at least stabilise (depending whether the CLN holders/broker still have sufficient overhang to sell into news). I don't know when that will be so I'm still more interested in when the CLN will be cleared and the brakes come off.

Expo "there are still alot of unanswered questions."

1. Why haven't the Directors been named on the ML yet?

Songwe Helium Ltd was registered as a company in Tanzania in June as a matter of public record. The company directors have to be listed on the filing documents (but not published like Companies House do in the UK). You could make a confidential request for that information for a fee if you want to, although it might not be granted.

2. Who are the three institutional investors by name?

3. Lorna stated in a previous interview, that the 3 II's would be named in good time and all would make sense? Why hasn't this been disclosed yet?

The deal is brokered by Marex and they would have a non disclosure agreement. They will be debt funds interested in monetising capital events. As the CEO said, it's up to them if they want to disclose their identity. I think it's unlikely. It's normal only to identify the broker in these arrangements. There are a handful of London-based funds that regularly participate in these structures. There are occasionally, high worth family/individual entities prepared to take high risk for a potential rerate opportunity. Then there are some proprietary trading outfits (potentially offshore) who specialise in convertible arbitrage with or without a shorting leg (relying on discounted entry and fast selling to monetise returns). Splitting between three entities reduces risk and makes the debt easier to place. The fact that it’s a Marex-arranged CLN, and not a conventional placing, points strongly toward small specialist funds or trading houses comfortable with high-risk AIM, not large institutions or mainstream fund managers.

4. Why has the FS still not been released to the public yet, what information is being held back and for what reasons.

It was never intended to be published in full, that was made clear. They said that numbers from the FS would come out in the CPR, which they have done. The CP clearly had access to a full array of modelling and development plans along with the test data, which they summarise clearly. What is not there is the cost return assumptions of course. It would be good to see those.

But the three debt funds converting their CLNs are not holding shares. They are monetising the debt by selling shares into the market, distributed through the broker Marex, increasing supply, which is why the price is falling progressively. If they were holding onto the shares then the market would not be flooded and the price would not be falling.

"My opinion is it will be in 10 days and probably for 0.25p"

What makes you think it will convert at 0.25p Punter? You'd need the average daily VWAP to rise above 0.35p for at least five days to get to ensure that, or ten days above 0.31p. Possible I suppose, if there's demand, not sure how likely it is. If today's VWAP holds around this morning's level then conversion price will be running around 0.226p, which maintains the approximate 30% profit margin on any shares they're selling today for 0.29p (on c 440m shares per £1m debt conversion).

It's all about the liquidity. There should be a decent historical liquidity pool around 0.25p where the 2024 raise took place, and the balance between mcap and cash position becomes more attractive as more debt is converted. Some way to go yet but the more liquidity they can find the quicker this gets done. The next conversion will be more than half way at least.

I'm not sure what numbers you're looking at but if the daily VWAP stays as it is now (anywhere below 0.29) then the conversion price will drop rather than rise because the formula selection will switch over again (from lowest day to ten day average).

Do you honestly invest on the basis of imaginaries? You have the EWT results. You have the CPR. You know the extent and potential value of the contingent and unproven reserves. You know the company needs the ESP appraisal results to improve on that before entering discussions of project finance. No one outside this discussion forum has suggested anything to the contrary. There is certainly chance of an investable upside but there’s no point misleading people by just making stuff up.

Nico, I just meant that you’re relying on lines of argument that are not substantiated by evidence, so either that’s purposeful or it’s misguided. Where is the evidence of ‘billions’ of dollars of recoverable helium? Where is the evidence of any major partners?

How likely is it to be a low point when they are less than half way through the debt conversion process?

They will have made the application on Friday