Member Info for Boffin

Just in case anyone thinks I'm knocking AFC this is a bit of a "Devils advocate" piece. I've been invested substantially for years and want to see them succeed.

I realise in the longer term that Alkamem may provide many answers such as delivering circa 2.5 Mw in a 40 ft container. And yes short term there are rapidly increasing environmental pressures against diesel but even then cost and capacity cannot be ignored.

However I keep asking myself why then haven't rather more big construction companies at least put in an order for one to test out the concept? What may the issues be? So here are a few thoughts. First is just the raw power output of the current generation ( no pun intended!... well maybe a little bit!) of circa 150Kw in a 40' container just isn't sufficient for a central supply to a major construction project . Second maybe cost. You can buy a good quality 500Kw diesel generator (ie over 3x the AFC offering) for under £40k that would easily fit in a 10' container. I doubt AFC's are in that price range. Thatalso brings me to physical size and mobility. Many construction projects need distributed and mobile power . I live near the western branch of Crossrail. I counted 27 of those 2 wheel gensets you often see towed behind builders vans on a trip into Paddington and I probably missed some. Not something that AFC's current offering satisfies OK there are probably some centralised power needs too on something that scale but as I said for that use 150Kw may be well short of the power needed. Plus being able to regularly and easily move the power to where its needed most and minimising the risks and cost of long cable runs must be of significance to many projects.

The question I am thus asking myself is if the current offering is rather "falling between two stools" . Not big enough output for large projects central power and not easily moveable for distributed power needs? It does though suggest that in planning for Alkamem fuel cells that AFC should be working on at least two products. The 2.5 Mw system for centralised power for large projects and major EV charging stations. Then they should be looking at say a 200Kw system on wheels for distributed power needs for both large and more modest projects.

Views?

Correct Southernhay. There have been a few times when I wish I had taken my own advice as well as a few times getting out a bit too late! But fortunately I've had a few very decent wins too so I really am not complaining. We are mostly big boys who know the risks and don't play with what we can't afford.

Thats the best laugh I've had this week! It prompted me to check and whilst I don't have exact numbers in 2011 the market cap of AFC was for short periods just over £80m at an SP of 55-60p. Today the market cap is circa £265m at an SP of just under 40p.

The moto for me in all AIM shares is don't get in too soon. Even if successful there is a high chance of being diluted down as start ups often need recapitalising.

And don't forget that when the SP reached its peaks around 60p some 9 years ago there were only about 140m shares in issue. It always pays to plot the market cap along side the share price to better understand what is actually happening.

Assuming 250 Stock Exchange trading days in a year that would give us about 12 x the current SP. All we want for Xmas 2021!

Rubic, not my area of expertise either but its rather different to the UK. In most circumstances the loss remains attached to the business that made the loss and thus the profits have to be made there too. It's called the continuity of ownership test.There was quite a bit of talk under ECR's earlier management of arranging some kind of reverse takeover but apparently the Aus revenue service take quite a bit of convincing that this isn't pure tax evasion.

If you want to read up some detail you could do worse than start here

https://www.ato.gov.au/General/Losses/How-to-claim-a-tax-loss/

I think you have misstated the Tax benefit. Firstly it's Aus$ not £. Secondly the benefit is not having to pay corporation tax of circa 20% on the first Aus$66 M ( £36.5M)of profit . Thus the actual potential benefit to the bottom line is about £7.6 M at the current rate of exchange. It isn't a benefit of Aus$ 66 M and of course we first have to make the profit.

Quite an extensive article on the BBC business website this morning

https://www.bbc.co.uk/news/business-54511743

Interesting article in the latest New Scientist describing some lab based work showing a catalyst added to shredded plastics can enable microwaves to directly convert plastics to hydrogen and carbon. Perhaps most interesting findings (to me anyway) is the low temperatures needed and that the carbon "char" is mostly carbon nanotubes which could be a high value by product.

The article also includes a link to the Peel energy website pointing out that this is the most commercially advanced project to generate hydrogen from plastics

https://www.newscientist.com/article/2256822-microwaving-plastic-waste-can-generate-clean-hydrogen/

The rules around the tax credit are somewhat complex and as you can imagine the Aus Revenue service are very hot on finding reasons for it to be disallowed. The rather tricky one is around continuity of beneficial ownership. A straight takeover may well cause a problem. If you want some detail have a look at the following link.

https://www.ato.gov.au/Forms/Losses-schedule-instructions-2020/?page=5

What I sense from the way this is often talked about in comments here is that many seem to think this is Au s$66M that at some point will drop as a benefit to the bottom line. It isn't. What it means is that the first Aus$66M profit ECR ( well strictly the wholly owned subsidiary Mercator Gold) make will be free from Aus corporation tax at about 20%. So the net benefit to the bottom line is circa Aus $ 13.2M ie £6.6 M. Its still nice to have of course but first we need to make AuS$66 profit!

Well I remain overall positive and invested here but the last year hasn't really impressed me much. We didn't drill a single hole in spite of making much noise about being funded to do so, at least for Baillieston. For me data speaks louder than words.

Not that I object to exploring funding and risk sharing exploration initiatives with others. On the contrary quite the opposite but talking doesn't preclude getting on with drilling/ bulk sampling and with better data we can get a better deal.

And as I've commented several times before Craigs optimistic "sound bites" are often followed by a much longer pause until something substantive arrives than might be anticipated by many here.

Just over a week ago there was a final comment on the Bailieston video

"ECR have confirmed they are well financed to undertake future exploration drillings on the site"

So ten days later we need more cash? Just to help negotiations?

Its not cash in the bank we need for discussions. Whats needed are holes in the ground to better prove up the quality of the resource. Thats the most effective position to be negotiating from.

Interesting final comment on the Bailieston video

"ECR have confirmed they are well financed to undertake future exploration drillings on the site"

To which I say " Well why don't you get on and do some drilling, make use of the pilot/laboratory concentration facility that ECR put together last year, get some more data and go into commercial discussions from a position of increased strength?"

I know that earlier in the year there was a broad indication of late 2020/spring 2021 as a completion target for the first machine.

Having just read the annual report cover to cover I was encouraged by all the general positive forward looking indications but rather disappointed to find no clear timelines for the commissioning and start up at Protos. Does anyone have any more specific info on just how the engineering and construction are progressing and what the likely timescales are?

This is quite important as it is clearly stated in the Annual Rep0rt that a number of prospective customers (most notably Japan) have indicated they want to see the first machine up and running before they will commit.

Just a point re the tax benefit which others may not get. Its not having to pay corporation tax at around 20% on roughly the first 60M Aus$ ( £32M) profit. That is 12 M Aus$ or £6.2M difference it makes to the cash bottom line. There are complex rules around qualifying for this that we have to be careful of in any deal that is set up. I'm sure the current BOD will be well aware of this but just alerting people here that its not just "£32M cash in the bank". First we need the profit!

Brasso3. Quite right! without a JORC standard resource survey estimates of what may be in the ground are highly speculative. And we should remember that even with a JORC compliant probable resource survey minerals in the ground are most usually valued at between 0.5-2.0% of the value of the Mined,Refined & Sitting in the warehouse value.

Just as an example lets use a 1% figure that would mean that gold ingots in the bank worth US$1700 per oz are worth US$17 in the ground. Then lets just take Craigs 5 million oz speculation at Cresswick. Then, with a good JORC survey it could be worth circa $75 million in the ground. Trouble is we don't have such a validation and it will cost many millions to get one for the whole Cresswick license area and will take a couple of years to do. So whats Cresswick worth now based on the small amount of real data we have? Well for anyone reading this your guess is as good as mine! But I would be surprised if any mining major put it at more than around 10% of Craigs resource guestimate ie $7.5M. Of course I will be wrong but that's the order of magnitude we should perhaps expect.

So what to do in order to maximise the value to us shareholders? Well personally ( and yes of course its only my view from 12,000 miles away) but I would try and get a decent amount of cash from a Balleston "buy in" and spend much of it getting a JORC compliant resource on at least a part of the Cresswick license area. Then we can negotiate from strength.

Sorry but I forgot to point out that this equipment was scaled to process "whole bag" samples of circa 30kgs each ( the amount of rock from 10 meters of drilling). They declared a total of 119 whole bags were tested in an RNS last Novemeber. That is just shy of 4 tonnes of material - rather more than "a few Kgs".

Where was production process mentioned by me-or anyone else? I said pilot/laboratory which is most definitely not production. And to quote the RNS of 21June 2019 in which they announced it "ECR has rented a large aircraft hangar and house at Nagambie for the sample storage and supervised preparation and drying of bulk samples. Further the Company has purchased large laboratory equipment for this; "
Not production but certainly not trivial

Try reading this. It sounds like Pilot?laboratory facility to me
https://www.proactiveinvestors.co.uk/companies/news/222583/ecr-minerals-gets--aggressive--with-plans-to-advance-creswick-gold-project-222583.html

"why would you plan to drill 20 holes now, when you could get a JV shortly and plan to drill 200"

Basically the more we prove it up the sites the better the deal we can negotiate. Plus at the moment we have a substantial pilot plant/ laboratory set up that as far as I can tell is just sitting idle. Not a productive use of an expensive asset.

And anyway my point was really that they have ducked an opportunity to clarify the mid term strategy, what the unspecified "work" to deliver those as yet unspecified objectives consists of ( ie is it just negotiating or is something of a more practical nature happening) and likely timescales. Ireally see no possible harm or breach of NDA's that would occur if rather more broad intention and clarity of ongoing activity using our money was communicated.
I think it was January in an interview that Craig strongly intimated "significant news in the coming months ". Well his and my understanding of "significant" and "coming months" are obviously at variance