Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Going on figures from the RNS’, revenues from the new business strands have been roughly:
- £9k/month in Dec 2020
- £35k/month in July 2021
- £62k/month in Nov 2021
- £92k/month in Jan 2022
- £115k/month in Feb 2022
I encourage you to plot that on a graph. If you want to see a growth rate that is as near as damn it exponential, this is it. Plot it against a log axis and it’s basically a straight line. The backbone of this growth, to my mind, has been South America/LiveGoals, but the esports add-on has the chance to give another leg up this year.
I know growth is always lumpy and there are variable factors driving it, but if you extrapolated at the same growth rate we’d have roughly:
- £168k/month in April 2022 (breakeven on current cost base)
- £1m/month revenues in Feb 2023
- I hesitate to step this far, but for an illustration of just how fast the revenue growth rate has been this year - if it didn’t slow down, MOS would hit £1Bn/year (£83m/month) in about Feb 2025.
Set against the revenue are of course the costs:
- Cost base in H2 2021 averaged c.£138k/month (from today’s results).
- Cost base 31 Dec - 16 Mar 2022 averaged c.£168k/month (estimated from cash positions given at 31 Dec and 16 March, and revenue figures so far this year).
- Most of this increase can be explained by the BoD switching to take payment in cash not shares from this year. The numbers certainly don’t show costs growing at anywhere near the same rate as revenue, if at all.
- Company has 40 months’ cash runway at current run rate. Or rather, 35 months after the Krunch purchase.
How can some people keep spouting such rubbish when the indisputable numbers show such a fine trajectory?
Maintaining SP is pretty darn good for a micro cap in a bear market.
But the business performance and SP are different things. You’ve got to separate them in your head and not attempt to simplistically correlate one to the other.
It’s good house-keeping to have all the key parts of the business & important IP underpinning Streams in-house, rather than having separate chunks of the business with slightly different sets of stakeholders. This is setting up the business for future success.
Re: “What’s to stop ME selling his pencil case to MOS for £1m next week?”
Simple answer - review by the independent directors on the board (i.e. all those that don’t have a share of his pencil case). Most of them hold shares and wouldn’t support that.
As I said, the cash gives the BoD options. And in comes the Krunch purchase! Using part shares for the acquisition:
- a/ Retains the bulk of the cash position, keeping their options open for other growth plans.
- b/ Since the 51% of Krunch that MOS are buying is owned entirely by MOS Directors and PDMRs, Mark, Tom and Annabel, it shows the shareholders their confidence in MOS’ prospects to take mostly shares. A 100% cash offer could have been interpreted negatively, as they would have been paying themselves more money directly from MOS’ balance sheet.
One thing I didn’t mention below is the BoD last year taking all their pay in shares, then most of them switching to cash payment from Jan 2022. That could explain the bulk of the (modest) uptick in monthly costs this year vs the look-back, and in real terms is not an increase in cost for shareholders as it means less dilution.
£1.4m cash as at 31 Dec 2021
£1.25m at 16 March 2022, with £1.55m from the placing (less costs, less £250k investment in GFIN) to be added.
MCap £9.85m today @ 0.3p.
After placing shares are added, @0.3p it would be an MCap £11.4m, w/ c.£2.4m cash, giving an EV of c.£9m.
Coming back to cash position. Net cash burn in the last 2.5 months has been £150k total, I.e. £60k/month. If all else stayed static, with £2.4m cash that would give 40 months’ cash runway.
Current total cost base:
Given revenues (as stated by MOS) of $120k for Jan, $150k for Feb, and assuming c.$80k for 1/2 March, that’s c.$350k total, I.e. £270k.
Since net cash loss in the last 2.5 months was £150k it means, roughly and simplistically, gross costs across the business of (270+150=) £420k, I.e. £168k/month. So with constant costs, $218k/month would break even.
Comparing with the look-back, during the 6 months to 31 December, total costs across the business were £828k, I.e. on average £138k/month.
Additional costs for project setups or investments/purchases like LiveGoals and GFIN will continue to be lumpy - and the big cash reserve gives te BoD great options for growth. But as shown here, revenues are clearly growing much faster than costs, and break-even doesnt look to be far off.
City, as a PI, how would I go about taking broker options? Does it not require being on their list of HNW individuals with a significant chunk of cash to invest, to make it worth their while calling you, or is there some other mechanism?
Good posts. I think very fair and balanced.
Having reflected further myself, I would say that even for profitable growth companies in the tech sector, cash raises are common to fund expansion. Whether or not it’s the truth (and I’m still willing to extend the benefit of the doubt), this is dressed up as a cash raise to fund expansion, rather than to keep the lights on. Those always come out of the blue in response to an opportunity, and the BoD cannot give the market a sniff of it in advance, for obvious reasons.
I also noted the significant additional discount vs daily close here (0.3p, c.25%) compared to that at GFIN (1.25p, c.2.5%), but if you consider that they were trading at over 3p just two weeks ago, then it actually is more of a kick in the teeth for them. MOS’s raise is at a fairly decent point in the trading range over the last couple of years. But I do wonder if the warrants were really necessary. Seems a very sweet raise to take part in, for a big discount and the benefit of warrants. Shame retail doesn’t get a look in on that.
As far as I understand they are in addition to the old warrants, and provided to participants in the most recent placing - so not a direct replacement. When the 0.5p warrants expire it will just be the 0.6p ones left. As you say, there’s little chance the share price will go above 0.5p in the next couple weeks (although never say never - see what the GFIN tie-up holds) so those warrants will probably not be exercised before they expire. Then just see what happens in the next 18 months. If the company keeps growing at the current rate, it won’t take too large a surge in volume above 0.6p to churn through those warrants.
ME is thinking about the long term vision for the business so probably less worried about what the SP does in the short term. He holds a lot of shares though, so his interests are largely aligned with ours.
Without the shumper combo as a point of reference, I barely recognise Alastair himself to be honest.
I will eat my words about not needing to scrape around for cash, apologies. At least they didn’t stand uncorrected while the market was open. Would be nice to hear more details about what the money would be used for.
The main thing keeping me here is the agile deal making, many partnerships, and revenue growth. These things as far as I can see, still stand.
Very interesting indeed. Good spot! Suggests that MOS are not scraping around for cash if they can afford to do this. They know the esports space well, so seems a nice vote of confidence for GFIN as well.
I’m greatly enthused that there aren’t more comments. I hope the market has had its blood and we can steadily move back closer to what I would consider fair value. One of the most important lessons I’ve learned throughout this last couple years of being over-exposed to Avacta is to be very wary of stocks that everyone is talking about, even if your research backs up the hype.
So as far as I’m concerned, a good move up with a relative lack of excited “to the moon” commentary is great. Let’s hope it steadily continues over the coming weeks and months.
You can contact your broker and ask directly if they lend your shares out for shorting. I am with II and asked a year or two ago; their response was a clear no, but that they might consider offering that as a service to customers with a large holding in future. I don’t think the terms have changed since.
Nice one gmcc, thanks for sharing
Cheers City. I reckon as long as they are able to keep delivering across the business, and keep communicating the story clearly, in time the market will catch up. Maybe sooner rather than later, but personally I’m in no rush. Would be nice to get another more detailed update though.
This share’s price has held up better than most of the rest of the market, tbf. And I feel more sanguine about holding this and riding out the broader market downturn and political turmoil than one or two of my other holdings atm!
Given the digital nature of the business, there seems very little reliance on supply chains or logistics or other such that can be disrupted by the current political turmoil. And it’s growing so fast that I doubt any short term consumer confidence impact would show up as more than a slight blip in monthly revenue growth rates. Who knows, maybe it turns more people to staying in and spending money online?
Increasing energy prices could increase the cost of using all the servers required - potentially the main exposure to inflation, but how much of the overall MOS cost base is that, really? (I actually don’t know, suspect less than staff costs though.) And how quickly would that cost be passed on to by data centres to their clients (eg MOS)? The well-run ones would probably have hedged their energy costs which would delay or cushion any passing on of such costs.
Social media has been pretty quiet on MOS lately, price is gently drifting with news due… Not advice, but if I weren’t a tad overweight on this already I’d be thinking about an entry or top up now!
Thanks - nice diagrams. Interested to see the PhD you speak of which discusses gold-conjugating the Affimers, if you have a link?
Pressure definitely seems to be building up below 0.5, in what traders like to call an “ascending triangle” pattern. Good chance of an upwards breakout at some point in the next few days to weeks, purely based on the chart.
Any one of multiple potential news events could be the catalyst for that.
Great post EGTP, glad to hear you are still around and were able to top up. Also really sorry to hear of your losses; some powerful reasons to back potential solutions.
“ I don’t understand the exact science / facts figures so happy to be corrected”
With apologies and noting it wasn’t the main point of your post - just one thing, which is that PreCision/AVA6000 is completely separate from the Affimer platform. Apparently the targeting does not involve Affimers. The first Affimer-based therapy to reach the clinic is likely to be the PD-L1 inhibitor licensed with XT half-life extension serum to LG Chem. That is the one that I understand functionally does roughly the same thing as Keytruda (a multi-billion dollar drug) but using Affimers instead of antibodies.
SS: "Anyway drip feeding hasn't been the most sensible option so far...”
When making decisions in the face of uncertainty, you can’t judge the decision directly based on the outcome, because it was only one of the possibilities at the time the decision was made. Unless you believe in predeterminism, in which case maybe try your astrologer for investment advice.