Member Info for Ctw2014

Roll on 3rd October. Expecting a decent update on post period events and for Walbrook to drum up some good PR.

Good to see Hum take more Cora shares

Lots of stuff on GDR’s Twitter feed about this project.

Today is a classic example of something that has been going on a while in my view. The market makers are clearly holding the price down artificially to let the big boys mop up vast chunks of shares at knockdown prices. Buys massively exceed sells today and we are down! Not the first time by a long shot. Can you imagine, if any of us were lucky enough to have a couple of hundred grand to spend on HUM shares and tried to do so in one day (or even several) what price(s) we would have to pay. Think we could buy that much for 23p? Fat chance! Shows how crooked AIM is. Not remotely a level playing field.

What I don’t understand is why anyone would be surprised or upset by the conversion confirmed this morning. The convertible loan note has been there since 2016 and this was the most likely of the options, imo, of those set out in the farm out RNS. The resulting number of shares in issue is not that bad considering what we have and how we now sit with the farm out etc. If you want to see what real dilution is like, take a peek at Prem or Vast to name but two.

Sorry, we were at cross purposes. I thought you were talking about the restructuring due on completion of the farm out. I agree a decision on the loan notes is imminent, as previously discussed.

BUTD if you look at the August presentation completion of the farm out/refinancing is not expected until September. No shocks, just various hoops to jump through as per the RNS.

Not this time. . .I was discounting the warrants with a strike price of over 32p, for obvious reasons, but I think we are all clear where we are now.

Yes, thanks. That should have read less than 5%. Maybe not tiny, but a lot less than 12%.

Yes, thanks Billsboro. The most reliable source (subject to subsequent changes) is the Annual Report for the year ended 31/12/18, note 16 of which clearly states that there were 33,777,310 warrants outstanding as at 31:12.18. However, as you point out, 20m of those have a strike price of over 32o and are, therefore , not of immediate concern, which leaves the 13m odd referred to in my previous post. In the context of 337m shares in issue, as at April 2019, that is less than 0.5% which I would say is tiny, and certainly nothing like 12%. It would still be nothing like 12% if you included the 30m warrants which are not ‘in the money’.

Well, if they do convert at 8p and place with a third party at 20p I would be perfectly relaxed as the recipient would be in the same position as any other shareholder with an average of 20p and unlikely to sell until the sp is significantly higher. Dilution per se doesn’t concern me; it’s the SP and market cap which counts. Where do you get 12% of shares in issue as warrants? Please identify the source of that figure as I could only find just over 13million shares worth, which is a tiny percentage.

Can I make just one simple observation: since April 2017, irrespective of ups and downs, the SP was on a downward trend until the end of December 2018. Since end of December 2018, irrespective of ups and downs, it has been on an upward trend. Hopefully at least that is uncontroversial! That’s all folks.

On the other hand, the Administrators are accepting repayment of loans of £16.6m which would certainly give them scope to convert the £10m loan at 8p, which would give them 125m shares. However, if they do, applying the above logic, I would expect them to hold for future growth, not sell at this stage.
Of course, it might be argued that accepting long term unsecured convertible debt for all or part of the £20m convertible loans would be seen as too risky for administrators. It may well be more risky than converting at 8p, so there may be a good argument for converting that one, but I would argue that converting at 19p would be seen as more risky than even unsecured long term convertible debt. In summary, I am not too concerned, personally. The most persuasive point, in my eyes, is that, as a shareholder, LOG’s interests are already aligned with IOG’s. Neither company will want to do anything to suppress or depress the share price, certainly not, imo, until much more value has been extracted from the project. As I say, all imo and DYOR.

If you go back to the 2018 results you will see that there are two £10m convertible loans at strike prices of 8p and 19p respectively. The placing RNS of 1st April sets out details of the warrants, as per the then agreed restructuring, vis: 5.8m shares (not £s) at a strike price of 11.9p and 7.5m shares at a strike price of 8p, all maturing in December 2020. That same RNS sets out the terms of a ‘relationship agreement’ with LOG, which gives some useful clues as to the administrators’ likely attitude to the choices they will need to make by 9th August under the latest restructuring announced in the farm out RNS. Then there is the failure, by the administrators, to accept Rock Rose’s offer to acquire all the LOG debt for £40m (face value plus interest) to take into account, as well as IOGs response to that offer (all in RNSs).
Applying a bit of logic to the choices facing the administrators, what can be surmised? In my opinion, it is pretty clear that they will not convert the £10m at 19p, given the current level of the SP. Too much risk. What about the £10m at 8p? Arguably less risk but not risk free and why would they convert now, when they haven’t hitherto? Nothing has changed accept the deadline, which doesn’t mean much, given that they have the option of converting to long term debt, convertible in the same terms (except it would be unsecured). Even if they did convert, it would not be in their interests to try to dump them into the market and, in any event, they are subject to orderly market restrictions. The relationship agreement makes it clear that the administrators see value in working with IOG in the interests of all shareholders (including LOG and by extension the bond holders) and it is not in shareholders interests to do anything which would stifle share price performance. They are clearly, imo, taking a longer term view, not a short term one, and will want to see maximum value extracted from the LOG assets, which means extracting maximum value from IOG shares, loan instruments and warrants.
What about cash repayment. The ‘rejection’ of the Rock Rose offer suggests to me at least that they are unlikely to adopt this course, and the IOG response to the £40m offer gives an explanation why: it does not ascribe value to the conversion rights. There is more value to be gained in conversion but the question is when? The warrants give another clue. They are also ‘in the money’ but have not been exercised, indeed the maturity dates have been extended. Why? Again, in my view, because the administrators see value in waiting and allowing IOG to deliver more value. The £40m initial cash provided under the farm out provides the ability for IOG to repay loans if LOG go down that route, but given the above, it is more likely imo that they will accept long term convertible debt on at least part, and leave the warrants to run for the time being. Even if exercised, the warrants are not on a large enough scale to cause major problems. All imo DYOR

Cryptologic (the company) will be a cannabis company (and probably change its name again). The bitcoin mining business will be sold off, possibly with the Cryptologic name. That’s how I read it.

200,000 tonnes of ore on the ROM is good insurance against any difficulty during the rainy season. Smart move.

Well, we now have the latest Hardman research, which always strikes me, and is stated to be, conservative, to put it mildly. We also now know that the £9237 buy on the 17th was the non exec Chairman adding, which though modest, is encouraging. Also encouraging was the little flurry of buys at 18.85p. I did notice from the Hardman report that the clinical trial sample requirements for the HCV test have been amended to better reflect the real world situation on patient viral loads, so that should speed up completion of the trial, or at least avoid further delay on that. On HCV, it was clear from the interview that the ‘good’ countries, with HCV programmes and funding were still to come through with registration so, once those are in, and WHO qualification is in the bag, things should pick up. I have said it before, but I think it is the biohazard product which will provide a boost to short term revenues, beyond Hardman’s estimates, as (a) they are confident of more orders from the US DoD this year and still have an existing order to fulfil and (b) Budd clearly indicated that other military customers were emerging for the product. I wouldn’t be surprised to see an announcement of a new customer, which would be great. The anti biotic hearing loss clinical trial starts in the Autumn and it is clear that the NHS are taking it seriously with some 300 nurses being trained to use the kit. The clinical trial is not of long duration so I think orders from the NHS will follow pretty soon after a successful conclusion of the trial and then it will be rolled out to the rest of Europe, the US and the likes of Japan. Although we are obviously carrying significant debt, with £5.2m in the bank and potential short/medium term sources of revenue flagged up (biohazard, HCV post further country registrations, and anti biotic hearing loss tests post clinical trial, not to mention unspent and possible new grant money, further tax credits etc) I am not worrying about cash just yet!

Ok, so there is a new David Budd interview on YouTube (just google it) which is very reassuring and encouraging imo. Whilst displaying his usual understated approach, it is clear that he is very optimistic looking ahead, and that there is lots to be optimistic about. Key takeaways for me are:
1) the delays in country registrations are, as I suspected, simply bureaucratic ones in the countries themselves, and some of the outstanding ones are ‘good’ countries with funding for HCV; and
2) there are now potential additional customers for the suit of biohazard products developed for and now being sold to the US DoD. This one will rocket at some point in the not too distant future imo. Just need to buy or hold and not be panicked by the drops on tiny volumes which in reality gives an idea of how fast this will move up when the penny drops and people start buying. You don’t see the institutional holders selling. They know what the future holds here. All in my opinion only and please DYOR. GLA.

Happy days - this should blow the doors off.

Same old pattern of smaller sells being mopped up by thumping great buys, tells you all you need to know.