Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Fair point Happy.
Some saw DVRG as a unicorn for a number of reasons (STC, PD, BT etc).
They had visions of 100 bags and a billion market cap. If you believed that last month, what has happened with the financing and the SP does not change this.
DVRG may well still be a unicorn, but due to the recent dilution those 100 bags would now be 30 or so. Still a tidy return for any investor.
If the company becomes cash generative and profitable as the BOD expect then this should be one of the last raises. And who knows, maybe a share buyback could come down the line in a few years if DVRG all of a sudden took off.
I am not a happy LTH, and recent events hurt for sure, but i wont be selling at these levels and i still believe the company has a lot of potential. Unless we get any major contracts, it will take a long time for me to make my money back. I still may. The game is not over, as the recent financing ensures
Is this not a lie?
"This £25 million mezzanine loan ensures availability of funds for growth, avoids stock market fluctuations, eliminates the need for a discounted equity dilution of shareholders and the Glanaco acquisition underwrites our ability to take control of our supply chains and manage scale to meet the growing global demand being experienced by the company."
And then 6 months later they raise £10m at a massive discount to a hugely depressed share price
The mezzanine loan had terrible terms, but it meant that the dilution would only be limited to the funds borrowed. If they continued to use the mezzanine loan, albeit on terrible terms, there would have been no raise to leak and i am adamant that the SP would be a lot closer to 10p when riverfort converted the balance. The likes of TW would never have gotten down wind of a £4m conversion. But the £10m raise? Kept as quiet as a fart into a microphone
For the company to persist with the raise at 2p per share is terminal for the value of any shareholder who purchased over 10p, and probably lower
The new shareholders and warrant holders will flip their newly acquired shares. It will take months, if not years, for the flipping to stop (which will depress the SP) and the BOD will probably go for another raise before the SP ever gets back above 3p
Depends on the dilution of the SP following the raise (or conversion of loan).
If the shares in issue double, or even triple, then the a MCAP of £20m won't result in a 4 bag in SP.
We need clarity. Dilution at these levels will be catastrophic for existing LTH
Apologies, i wrote that on the train this morning.
In short, micro cap companies often need to raise funds and they do so at the expense of dilution to existing shareholders, and thus the SP drops despite the mcap remaining stable, or even rising.
Companies like MODE floated with a 50p share price and £50m mcap. The SP is now 4p two years later. Granted the mcap is down too, but it has been awful for investors
I hope UKSPAC defies the trend, but my gut feel is that whatever the business does from an operational growth perspective, the SP wont necessarily follow that trend. If they need to raise funds in the future and can attract an institutional investor who will stick around, then happy days. The risk is that if they did raise by these means that the investor would be the type to immediately dump the shares, denting the SP
Ambitions are cheap, what isn't cheap is finding the funds to facilitate such ambitions. I hope they raise all they would need from day one. Any subsequent raises as the months go on will dilute shareholders considerably, more so than we already are being.
My experience with small caps is that they almost always need to raise and when they do they always do so via "investors" who have no intention of holding. Instead, these new investors dump their newly acquired shares (always acquired at a discount) into the market, and thus damaging the SP. Very few companies ever achieve an SP in excess of a raise SP point as micro PI's can never stem the slide of the SP with their "few grand here and there" buys, vs the deluge of dumping by a retail investor
There are, of course, exceptions. But AIM in particular is littered with micro cap companies that offer no return to shareholders. I am not confident this will be any different
The dream of micro cap shares are the 20x+ gains (ARB over a period of two months in 2020/21), but most end up like Iconic Labs (look them up).
I personally always felt that t-rat tirelessly provided useful information, always supported by links and sources. He was and will continue to be a very helpful contributor, in my opinion.
Trills has already acknowledge he got it wrong. He doesnt have to say this on repeat. He bought into the (still ongoing, i must add) story and was an enthusiastic supporter.
As for Chesh? Not sure where he has disappeared to, but i personally saw him as an enthusiastic holder. I never recall him telling people to buy or making things up to sway opinion. I may be wrong in that view, but he is innocent in my eyes.
One thing is certain. Modern water, STC, labskin, rhino cloud et al are worth more than £6m, the present mcap. Heck, the H1 revenue was more than the current mcap and the forecast annual is three times the mcap.
So, the drop is well overdone. As clear as day.
The rumoured/leaked placing price, the silence of the BOD, the rumoured MBO etc have all combined to destroy the SP.
However, you would need to be ballsy to invest now as we all know a placing is coming. A placing COULD be at 20p a share (haha) but it will most likely be at a heavy discount so that the financier can dump their newly acquired shares. So, likely a placing price of 2p or so. And if £10m is needed, again, as rumoured, then the dilution here will be immense. We wont see a double digit SP for a long long time, and yet this time last month it was just that. Some here will have averages in the 30's, some even higher. I really doubt they will ever see a return
In the minds of many (if not every) LTH, DVRG has turned into a nightmare and GB is enemy no.1 (whether he deserves to be or not).
Where do we go from here? At some point he will have to surface. The show must go on. The tweets will start again. The proactive meetings will start again. The AGM and so forth.
At some point this needs to be addressed and i dont think anyone will forget what has happened today. Sentiment is negative. LTH (owners of the company) are angry.
The next steps the company takes will be scrutinised heavily. People knew of the impending news and thus the heavy selling over the past few weeks. Insider trading is illegal.
Something isnt right here. The FCA need informing, including in relation to the rumoured MBO.
If anything underhand has taken place (and i suspect it has) there needs to be action. It's one thing to lose my own money, but to see someone else illegally/immorally/unethically gain from that makes it all the harder. The FCA need to be informed so that they can move the magnifying glass over the company and all involved.
If this is all one big misunderstanding, and LTH are over reacting to the SP drop, then the company need to come forward and say something. Their silence is painting a dark picture
The second rumour floating around yesterday was to use the placing to clean up the balance sheet ahead of an MBO.
Just a rumour, of course, but so too was the placing. That rumour came true.
GB/DVRG have done nothing to rest shareholders. I have never seen GB so silent
My prediction is GB stepping away from his role as CEO, going off grid for a year or so, and then coming back to take the company private. The MBO rumour has legs imo, and the company have not moved to silence those fears.
Thankfully this is a relatively small % of my portfolio, however, it hurts all the same
FFS. So, an equity raise, to clear the debt. Rumour one confirmed.
Rumour two, a management buyout, with the sticking point being the debt. Not after the proposed equity raise... there will be a clean balance sheet and a languishing SP.
I am struggling to see how any of this ends well for LTH. I am really disappointed at the moment
GB in the March RNS:
"This £25 million mezzanine loan ensures availability of funds for growth, avoids stock market fluctuations, eliminates the need for a discounted equity dilution of shareholders and the Glanaco acquisition underwrites our ability to take control of our supply chains and manage scale to meet the growing global demand being experienced by the company."
The SP was about 9p two weeks ago. They have a £24m facility, of which only £4m drawn.
Why would the company be looking to raise funds by going to the market when they have the mezanine funding? And why the heck would the price be 3p a share? Even at today's 6p, 3p would be a 50% discount.
He is likely scare mongering. If this comes true GB has screwed LTHs
Other shares i own have dropped today, but 20% is crazy. I am starting to suspect that the earlier prediction, that DVRG are converting the loan with the shares then being dumped into the market, is the case. No RNS yet, but i expect us to see it shortly. I can see no other reason for such a drop with no obvious reason.
The time for GB to reassure us all is now. The longer he stays silent the more this will fall
A very unhappy LTH here. I believe in the company but not in the SP
GB cant do anything about the SP day to day. Hopefully, in time, the good news and growth in the financials will shine through, but right now there is nothing he can say or do to change the SP direction whilst someone is dumping large quantities.
I am invested in ORPH, which has seen its fair share of ramping from a member of the BOD, with crazy SP and MCAP targets. It hasn't done them any good, although it did for a short while.
If GB comes out and starts saying that DVRG is going to the moon, £1bn mcap next year etc, he will get an SP reaction, but it will be short lived.
Under promise, over deliver needs to be the name of the game. The business is growing, but the SP just isn't reflecting that. Expected turnover of at least £18m. MCAP touched £15m earlier. A clear disconnet imo, although i want to see the loan repaid, not converted (at this SP!)
The SP decline is indeed painful Stoater, and this pain will be felt by all shareholders, including the BOD.
Hopefully we get some solid contract RNS over the next three months to stem the leak. The big RNS i am anticipating the most is the Jan non-audited turnover confirmation.
"The Board conservatively expects revenue to be in excess of £18m for the full year to 31 December 2022". Conservative means nailed on in my book. If they can delivery £18m revenue at the very least, perhaps even £20m+, then the market should take notice. MCAP is presently beneath anticipated annual turnover. I cant imagine many companies are in that position. I know of many with MCAP well in excess of turnover, that is for sure!
The macro economics are playing a massive role. The naysayers like sticking the knife in. It's over to GB to confirm to us that all is well on the good ship DVRG.
I cant imagine many LTH in any share are having much success these days. We just need to wait it out (if you can) until this maelstrom of a bear market is beyond us. Remember, the NASDAQ is down 25% (so i read), so it isnt just AIM, and certainly isnt just DVRG
Per the RNS in August 2021:
"Consideration of £45.2 million to be fully satisfied by way of the issue of an expected maximum of 9,578,937,499 new ordinary shares in the Company ("Consideration Shares") at an expected minimum of 0.472 pence per ordinary share ("Issue Price")"
$222m sounds good, but let's be honest, RBD won't take the well to development. Isn't there a risk that they would sell sooner rather than later for like £30m?
We know with Victory that undeveloped fields go for a fraction of the NBV
I am just a little disappointed with the Victory outcome and when i see $222m NPV to RBD and sigh a little as i cannot realistically see us getting anywhere near that much for it
*over a 10 bag to broker target
Good point, although the SP was around 26p when those options were granted.
If they granted options today, at 30p, that would be a great sign of where they see the SP going.
Still, there is a motivation to get the SP, at least, back to 30p, which is very doable. And the TP target of 90p (where it has stood for a couple of years) is a further sign of where some see this going (eventually).
Close to a 4 bag for the options to kick in, ovet a 10 bar to broker target. No bad reading.
Of course, a comment from GB that the loan will be repaid (and not via conversion) wouldn't go amiss right now, and may settle a few restless souls... (can't imagine that is market sensitive information?)