Member Info for DRB83

Share4. You seem to think that cash behaves differently in an early stage tech or advertising tech company. Why is this?

30 day terms are the same whichever industry your in. If I invoice you in June I expect to see the money in July. It's a universal concept. Please highlight to me why you think that is different for Bids.

Let's put your theory to test. I'll take a look at BOOM who operate the same strategy just with a podcasting platform.

FyDec21
Revenue $60m
Receivables $15m
Debtor days 91

H1 22
Revenue $41m
Receivables $15m
Debtor days 67

Now bids:
FY21
Revenue £2.6m
Receivables £1.3m
Debtor days 183

H1 22
Revenue £2m
Receivables (no breakdown but increased by £1.5m since Dec21) £2.8m
Debtor days 255

BOOM are making profit and still improved their cash collection to 68 days. BIDS are still burning cash and the threat of a raise is very real here. Therefore cash collection is paramount. Bids debtor days are 255. I'm not just saying wishy washy that bids will need a placement just to wind holders up. I'm not a troll. I like Bids and it could be huge in the coming years. Im supporting my reasoning behind why cash could be an issue and why the bod state in the annuals that they still rely on placements.

Your personal attacks on me are just a blatant sign of your insecurities here.

Smiller, what's 1p, £47m. Fenix generated that in 12 months. It's doable..I'm counting on it.

Seis, good point. Keep some in reserve to ensure H2 sales limits can be achieved. The auditored accounts will hopefully confirm this soon.

So in a nutshell, going into H1 2023 I'm expecting

Increased PGM, Copper and Cobalt volumes
Increased PGM basket price
News on Northern Strategy
News on East Limb hub
News on international strategy in Cyprus.

Hold and wait.

Have they ever split out the EL Oz from the WL oz. Have we ever known what we get from the EL? It's always been wrapped up in the PGM numbers so no difference there as far as I can see.

How do they account for it? We must disclose the revenue after the JV have take their share. This would result in a lower PGM basket price so have we seen a significant drop in the basket price since the EL agreement was signed?

Homey, another question that needs answering. How much is the minority stake.

I don't think a drop of almost $400 per Oz can be all attributed to the EL JV.

An RNS states that the supply agreement for EL is for upto 14500 Oz per annum. So let's say we maxed up on that in H2 and got 7500 Oz from EL. Leaving 13500 from WL. Let's also assume the minority interest is 49.99%.

13500 @ $2k per Oz = $27m
7500 @ $1k per Oz = $7.5m
$34.5m / 21000oz = $1643.

We obtained $1586. It's close but that would suggest we have signed a pretty **** JV deal for the EL ounces. We'd be making no money.

Processing costs of $584
Transport = $3.12m/7500oz = $416
Total cost $1000

So our revenue from the JV would be $1000 and the costs would be $1000. That's a coincidence by the way. There's no way we'd sign that off whilst the JV party gets $1000 for nothing.

In summary, there must be another reason for the reduced basket price. The sale of the 6000oz of part processed foods made sense for H1 but I would expect that to have been a one off at the beginning of the works so not repeat itself in H2.

Over to you Leon. What's going on with the basket price?

What are the profit sharing details of the Eastern Limb, homey

I also noted this sentence from a recent RNS:

The chrome operations operate on a fixed margin contract of approximately 11% and is the facilitator to the production of increased PGM rich discard that is processed by the newly expanded Inyoni Facility.

Leon is labelling Chrome as a facilitator to PGM hence the move to by product.

The 6 month operations update was a heads up. When you compare to the interims which came out a few weeks later most of the numbers changed. Overall they got better. It looks like they reallocated some of the earnings from PGM to Chrome which boosted Chrome's numbers.

The JV is playing a smaller and smaller role as a % in our production so maybe they have decided that now is the time to move away from splitting it out and just report the relevant numbers relating to JLP. I can see the tonnes going through the JV and know it's small so what they are earning isn't something I'm too fussed about. I wouldn't jump to the conclusion that Leon is hiding something.

As for reserves, I'd like to think if he's spending £10's of millions improving Inyoni that it's because he knows he has access to sufficient tonnes of reserves. But yes, a good question that should be asked.

It's a strange one Sais. You'd think that rather than sell semi processed stock at cost we would put more volume through the JV. We only put 1000 Oz in H2 compared with almost 6000 Oz in H1. It's certainly worth a question but I'm assuming we'll learn more in the auditored accounts.

In the interims they gave attributable information for Chrome which basically consisted of

Revenue 41,487
Earnings 4,385
Tonnes 619,900

In the last RNS they also gave this information for Chrome

Revenue 52,883
Earnings 7,882
Tonnes 602,552

It's all there, in a slightly different format but we have to get used to the fact that reporting develops over time.

The concern here is macro economics and debt. JDW generated 5-6% margins pre covid and pre inflationary rise. JDW are now probably in the realms of needing £2.5bn sales just to break even.

With a gearing ratio close to 400% and finance costs of £70m per annum the pressure starts to mount.

Debt covenants are the devil's advocate and the special agreement with the lenders expires in October having already been extended several times. From RNS:

The company has an agreement with its lenders,
who have been extremely supportive throughout the
pandemic, that waives its debt covenants until
October 2022 and replaces them with a minimum
liquidity requirement of £75m. At the half-year-end
liquidity was £159.1m.

On top of that is the tax payers £100m that has to be paid back in 12 months.

JDW are now at a point where the next set of results have to be profitable otherwise it will be another raise and I'm not sure what the appetite will be following the last one and the current financial position of JDW and the macro economics we will have to endure for who knows how long.

Hats off for sticking it out here and I hope I'm wrong and the economy comes bouncing back and all ends well.

HH, fair point. They have an agreement to sell 35kt per month @$180 per tonne for about 11 months or so. Assuming they make $110 profit per tonne thats $42m profit over next 11 months. That's more than their current EV. Crazy.

5x5, dividends have been paid but the £59m they have in their bank is their today so more dividends around the corner.

If they were to keep the cash and generate another £60m post tax profits then in 12 months they'd have £120m in cash which will most likely keep growing.

Mcap is £88m.

Crazy times.

A few on here seem to like a listing on the ASX as the Australians appreciate miners. I am just wondering why Fenix are valued at a EV of £29m when it's probably generating £4m a month profit and has enough reserves to operate for another 5-6 years. They do appear to have a exploration license on a new tenement which with £59m in cash shouldn't take too long to firm up. They also acquired the haulage company which will be worth something.

I appreciate Iron ore is low at the moment but is the market pricing in a further drop or is it the uncertainty that is putting investors off.

I ask because they are the most comparable to our Han**** project.

This is from the RNS:

The Company may elect not to repay the Advances that fall due (see below) and, in such circumstance, the Lenders will have the option to convert the Advance's principle and interest and any relevant outstanding fees into the Company's Ordinary Shares at a price equal to the lower of (a) 80 per cent. of the average of the two lowest VWAPs in respect of Ordinary Shares during the 10 business days immediately preceding the date of the Conversion Notice and (b) Fixed Premium Placing Price up until the Maturity Date.

Clearly a) would be the worse case. I did a rough cash flow fcast the other day based on the forward guidance and believe there should be sufficient funds to settle the initial advance whilst maintaining a healthy bank balance.

As a back up, I haven't seen anything that suggests DPVG can't take a 2nd advance to help pay the 1st if things get bad.

There are always risks but imo any conversions will be done no less than 20p. Significantly higher than today's SP.

Fenix
Reserves 8mt 63% DSO
mcap £88m
Cash £59m
EV £29m

UFO
Reserves TBC but potentially 10x Fenix at 62% DSO
Mcap £27m
Cash £4m ish
EV £23m

Fenix are generating close to £50m pre tax profits pa so appear to be massively under valued. We are even more massively under valued Vs Fenix.

What am I missing?

Steve, this from the June RNS:

An initial Mining Lease area within the tenement has been surveyed, and an application has been
made. A Miscellaneous Licence application for the Haul Road corridor is being finalised, and an
application is in preparation.

Happy, I assume you mean 300t of Cobalt.

The dates for the Northern strategy are out there and Leon said only yesterday that the focus now switches to the Northern Strategy. $6k earnings per tonne of copper I am expecting when Cobalt is running. That's a big chunk which will hit FY24.

We're generating profit and cash. Debt free. Growth plans already established. Just come out of a tough year and still made money. Growth takes time so just be patient and the SP will grow. One day dividends.

Well, Chrome is a product. No business is obligated to report product profitability. It certainly helps with internal management reports which help direct the business but in terms of auditable accounts we just need to provide accurate revenue, expenses, assets, liabilities and equity, cash flow etc. We don't need to split it out by product. Most companies will do product profitability like Tesco's will with tins of beans but shareholders don't get to see that level of detail.

So as part of the process in producing the feed for PGM we produce Chrome. One raw material goes in and from it out comes PGM and Chrome. You can treat them as 2 main products or one main and a by product. Ultimately, I don't see why it matters. Leon has given us all the individual costs per Oz so he's hardly hiding anything. He's just telling the story in a more favourable positive way. The ending is still the same but you enjoy the story much better.

Chrome is 11% margin Vs the others that are much higher so maybe putting them together tells a better story. Who knows and frankly who cares. We still end up with the same earnings.

How is it death spiral. They exercise the warrants at 20p. If they decide to exercise then it's because the SP is 25p+ and thats another £2-3m in our bank. There is a good chance we won't need another drawdown. Death spirals go down not up.

Clown, well it's Chrome that is classed as the by product but the point is that the 2 processes are intertwined and therefore including the benefit in the net cost is one way of accounting for it.

It is standard but not the only way to account for by products. I'm not sure there is an IFRS specifically for by products but I'm sure internal management have flexibility to account for it a number of ways. They are more than entitled to change the way they account for it if they so choose.

An example would be scrap. Any company which generates scrap will try to sell it for an additional revenue stream where possible. If you are costing up a project that will generate scrap then the resale value of that scrap can be used to bring the cost of the project down and more appealing to the directors.

As for FY22 results, I'm not expecting a particularly positive result. We've had most of the numbers. It's been a tough year in terms of volume and price. The value of JLP for me is in FY23 onwards. If things go as planned then earnings could exceed $140m in FY23 and $180m in FY24.