Member Info for dustofnations

Here's the relevant minimal fair-use snippet:

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There are plenty of opportunities outside the US. “London is stuffed full of quality companies offering a real mix to investors, from solidly performing household names such as AstraZeneca, well-run businesses such as Relx, smaller innovators such as hVivo and downtrodden sectors such as consumer discretionary, where popular stocks like Games Workshop are now on reasonable valuations.”

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I must say, I am shocked to see John Potter's total remuneration is £253,000.

WongaFA — yes, correct. You can get a bit more information on this subject in the QRF Report (https://quorumzine.gitlab.io/quorum/content/2024/02/28/quadrise-research-facility-retail-visit-biomsar.html)

In short, the target refinery is looking to use the bottom end of their refining output to fuel the refinery itself. MSAR is an enabling technology to use that directly as a fuel instead of needing to dilute it with expensive diluents/cutterstocks.

As you rightly point out, refineries produce a 'heavy end' that comes out of the bottom of various distillation and cracking units; these are molecules with higher density and viscosity (as a result of long chains and strong intermolecular forces).

For the target refinery, they currently produce a bottom end residue that is not heavy by MSAR standards, so Quadrise were working on formulating a super-cheap version of MSAR to facilitate that (i.e. no need to use a sledgehammer to crack a nut). Think MSAR Lite.

However, in the medium term, the refinery are looking to install an upgrade that would result in much heavier residues. That would be the perfect target for standard industrial MSAR, which would be a seamless transition.

As refineries install upgrades, they are able to convert a higher proportion of the input crude oil into high-value distillate products like petrol, diesel, MDO, MGO, etc. However, the (smaller) remaining fraction is much more viscous than before, because these fractions are incredibly difficult to break up and hence are left behind. The are inherently low value because of the difficulty handling and processing them.

Enter MSAR, which can take those heavy residues and use them directly, unlike any other technology.

TL;DR: the refinery is considering using their own heavy ends to power the thermal requirements of the refinery. MSAR lite today, and Power MSAR later when additional upgrades are installed.

HVO is a great "core of portfolio" company.

- The leadership has a steady and undramatic management style;

- Meeting and exceeding their guidance;

- Transitioning to a regular dividend-paying company;

- Offering a category of services that others are unable to, with a very high barrier to entry (moat);

- Offering a strong value proposition to customers that easily pays for itself via either faster time-to-market or early project termination. This is a game-changer versus years of preclinical and P1 trials to determine basic efficacy;

- Enables categories of therapeutic to come to market that have proven impossible to test before. For example, pathogens which are very seasonal and/or exhibit unpredictable wave-like patterns of transmission in their epidemiology (e.g. a burst of severe cases rapidly transmitting, but disappears for a few years until the next cycle). HVO can control that process, rather than you having to pray that the disease will be present in the community when you kick off your P1 study;

- Good margins, gash generative, plenty of reserves for either dividend payouts or bolt-on acquisitions. No debt;

- Customers with plenty of cash and a long pipeline of new business opportunities more pathogens become accepted candidates for human challenge trials;

- Increasingly good regulatory acceptance of human challenge trials data, as evidenced by comments/data Mo' shared from customers.

Those are just some of the reasons, off the top of my head. It's really a completely unique proposition.

WongaFC: "why did he not correct Lionel and at the same time alleviate a lot of investors concerns by saying something along the lines of;"

This is always a tricky subject.

They aren't allowed to give selective disclosures, especially on sensitive topics like funding. It would have to be announced to the market broadly before the AGM.

At the time, it would not have been possible to give a precise answer to how long the runway would last, as we were supposed to be kicking off key project expenditure in Q1, such as purchase of equipment for installation of MMU at Mac^2 facilities, etc. That would be expected to burn a lot of cash.

Clearly, December came and went without as much as a squeak. So that money was not spent.

That said, I made it very clear to the team I did not believe the money from Utah would be forthcoming in any timeframe relevant to fundraising. They were aware this was a risk.

WongaFC: "Why did they not intimate the need to raise capital in H1 when the SP was nearer 3p?"

I personally suspect it was because they thought they'd get contract signatures over the line with plenty of runway left to reassure stakeholders that sufficient funds were still remaining. But it did not happen as anticipated.

If I were one of the BigCo partners, I would want to be reassured that Quadrise has secured plenty of resources to execute the trials and that their financial statements are "going concern".

TL;DR - How long the runway lasts is highly contingent upon signatures, as "getting the ball rolling" will cost significant money in project expenditure. In a good way.

WongaFC: "was merely questioning the timing"

What you say is entirely your own responsibility. Dressing it up as a question makes no difference.

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Now while I'm aware the BoD will have info they are unable to disclose at given times, as I see it, the JM agreement with Lionel's point was disingenuous to say the least.

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AIUI, the simple answer given in the QRF report was that pretty much all major project expenditure has been delayed/deferred because none of our key projects have started on-the-ground activities yet.

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it does raise the question has the SP been deliberately subdued to allow BoD members to buy in more cheaply than they might

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This would be both illegal and senseless. I doubt the BoD see it as worth risking going to prison for a few quid.

Plus, we can't have it both ways. Complain when they don't invest, complain whey they do invest.

I must say, well done to the Quadrise team for responding positively to retail shareholders who pointed out that the deadline for locking in cash for the OO (for most brokers) was actually prior the new tax year.

Changing the date to ensure more shareholders can participate on their preferred basis can only be a good thing, in my view.

Personally, I already sold a small tranche and bought back to fulfil my quota — but I'm not bothered in the slightest that I "missed out". 

This is manifestly in the best interests of the shareholders and company.

Well done, and onwards and upwards.

Let's say you have 190,000 shares.

Your entitlement at the open offer would be:

1/19 * 190,000 = 10,000 shares.

When the 'ex' date passed, that entitlement was fixed.

Hence, even if you sold 5,000 shares tomorrow, your entitlement to purchase shares at the open offer would *still remain* at 10,000.

The converse is also true. If you buy additional shares today, it would not grant you any rights to buy at the open offer.

I hope that makes sense, and I welcome any corrections.

[Not financial advice, please verify for yourself, etcetera]

For those that are looking to sell and buy back into the OO.

The 'ex' date at which your open offer entitlement is locked in has already passed, so you should still have the 'full' open offer entitlement (i.e. as if you still had the larger holding).

[As always, check what your specific broker does.]

What is your stockbroker? Someone with the same one might be able to help.

> The Company is growing revenue's by £6m + p.a (obviously this equates to a smaller % as they get bigger)

Absolutely agree.

While high % growth can be sustained in the early part of a company's growth phase, as a matter of basic mathematics it's absurd to expect continuous high rates of exponential growth (which is what a % increase is); you would quickly become the largest company in the country.

Absolute increases in revenue and profit are highly salient; consistency of results and delivery; optimising profit margins; stable workforce and management team; ensuring quality of work and hence establishing long-term relationships; large cash pile; increasingly stable shareholder register; attractive P/S and P/E ratios; etc.

From these perspectives the company is fantastic and I really appreciate Mo's "steady ship" approach. For example, with the establishment of a regular dividends policy and good business predictability/pipeline. These factors mean HVO is transforming into a core institutional portfolio holding (as evidenced by major JP Morgan stakebuilding, etc — you can see others on the public register such as Canaccord) https://markets.ft.com/data/equities/tearsheet/profile?s=HVO:LSE

Of course, this transition to "undramatic, consistent delivery" is much less interesting for traders and speculators, but is wonderful for long-term holders like me.

My message to the team would be: "please carry on doing what you're doing".

I suspect there will be an IMC prior to the OO for retail investors to grill the team, but it’ll be co-announced with the full OO timetable, likely (or some time near that).

I notice that the RNS doesn't actually say when the OO itself will be. The notes on share admission dates pertain only to the main offer section (not OO).

I image we'll find out tomorrow or within the coming days.

Likely means nothing. TomCo frequently have small surges in SP that fall away.

HotChip — I expect JPM's major stake-building explains the weird market that HallsWorthy was complaining about yesterday, where it was difficult to get hold of any shares unless paying around 30p. JPMorgan have been hoovering up the liquidity.

Interesting point Indigo/SR.

Another share I hold (hVivo/HVO) recently had been promoting the company to long-holding institutional investors in an attempt to broaden and stabilise the shareholder base.

The feedback received from IIs was that there was not enough liquidity available, and even relatively small purchases were causing the share price to rapidly appreciate (and then quickly fall back once buying stopped).

Ultimately, the hVivo founder/chairman and another insider who held a large number of shares agreed to sell a portion of their holdings to the institutional investors at essentially no discount.

That created the liquidity to bring the IIs into the shareholder register.

Point being that these kinds of IIs want to buy big chunks of shares at once, and not faff around for months with a handful here and there.

[That is just one factor of course, there are numerous others such as the II's risk profile, company history of execution, commercial activity / fundamentals, total addressable market, dividends, etc.]

I have decided to add to my holdings. I do feel that HVO are still undervalued relative to their financial metrics and business development plan.

That's a factor of the UK stock market more widely (especially AIM), but I hope it should correct over the coming year or so.

As a company that's performing very well and paying regular dividends, it seems an excellent fit for my preferred approach to investment.

I look forward to the regular dividend policy, and some insight into how cash will be redistributed to shareholders.

It's not the hurdle you are implying.

Typically, charterers ask vessel owners/operators to implement specific low-carbon technologies and fuels, in return the chartered vessel get an enhanced rate.

You can read about it in this here:

https://www.cargill.com/transportation/doc/1432241066001/cargill-ocean-transportation-decarbonization-report-ry2022.pdf

https://www.cargill.com/doc/1432213554081/making-zero-carbon-shipping-a-reality-2021-report.pdf

Cargill talk about using their own biofuels in their ocean transportation (OT) fleet, in addition to technological enhancements such as wind, bubble lubrication, etc.

That roadmap seems well-aligned with what Quadrise are trying to offer the shipping sector with bioMSAR and MSAR Zero.

Traders doing trading things and taking advantage of volatility. They only tell you when they're buying and selling when they think it will benefit them.

One observation: project expenditure that QED would have expected to incur by now will be deferred until pen is put to paper by all counterparties (i.e. project expenditure begins in earnest).

Naturally, it just shifts when money must be spent, but it lengthens the runway pre-signatures.

Hi V72, happy to add some colour to that.

On Morocco, I think there's a cultural element which requires going a little bit more slowly while the boxes are ticked and the appropriate high-level exchanges and formalities are completed. Once the ball starts rolling I think it should gather steam (pun not intended) quickly.

However:

I agree, the likeliest refinery seems to be Cepsa. And I agree that there will be a fair gap between commercial agreements being signed and (commercially-produced) fuel actually arriving from a refinery.

And, given our history, I also agree we should be mentally prepared for it to drag out as you describe (and be pleased if it lands sooner).

All that said, I believe the signing of concrete commercial agreements with Morocco to be more important than physical supply of MSAR beginning — that's the biggest de-risking step in cementing our pathway to sustainable commerciality, though not the only one, of course.

Achieving a deal should make raising finance from traditional non-dilutive sources much easier. Or minimally, less dilutive by virtue of a higher share price.

As ever, we shall see, and much risk abounds. But, I was pleased that the ball is rolling on Morocco and we finally got that accursed commercial trial done! It was a terrible shame how much time that burned.

Finally, I do think Quadrise have the right agent batting for us in the shape of Younes.