Member Info for Happysurfer

There he is !!

We were starting to miss you TP3. So more foreplay it is then you little tease you. I see the shift work finished a bit later today but glad you are now back safe and sound in the comfort of your studio flat.

"you do. lol". You dark horse TP3 down with the kids. White trainers, reverse baseball cap and a dad Bod......did you need to google "lol" ? LOL

I see you still have not answered the question as to how you worked out that IA had fallen by 5k in 2022 ? IA, as a reminder, "Intangible Assets" you know the one you had to google as had no idea what they were hence could not put it in your own words. Genius TP3 Genius !

"Educated". The irony is not lost. Didn't by any chance have an introduction to basic bookkeeping back when you were doing those CSEs did they ?

It appears your fascination with Trump (picturing a similar hairdo underneath the reverse baseball cap ?) and all things US has clouded your mind on US (singular) v British English (plural). Was this not covered in your CSE English course or did it clash with the bookkeeping one ? You can add to it your list of google searches: Intangible Assets; PPE; Capitalisation; LOL; Godfather 3; thousands v millions abbreviation (muppet !); 2022 v 2021 in accounts; Narcissistic Personality Disorder..........you may have to cut the shift tomorrow short as a lot of homework before your next post.

Having said all this I think we are making some real progress TP3. Refusing to answer the questions posed to you about your idiotic post/s is about as good as one can get to an apology and/or an admission of incompetence from someone with NPD. This should not be underestimated so genuinely well done TP3.

I honestly think this could be the start of a beautiful partnership TP3. Likewise this and more to the point you are my entertainment. Peas in a pod. Hope the shift is not as long tomorrow. Missing you already.

Surfer Boy........quite like that actually.

Genius TP3 you couldn't make it up.

24 hrs on, umpteen google searches, a couple of spell checks, a grammar review by his local English professor and finally we get the long awaited TP3 sequel - must admit a bit disappointed though more Godfather 3 than Godfather 2.

More deflection I see having been caught out for making misleading and factually inaccurate statements. What's next after the collective noun chat, shall we move straight on to the big one "Typos" or do you want a bit more foreplay first ?

You still have not answered the one basic question which shows your ineptitude more than anything else. In your words "Also, intangibles decreased by $5K not increased". Please tell us all how a person of your undoubted intellect identifies that Intangible Assets have decreased by 5k in the recently published Financials ???

Even you should not need to google that one to answer it. The problem with narcissists TP3 is they can never admit when they are wrong even when it is blatantly obvious to all around them. They will continue down the same path, embarrassing themselves further and further to the point where they become a laughing stock. Sound familiar TP3 ?.... I am sure this is not the first time you have heard this and most definitely will not be the last.

The recent RNS was indeed a curate’s egg.

On the one hand it feels like ESIA issuance is closer and that there remains considerable support from multiple stakeholders.

The flip side is we still don’t when the permit lands, inflationary costs and management are finally starting to manage expectations. Q4 for financial close and production not likely before 2024 ?

The challenge, as early bird investors, is does the risk reward stack up. In hindsight I think post permit may have been the time to pile in. Permit tomorrow and I would guess you could still buy in size at 7p or less ?

However sometimes you have to take your position and back your call. Not so long ago we were at 9p pre permit so as always it’s all about timing.

TP3,

You are talking utter nonsense on multiple fronts.

"Happy, should read @ company has, not have. It is a singular entity." Incorrect. In British English, the name of a company is generally taken to be a collective noun and therefore takes the plural form of the verb (have). In American English the opposite. Consequently both are used but the mere point you feel the need to raise it likely says all we need to know about yourself - Narcissistic Personality Disorder perhaps ?

If you do not know how to read a set of accounts, that is fine many don't, but to pretend that you do is simply insulting - NPD again ?

You clearly stated that IA have decreased by 5k in 2022. Tell us all where you see this in the accounts ?? .....If you cannot tell the difference between an asset in the BS increasing by 5m or falling by 5k then I would suggest you are beyond educating in such matters.

You were also implying that all the technical work that the company clearly stated they have carried out during the period could not have, by default, actually happened.... " In the Financial Statement, there is an interesting item under Property, Plant and Equipment. '21 this item was $41K, '22 the figure is $44K . It seems to contradict the BOD statement of all 'the work' that is being done on site, and engineering advancements".

Incorrect again. You failed to grasp the very basic concept that, in agreement with their policy (and auditors), all the costs associated with this technical work had in fact been capitalised as an IA before being transferred to Tangible Assets if and when production starts. I will give you a clue and slow it right down for you this time. Policy note below.

2.10. Intangible assets - exploration and evaluation expenditure
Exploration expenditure comprises all costs which are directly attributable to the exploration of a project
area.
When it has been established that a mineral deposit has development potential, all costs (direct and
applicable overheads) incurred in connection with the exploration and development of the mineral deposits
are capitalised until either production commences, or the project is not considered economically viable.
In the event of production commencing, capitalised costs in respect of the asset are transferred into Tangible
Fixed Assets, and are depreciated over the expected life of the mineral reserves on a unit of production basis.
Other pre-trading expenses are written off as incurred. For the purposes of impairment testing, intangible
assets are allocated to specific projects with each licence reviewed annually. Where a project is abandoned
or is considered to be of no further interest, the related costs are written off.

So TP3, there is only one person trying to sound clever and failing miserably in the process. Clearly your default position when caught grossly misrepresenting the facts on multiple fronts is to try and deflect with pseudo-intellect - I give you RR 19171 !!!

NPD

TP3

Congrats on pasting the first google search item as to what an IA is.

Intangible assets increased by €5m to €18.6m in 2022. Where in the hell do you see a decrease of 5k !!

The company have said The intangible assets consist of capitalised exploration and evaluation expenditure in respect of the Company's potash interests in Morocco (the Khemisset project).

In addition the cash flow statement states they spent $5m on exploration expenditure in 2022.

These outgoings will unquestionably relate to the technical activity carried out otherwise what do you think they spent €5m. If you read the details of the technical work it is clear that it is not going to end up as PPE.

The PPE you reference is for actual purchase of plant and machinery which the company clearly state was zero in the period..

17m of NAV is goodwill; effectively worthless and will either be amortised over time or we will see an impairment in FY22 accounts.

The recoverability/quality of remaining NAV is completely unknown. When people talk about a discount to NAV it is normally with reference to cash, stock, receivables etc….and not goodwill or other spurious investments of questionable value.

Yes it’s possible this comes good but to cite discount to NAV is very misleading. The SP is where it is for very good reason.

The work on site is capitalised within Intangible Assets for the time being.......$5m of additions in the period.

Takeover premiums are typically circa 30% of prevailing SP. There is literally zero chance of receiving a bid at multiples of todays price.

Unfortunately the cash flow mismanagement here by the BOD on a grandiose scale has exposed the business to an opportunistic offer to acquire the IP at a fire sale price. The next 6-12 months are critical in determining if EQT survives in its current guise.

Andi honestly give it a rest as you are increasingly sounding desperate or more worryingly have ulterior motives.

If you can just once make a post that focuses on cash flow over the next 12-18 months and how they avoid having to seek further crippling raises then i think you will gather a lot more respect.

As a CFO myself I will give you a clue. The £3.5 m will last several months. Then, from July onwards, cash burn for debt repayments + overhead has annualised run rate of £7m p.a. Factor in ongoing investment on other live projects and they will require in the region of £10m cash minimum over that period just to break even.

So…..firstly how are they going to do that ?; and secondly will they have to raise again near term ?

I am 100% confident they will be back seeking funds to address this apparent gap and am more than happy to be proved wrong. The only question I have is will they survive. Honestly I don’t know but I can assure you it is very finely balanced.

Precisely my point the cash raise only lasts 3-6 months.

They have annualised cash burn of circa £7m from June so they need significant sums of further cash to make the business sustainable. We have no idea from the RNS how much cash they can generate from the other activities they reference and the timelines involved (which in anycase they never hit !).

A good entry point ? Maybe lets see but a lot of trust has been lost by this and the major related party S/H selling materially down prior to the raise.

Yes ?

There is indeed so much to be excited about operationally.

The equation however is a simple one. £3.5m lasts circa 6 months at current cash burn rates (overhead + debt from June). If they use some of the £3.5m for MDCs and other ventures then it lasts 3-6 months only.

They need to start generating some significant cash from Ops and very soon. We are not just talking a couple of million one off either but regular material income.

The market has now completely wised up to DP and the business approach. Unless an RNS starts with £Xm banked due to ........ then it doesn't want to know hence the muted response. It knows any SP strength will be trigger a raise so until the BOD can prove they have a sustainable business that is largely self funding we are stuck at these levels I fear.

Let us not forget their overhead is running at circa £350k per month and as of June they also need to commence loan repayments of circa £250k per month. So the run rate on these 2 items alone is £600k per month or £7.2m annualised.

If they do indeed intend to use some of yesterday's raise on the MDCs then it is not going to keep the wolf from the door for long. They desperately need to start generating some cash from ops.

Admire your optimism Simms.

Personally I think you are being very generous with your interpretation of the Riverfort facility and the state of EQT finances but as always time will tell.

We will likely get a better view when they publish their Annual Report as it will include all the subsequent events and an update on the cash position/financial commitments etc.

Simms that's not my interpretation of the loan facility with Riverfort. Admittedly one has to join the dots so it's a case of what the RNS does not tell you as opposed to what it does.

EQT drew down £5m tranche last year on 29 Mar 2022. Ideally they wanted to covert to equity but the falling SP prevented this. They were then supposed to commence repayment in aug'22 for a period of 12 months. Consequently they should only have just over £1m of debt to repay as of today. However they did not have the cash to commence repayment so have effectively defaulted and hence still owe the full £5m plus some interest rolled in.

As of yesterday, they have now had to pay a price to reprofile this debt and convert a small part to equity. Obviously they would have loved to convert the whole thing to equity but Riverfort are not stupid etc.

You are right the original loan facility was for £10m. Clearly the 2nd 5m tranche is no longer available to draw down or else quite simply they would have done so by now. Future draw downs were always at the agreement of both parties. They have defaulted on the first repayment schedule and Riverfort simply want their cash back. The SP is rock bottom precluding any future equity conversion. Riverfort are therefore never going to agree on them drawing down the 2nd £5m tranche as it would be a completely irrational decision given EQT finances.

So the reality of the situation is the £3.5m raise yesterday is to make sure they are a going concern. Otherwise they would not have enough cash in the bank to meet their liabilities (inlcuding repaying the loan). For audit sign of they need to show they have enough cash to meet their liabilites for 12 months from date accounts are signed. So all the details from yesterday such as BOD sacrificing salary to equity, debt reprofile etc will be to satisfy this cirteria and it will still be marginal.

So they have very little cash to play with in reality so in my view this is right on a knife's edge.

"The £5m loan was only half drawn down. So now we have £5m cash from that with a 3 month payment holiday, then payable over 18 months. Seems more manageable."

@Aandi: Honestly ?

This cash was received in Mar'22 and has long gone for sure. As they could not convert , they were supposed to have repaid most of this by now to Riverfort. They did not have the cash (despite further raises) so have defaulted on the repayment schedule hence the reprofiling of the debt repayment schedule( June 23 for 18 months)

This current emergency raise is no doubt to ensure the company remains a going concern (auditors will require to sign off AR). Thee big question is can they manage the circa £300k per month debt repayment from June this year ? History would suggest unlikely.

This is right on a knife edge now make no mistake. They are running out of options to raise any further cash so its last chance saloon. I don't personally see them existing in their current guise in 12 months time so need a White Knight to take on the tech.

...and the real kicker here is they had not repaid a penny of the £5m Riverfort loan. There were some that were even assuming it had virtually been paid off by now !

As part of the debt reprofiling they need to start repaying this in June this year for 18 months. Approx repayment per month (with interest) of £300k. I genuinely am not sure they are going to be able to manage this repayment schedule given their history of cash flow mismanagement.

Reading the RNS again in detail its actually far worse than i had thought. Make no mistake this was an emergency raise to ensure the company is a going concern and to prevent the receivers coming in. Riverfort must be all over them and clearly reluctantly have agreed to this reprofiling as have no other option at present if want to see some or all of their cash back.

Can they come back from this ?.....not sure

I have said for a while its basically uninvestable at present and everything they do reaffirms that view. It just goes to show you that one can have the best tech in the world, tweet all day about on the ground developments BUT if you cannot manage cash flow you have no viable business. The BOD are clearly well short in this regard.

It has become a lifestyle business and in effect a pseudo ponzi scheme where cash is simply being moved amongst various related & 3rd parties. The Balance sheet Net Assets are then just stacked with goodwill and assets of questionable value. They could have just raised the £40m and left it in the bank and we would have been better off.

Very difficult to see how it recovers as DP will raise in to any SP strength. They clearly hoped the Italian MDC going online would boost price somewhat more but the market has wised up.

Only here as have a free carry after the crazy rise to circa 3p but have little to no expectations. Only hope is someone with deeper pockets acquires the tech.

The challenge at the moment is the binary nature of news flow. An RNS lands stating ESIA will not be forthcoming then effectively worthless (?) Vs RNS confirming ESIA and funding package (circa 15p ?).

On this basis the market is attributing 30% likelihood to ESIA + funding landing successfully.

30% seems low but as time passes it naturally comes down as people get a bit twitchy.

The big challenge is would we get a warning to react accordingly if awarding of ESIA seemed unlikely.......probably not.

Still holding firm and optimistic we get over the line but the binary nature of events does pose a challenge from an investor perspective

It does beg the question as to how a related party and major S/H is permitted to materially sell down at a time when price sensitive discussions are ongoing wrt Deeside and other activity; the irony is not lost on the 2 x RNS' landing on the same day just to rub a little more salt in. Surely has to be sailing close to the wind ?

Regarding NAV. We have £17m of goodwill which is effectively worthless. Recoverability/quality of other assets is a complete unknown at this stage. If we were talking Cash, stock, AR etc for NAV then completely different argument as to discount to NAV.

In some ways however todays news nothing new/unexpected hence SP back to where it was yesterday. The ever increasing RP transactions now that 3rd party funding avenues have likely dried up does however make me increasingly uncomfortable.