Member Info for Happysurfer

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.

Not always.

Watched this go from around these levels to 3p in a short space of time. Took 30% off the table between 2.5p and 2.75p to give a free carry +. However still lost a small paper fortune. Ironic that even at 3p many were saying cheap as chips compared to piers like ITM etc. Now those same people would bite your arm off for anything close to that.

Its also ironic that feel less confident at these levels than when when we were approaching 3p; however with a free carry means will see it out to the end no matter hence my "not always". Certainly not a buyer again though as far too many RP transactions and cash flow mismanagement instances to make it an investable proposition for the time being.

In the same way it was hypothesised that the Riverfort debacle was firstly intended to be a CLN arrangement and secondly was no longer available for drawdown due to low SP, it is clear now that DP/Altair (same thing basically) are engaging in shenanigans. Naysayers would you actually bet against it being so as you did with Riverfort ?

At a time when BP are churning our £24Bn profit and EQT are supposedly sitting on global dominating technology just ready to roll out at scale you wonder if they have missed a trick !

The other misconception is that once the MDCs are up and running the rest is a formality. Tier 1 require the MDCs as they are not yet convinced so in some ways the MDCs are when the operational risks really begin.

Anyway will see it out to the end as you just never know........

Apologies TryTry ! No issues with people disagreeing. Clearly was reacting to what i thought was Mkt manipulation accusation.

Sources?........if you read the last 18 months worth of RNS' and reach a different conclusion (Educated opinion) then fair enough to you and good Luck.

As for Market manipulation. Wow !! Naivety personified. ..........incidentally i relish talking my investments down.

Sale of Deeside was turned down as offer not good enough - Sources? or else you are at risk of putting yourself on the wrong side of market manipulation

Glaringly obvious; too many operational people and not enough genuine financial expertise on the management team.

There is good reason why the majority of FTSE 100 CEOs come from a chartered accountancy background.

Another cash call cannot be far away. This really is a classic case of boys with toys but zero financial acumen. I fear the worst unfortunately. The hope is someone with deeper pockets can take the undoubtedly quality tech to the next level.

Seriously frustrating.

Thanks both.

Does anyone have a feel for how long an MDC needs to be realistically operational to provide proof of concept and hence commercial viability of the tech ?

The USP of EQT to me was a plant operating successfully for 10ys+ using our tech. However we then discover that, due to changing feedstock/tech evolution etc, Tier 1 require further evidence as to commercial viability ......hence the MDCs.

There appears to be a presumption that once an MDC is up and running we are off but is success a given (or close to being so) and what are reasonable timescales etc.

ESIA is indeed a tricky one to intuitively get your head around.

On the one hand we have the company saying Moroccan authorities have been provided with everything are happy and no o/s issues etc BUT then in recent the recent update go on to say some of the funds raised will be used to finalise permitting.........so is there further work and o/s issues to be addressed to satisfy MA or not ?

Additionally, the company say "In view of the strong interest we have received from banks and other investors keen to invest in this exciting Moroccan venture, we expect to pull together the full financing package for the construction phase rapidly, once the remaining environmental approvals have been received."

but that this is expected to be in H2'23. I think the inference therefore and what in part is causing the sell off (aside form general market weakness) is that the company are not expecting that ESIA any day soon given their own H2'23 to finalise funding.

It may simply be they are now managing expectations given their previous "imminent" comment; either way it is very difficult for PIs to understand the reality of the current situation.

No chance he is selling them yet. Exercised back in August so market would have been informed by now if he was offloading.

In addition the messaging of him selling a sizeable chunk at this juncture when engaging with Strategic/Offtake partners would be seriously damaging.

Far more likely he exercised to establish a base cost for future CGT. Little did he know we would see this general fallout in the markets.

....I mean they will only accept equity under the circumstances where they can forward sell and delta hedge any future equity exposure. These guys don't work with equity exposure, just bank the guaranteed margin and move on.

Either way I think we will be forced to try and do something with them whether or not that involves a renegotiation of the terms if willing.

There is also a big difference between revenue recognition from an accounting perspective and actual cash flow. The company now find themselves in a precarious position for sure as financing avenues are drying up.

I think they will have to re-negotiate the arrangement with Riverfort if possible. The 1st 5m tranche they have to repay in cash as the SP precludes issue of equity. Perhaps they can then take the 2nd 5m and use this to pay back the first instalment. Then , if we assume this is a low for the SP (?!) they have the option of issuing equity to repay the 2nd 5m when due. This then buys them some time to actually close out deals and bank the cash.

All hypothetical as Riverfort may now deem equity exposure is too risky hence will want to forward sell the drawdown weakening further the SP.

The irony is there were people frustrated with the 15m raise at 1.5p. In hindsight that really was the time to go big as the SP had got carried away with itself; something not lost on Gerry Madden with a 25m sell at 1.91p !

I think the July (emergency) raise was all about showing they had enough cash on hand to settle the Riverfort 5m loan. They only had circa 2m cash @June hence the 3.75m raise. It allows them to publish interims on a going concern basis; the absence of the 3.75m in July would have prevented this and caused further damage to BODs credibility hence what appeared as last minute emergency funding. Possible also solved some breach of loan covnenants.

We will get the same issue with the audited Year end accounts (pulbished next April) so the clock is really ticking now in terms of closing big deals. The depressed SP has really backed them into a corner as a large raise at these prices will be very difficult to come back from I would say.

The nightmare scenario here is they do all the ground work but cash flow mismanagment results in the protected tech being offloaded at knock down prices to a bigger fish who can scale the business.

Going concern

The unaudited interim financial statements have been prepared on the going concern basis, which assumes that the Company will have sufficient funds available to enable them to continue to trade for the foreseeable future.

During July 2022 the Company raised GBP3.75 million (before expenses) by way of a Placing and Retail Offer. The directors consider that this is sufficient funding for the Company to continue as a going concern beyond the twelve months of the date of this report.

The directors are confident that the funding received by the Company in June 2022 will ensure that it will continue as a going concern and that there will be sufficient funding in the Company to continue to support its activities for the foreseeable future being not less than twelve months from the date of approval of these financial statements. The directors have therefore prepared the financial statements on a going concern basis.

Except they are now prepaying for some mining capex that will not be utilised for >12 months hence accounted for as non-current prepayments. That is a change from year end.

They clearly do not want cash sat idle now that they have become cash generative. Having fingers in a lot of pies, I guess this is why the auditors got twitchy with regards to whether these funds were being moved across other family entities/Related parties.

Not saying it is a bad thing if indeed securing more competitive deals but it does leave us low on cash in the bank given debt repayment schedule for H2.

It has certainly been a swift mark down to 6p mid over the last couple of days.

We either have a bit of nervousness around 30 Sep and whether or not the funding conditions will be rolled or we have a cash raise forward sold to 6p. Time will tell but the longer the EISA is delayed the more likely it becomes that the company need some more working capital.

Yeah it was always going to get a bit twitchy as 30 Sep deadline approaches.

To be fair the SP has held up very well given current market conditions.

Until now permit delays have just been a frustration. However 30 Sep brings with it new risks if CLNs are not rolled hence understandable if market gets a bit twitchy in the meantime.

A lot of moving parts at the moment but I would say it’s incredibly unlikely that the CLN conditions will be met by 30 Sep. They have not even had notice of the final ESIA meeting let alone being granted the permit itself. The final funding package then needs to be signed off by all relevant parties.

I think what will be key is if they are able to roll the terms of the CLNs. Whilst PIs might not be made aware of all the specifics of discussions with authorities you can be sure the funders will require full disclosure. Consequently 30 Sep will one way or another be quite an important date I think.

A bit of a double edged sword this one as personally I would prefer them to pay with equity at circa 1p (given current SP) as instincts are they are going to need every penny they can get their hands on.

The reality however, as previously discussed, is that they likely have no option given the lenders right to refuse equity.