Member Info for Happysurfer

What do we think the latest capex requirement is ?....logic would suggest somewhere in the region of $500m given everything seems to be circa 20-25% higher minimum than what it was 12 months or so ago.

It's a slight dichotomy at the moment in that rising MOP prices is lending itself to a significant uplift in NPV; however at the same time the capex requirement is rising all the time as is the cost of capital. So whilst the overall project commercials are phenomenal there are short/mid term pressures in terms of having to revisit funding requirements and also the cost of obtaining those funds.

Any company that requires near term funding is being indiscriminately marked down no matter the robustness of the financials unfortunately.

The investment allowance must be placing companies like EQT in to the shop windows of Big Energy ?

Not sure of the precise mechanism that qualifies investment for the relief but given it is to incentivise investment in UK extraction and to support energy security, then acquisition of EQT to expedite roll out of the valuable tech may be precisely what the IA is intended for. If so, Big energy can effectively acquire the business for free (90% discount)

For me, this tech is crying out to be in the hands of someone with deep pockets to roll out globally and at good speed. Perhaps the IA in conjunction with credible reports such as the RNS this morning may just be the catalyst for some corporate activity.

Certainly painful to watch the full circle play out of 0.4p to 3p and back to 0.4p ?.......especially if Amati continue to ease out of their position.

Riverfort will also not want to be exposed to any equity so we have no idea what sort of hedging they are up to in the background.

Perhaps we can draw down the 2nd 5m tranche to repay the first 5m.....get some sort of ponzi scheme up and running !

What odds on the first debt repayment being settled with equity ?

Not sure there is any good news in this respect.

The new CFO has dropped the ball with a convoluted CLN arrangement which appears to have alienated existing LT institutions who have supported the business to date so are now clearly acting accordingly.

Many would have supported another raise at circa 1p using LT strategic investors but instead we have this mess.

The CLN arrangement, like the commercials, are over engineered so investors have literally zero visibility with regards to future earnings.

The potential remains enormous hence why continue to hold but this in no way precludes ones reason to question. The new CFO has had a very shaky start in my opinion and as one myself am watching very closely.

Agree nothing wrong with some healthy debate !

The reality of the situation is that the SP was at 1.25p and showing strong momentum on 21 March just one week before the CLN RNS. Today, just over 2 weeks later, an almost vertical descent sees us at 0.80p (35% drop); to say these events are not in anyway linked is naive at best.

A business like Riverfort does not care about long term prospects of EQT and generally they have zero interest in holding equity. They simply want to lock in their "guaranteed" margin and then move on. Consequently, given the likelihood of CLNs being converted, they hedge their position accordingly. Various ways to do this but this is their bread and butter.

Admittedly there are repayment options so lets see if they get the cheque book out in 5 months time.

...but you can say on the balance of probabilities they will issue equity.

I recall you previously stated "it was highly likely they would repay the loan". Complete speculation ?

...because if they are issued equity ( statistically the chances are they know they will be) then the equity will be issued at the avge price of the 5 days running up to the drawdown. They get sufficient notice. Forward sell at 1.25p and first drawdown around 1p and so on.

Its easy money. If you genuinely think they will not issue equity to cover the loan then fair enough but it still leaves the SP open to manipulation in various ways over the next 12 months whist the facility is in play.

For transparency I have a decent position here but was very disappointed with the CLN arangement. I am just hoping EQT can buck the trend and will have some material news to break the cycle.

Unfortunately I think the SP will be , to a degree, in the hands of Riverfort for the foreseeable future. It is no coincidence that we have gone from 1.25p to 0.8p in the few weeks that they have come on board.

Typically with these CLN type arrangements they forward sell the drawdowns in the knowledge they cannot lose hence 1.25p to 1p in no time at all. Then we start the next leg down before get wind of the a further drawdown.........the often referenced death by a thousand cuts with these arrangements.

What we need is big news to break the cycle but until that point continued weakness. Hopefully EQT have a large rabbit to pull out of the hat. Who knows they may even be able to service the debt without issuing equity but odds are not in there favour in that regard.

It does beg the question as to why the EQT gasification option is not the tech of choice for most if not all new plants. Why, if the tech is the most environmentally friendly, the most efficient and fully patented etc are other companies (especially incinerator ones) getting any market traction whatsoever.

Is it simply a question of size or PR perhaps ? …There was a poster here a while back who I recall worked for local authorities in waste and claimed companies of the size of EQT would not be awarded large contracts to roll out nationally as would not pass the due diligence from a size perspective.

EQT tech in the hands of a major energy supplier could achieve global dominance in a short period of time if the tech is that superior. One wonders why no one is sniffing around the business at these low levels…..maybe they are.

One fear is that inferior tech but in the hands of a major player could become the preferred supplier.

Raising £15m at 1.5p is now looking inspired.

PI sentiment is often a very good gauge as to when to trade. Start of last year ,when we were seeing double digit SP predictions for YE, it was a massive red flag and some decided to take some off the table.

The opposite is true now with some long term bulls getting twitchy so looking very attractive again now as a mid term play

peers !

Getting close to capitulation where I think we will then consolidate for a period.
Market wants to value on profitability at moment and EQT at best shows b/e this year. Considering missed last years projections by some margin there will no doubt be a bit of de-risk applied by the market hence expecting another small loss making year.
The real issue is the price got way ahead of itself start of FY21 and with that PIs exuberance shown by the price predictions at that juncture.
So b/e business with strong pipeline/potential but as yet still somewhat unproven operating model; £75m MC feels reasonable. Not a lot of point comparing to piers who are on crazy Revenue multiples as the clue is in the word crazy.
Lesson in banking profits this one. Took 30% off the table in mid 2's but hindsight hey. Still thinking EQT will have their day but suspect rise, when it happens, will be more measured now.

It's a fair reservation for sure RB but a couple of thoughts:

Firstly if that were their intentions they would not bother with any bullish comments such as today's in relation to how cheap they think the business is at current SP. The other point is, even in that worst case scenario, we still gain so in theory no downside to worry about.

A bigger risk for me is a voluntary delist where they cite lack of liquidity and no access to capital etc hence listing not required. I believe this only requires 75% S/H vote so could possibly get that through with connected parties ?

In such an event it is not clear to me what we would get out of it but no doubt a scramble for the exit would ensue in the 20 business days notice required before the delist comes into effect.

It's not only revenue but transparency of earnings. Ultimately they will be judged on bottom line.

The operating model is relatively complex and it is very difficult for anyone, irrelevant of ones background, to decipher the deals from a profitability perspective; until we get that visibility I suspect any rerate will be limited. Mid-long term however huge potential if can leverage deep pockets of partners and take advantage of this sweet spot.

I think it is unlikely. The bigger question is will they formally announce it if going to miss. It may not warrant a profit warning disclosure as such depending on how a financial close is reported in their forecasts. Possibly some wriggle room albeit temporary.

Concern here at moment is we have had a string of positive RNS that have not moved the SP. However a profit warning type RNS would I imagine see us sub 1p as it becomes a management credibility issue.

Hopefully can work some magic but have serious doubts on that front. Unfortunately set themselves up for a fall with bullish projections and confirmed again only recently when had every opportunity to cite COVID delays etc.

Anyway let’s see …….

…with selling equity stakes in projects is that it prescribes a tangible value to that project. The market clearly thought one of the flagship projects was worth far more than this hence the weakness.

In short we need a major EPC and the failings to clarify the position with the Wood Group is further exacerbating matters. To be frank we are presently nibbling around the edges linking up with Micky mouse partners and until that changes the drip will continue.

There is a reason we are not tracking other green tech in recent months. We need to make sure we take advantage of the current sweet spot and that required partners with deep pockets.

Options would be honoured in the event of a buy out so it’s irrelevant whether the BOD own the shares or not at this stage; they benefit materially no matter.

Listed companies need to publish audited accounts within 4 months of Y/E so by April (for Dec Y/E)

The 2 month extension for Covid allowed until June so it appears they are back to normal reporting this year.

I think the challenge we have at the moment is the fall in spot prices since June 19 mean it no longer represents any discount at all.

Lenders will always run sensitivities below spot so will probably be doing so now circa $175-$200.

I would imagine the recent change in direction to consider staged development and/or a different in product mix between MOP,SOP and salt is being driven to an extent by the potential lenders.

That being said i think the project financials are robust and will have no problems ultimately raising the necessary finance; just remains how favourable those terms are.