Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I think most of us underestimated how hard it would be to transition post-covid. Is there any small cap that managed to totally transform because of covid profits or through raising tons of cash off a covid inflated share price? Biosynex up until recently was the stand out for me but even they've seen their share price fall from a covid high of €27 to €4.80 today.
For that reason I'm at least pleased that Novacyt are still in the game because if the management team had overestimated their abilities, if David Almond overestimated his ability and thought he could spend his way to success the cash might have already been blown. This cautious approach might just see Novacyt end 2024 having streamlined their business, be on the path to profitability and sitting on £50m+ cash - a very attractive proposition with no DHSC dispute looming over them anymore.
James clearly isn't the person to maximise shareholder returns for a diagnostics company listed on AIM but he's also not the worst person to have temporarily in charge until the dispute uncertainty has passed.
That's very true. If TGR have been given word that the VAT will be paid this week the 'imminent' covers it and yet that news has the potential to cause a 50% reaction from 6p. Why? Because it's more than the stated capital TGR need in the short term and it's completely non dilutive so it changes the outlook and carves out a path to significant operational growth. Also because the market doesn't buy anything management says still so despite the 'imminent' it will still be viewed as a surprise by the market.
Really would be ideal to get confirmation of receipt this week.
Craig did discuss this very thing in December Cindercone. I'll paraphrase:
'So we've modelled our prices for 2024 on the midpoint from what we received in sales in October/November, a fairly conservative view, and even at that price we have noticeable ebitda at the production level of 4300-4500mtV. So as long as the numbers don't get significantly worse than that we'll have a positive outlook from an ebitda perspective and cash flow. It's not enough to fund the entire capital for next year but certainly enough to keep us well above water including all the payments to Orion in 2024 and 2025'
A lot has happened since though. Guidance has been pulled and it's reasonable to assume it's going to be reduced by at least a few hundred mtV. We're yet to receive funds from Acacia and there are at least some doubts over SPR as a credible financing partner. Also whilst European FeV prices are similar to what they were at that Oct/Nov midpoint the US price has fallen by at least 10%, possibly a bit more.
This is a terrible time for all vanadium producers and survival will be all any can hope for right now. Next is Largo reporting their Q4 financial results tomorrow evening - they've just sunk to eight year lows so the market obviously isn't expecting great news.
Jammin add THX to your list.
Low debt, about to go net cash positive, will make $90m ebitda this year with POG at $2150 against a $102m mcap.
Only three years left for current mine but should make at least two times mcap in profit in that time. Mine extension should add another couple of years and then a bit further out they are hopeful for a new 100k ounce mine and also have lithium interest.
Why do people take such gambles on loss making high risk companies like this in such a gold environment? So many small caps making a solid profit, with little debt and therefore able to navigate hurdles that come their way with ease.
Been so many red flags here of late.
Sloppy of me, of course I knew that, thanks for the correction!
Even more so then the top positions are already more or less equally split between Novacyt and YG now. I'm pretty happy with how it's looking although a CEO to replace James with strong commercial ability and a history of success would be the icing on the cake. If not we'll most likely see Lyn given the more important brief with James more of an acting Chairman rather than CEO.
Sorry to nitpick but Joanne has a slightly different title to Head of R&D, Paul Oladimeji's role hasn't been filled yet. This is the senior management team as far as I'm aware.
CEO - James McCarthy
CFO - Steve Gibson
COO - Peter Coyne (formerly VP of Global Operations at Yourgene)
Chief Development Office - Anthony Dyer
Chief Scientific Officer - Joanne Mason (also from YG)
And of course Lyn Rees who is still CEO of Yourgene.
Then you've got senior members of YG like Jo Cross who is Director of Marketing for YG but probably will be made director for the whole group -as you can see this is more a merger than typical acquisition.
CC we've already been informed that they've not paid their $3.5m, on the 29th Feb (due 28th Feb). There's now a dispute between BMN and Acacia with Acacia supposedly asking for a two month extension and Craig saying 'nee'. So no we're not specifically due an update til there's some movement/progress:
'The Company is actively engaging with Acacia to resolve this issue as quickly as possible while reserving its right to take appropriate legal action.'
It's a total shi*show though as they move from one crisis to the next.
As I've highlighted previously YG was a £70m company even before covid, rose to a high of ~£135m during covid and was still valued around £60m well into 2022 with a net cash position of £3m, but their downfall came with the £5m loan they took on that year and a failure to reach profitability soon enough to give them any further options bar diluting to oblivion.
Now YG, alongside Novacyt, is part of a group that is debt free and has £44m cash that appears to be being channelled primarily into its side of the business. Does this guarantee success? Of course not but the chance of fulfilling the potential that many IIs have recognised in the past has ratcheted up many times. And what that success, according to brokers would mean, is a company valued in the hundreds of millions.
Then add in Novacyt's own portfolio and the potential for a number of small bolt on acquisitions alongside (and possibly big ones if the dispute goes our way) and you see how a 'midcap' diagnostics business is still a possibility here.
We’re entering ‘EBITDA exceeding current mcap’ territory now if POG remains high and forecasts are met
Well Joanne Mason was the Chief Scientific Officer of Yourgene so she essentially took over an expanded brief as the CSO of the entire group. Right now the board set up feels very positive. You have impressive individuals like Joanne, clearly capable entrepreneurs in Lyn Rees and you have the dull accountant types in James and Steve with tight control over the finances.
We're clearly not going to get any updates on the DHSC situation until there is some settlement in place or until a judge decides the outcome in June, they've kept tight lipped for two years so nothing is going to change in the run up to the end game. With that so close now I wouldn't expect many strategic updates but hopefully the next trading update will at least start to show the cost savings impacting our margins as well as hopefully further steady progress on the sales front.
There aren't many options for Chippas though at this stage. You either take as much cash as you are offered as often as you can and simply increase your chance of survival (continuing to earn a ceo salary and 9.33m shares a year) or you take the gamble and wait and hope that the share price catches a huge wave before you drown.
With the market's awareness of Argo's constant cash needs I doubt there will ever be the potential of enough of a rally to make the latter a risk worth taking so it probably is in his interest to just raise as often as possible.
Really it's a case of what comes first, running out of working capital or the next debt maturity deadline? As of 30th Sept they have $13.7m of debt maturing so only a small proportion of the overall debt but still a reasonably sizeable sum.
Unless they can raise enough beforehand to push both those things further back but we're still forever delaying the inevitable and it won't be too long til the fleet of machines will need to be replaced just to continue mining 50 odd coins.
How do you know he's still active on Linkedin? As far as I can see he never posts anything and only occasionally likes a post, the last being 5 months ago. Clearly not a tool he uses (but should, admittedly).