Member Info for HarChris

The point of my post was to show that another placing is inevitable but really what it highlights is that there isn't a way back for Argo. Since the saleable assets were all flogged Argo has managed to reduce its debt, over exactly one year, from $76m to $70m. Net debt has actually increased $6m because cash has decreased by $12m and there is 83 less BTC in the accounts and that includes a period that included a placing.

The only feasible way of surviving the next twelve months is to raise enough to cover the $14m of debt crystallising within that period and to have enough working capital to make it through H2 post halving, I would imagine the amount needed to achieve that would be in the ballpark of $25m, assuming a likely path for the bitcoin price. Not an impossible amount to raise but considering the July placing achieved less than a third of that it's an almighty ask and requires a fair few things going their way *just* to make the debt repayments and be operating this time next year.

Does anyone disagree with that?

Sorry, one small error - the placing raised £5.75m, not dollars so let's call it $7.2m.

That'll teach me for trusting my own memory rather than double checking the rns. Anyway I hope the below is helpful.

There's nothing worse than posters spouting 'placing!' without warranty so it's at least reasonable for new investors for me to share a timeline of Argo's attempts to refinance and deleverage over the past year, year and a bit so you can come to your own conclusions:

7th Oct 2022 - 3,400 new in box Bitmain S19J Pro machines sold for $6.8m

31st Oct 2022 - 3,843 new-in-box Bitmain S19J Pro machines sold for $5.6m

28th Dec 2022 - Sales of Helios for $65m to Galaxy and refinancing of asset backed loans with a new $35m loan with Galaxy

These deals reduced debt from $117m to $76m whilst also boosting the cash position to $20m plus 115 BTC.

Having sold their flagship asset and new machines the hope was for BTC through 2023, but that never came, or at least not to the degree to allow Argo to generate cash organically so with no other levers to reduce debt and increase working capital next came a placing:

July 2023 - total of $5.7m gross raised at 10p per share.

Following this and as of 30th September Argo now has debt of $70m and cash of $8m + 32 BTC.

Argo management post Peter Wall's exit have done a tremendous job of battening down the hatches in order to continue operating but the noose gets ever tighter around the neck as debt maturity looms ($14m within 12 months) as well as the halving in five months - even a placing would be insufficient to raise the sort of cash needed at current share price level to stay in business for any length of time post halving.

I'm sure there was a time where they could have actively chosen to stockpile instead of selling at just above cash cost B/E but currently total group costs are around the $170m mark, less some costs that wouldn't be sunk if they pulled sales and you're looking at $40m needing to be absorbed for just one quarter... there just isn't enough cash set aside even for a few months but certainly possible both Largo and BMN decide to cut some sales to their lowest priced markets in the hope of catching the rebound with a stockpile to sell into.

Not quite what I said, I attached no blame to the auditors... I said it was a regulatory issue (probably of TGRs doing) that led to the late issuing of accounts.

As there is less oversight for half year reports with no auditor sign off that won't happen this time.

I bought some shares recently as I mentioned on here but I'm out now on this strong move. Will likely buy into the next raise if its offered to non holders.

Never said I was worried, it's just commentary. Pointing out the benefits medium term of this strength in share price.

Would you rather newbie investors got carried away and had no idea of Argo's financial situation?

Yesterday FAR reached a new all time low. Right now Largo has just dropped to an eight year low.

Certainly a tough sector to be operating in currently - I dread to think what state BMN would be in if Craig hadn’t been parachuted in when he was.

Yeah outside China and Russia there is only really Largo, Bushveld and Glencore producing vanadium at any scale and they make up roughly 5%, 3.5% and 4.5% of global supply respectively. All fairly equal in size although obviously for Glencore it's merely a footnote in their reports.

Latest quarterlies showed a small increase in Glencore's vanadium production through 2023.

And just to add weight to what i'm saying (although there really shouldn't be any need) Battery Minerals were issued over 5.5m shares on April the 8th of this year which were worth more than the recently issued shares because TGRs share price was more than 100% higher. Did BATs share price therefore double? No if anything it trickled down.

'Harchris, Battery Minerals have risen for the simple reason that TGR shares have been awarded to them which doubles their market cap. Read the RNS from 19th April, a part of which is below'

I'm sorry but that's total nonsense. The terms of the acquisition were agreed ages ago and any investor would know exactly what it meant in terms of shares and when they were being issued + the numbers you're quoting are at 52.6p a share.

Battery minerals has more than doubled in a week from $6m AUD to $16m AUD - that's a $10m AUD = £5.26m increase. They've just been issued 6.5m shares which at current prices is less than £1. It has nothing to do with the rise whatsoever.

It won't be delayed because it's not audited... it was the auditors that led to the delay in the full year results.

Going to take 160m shares not 1.6m shares to make any further progress in terms of debt reduction. Good thing is share price remaining strong at the moment which will help with management's placing negotiations.

'The key to unlocking the value here is the market sentiment. '

Agreed but what profitability and self-sufficiency affords you is time. SHG doesn't need a strong share price for financing purposes so they just need to keep delivering, keep generating cash and wait for that sentiment to eventually turn. And if it takes too long engineer it yourself through buybacks or large special dividends.

For clarity I should add to my comment re the situation with cash of just 212k against loans of 5.1m maturing within twelve months.

The interims also showed inventory valued at €6.6m and we've seen a huge increase in sales through H2. Positively mgmt have managed to offload the extra stock at fairly high prices. Revenue for July from palm oil alone came in at €5m for example, hence it looks like DKL will get themselves out of this mess and with much better times ahead as long as they can keep up the H2 numbers and get the cashew business sorted.

You may well end up right that this never sees 700/800/900 pence again but is that a reason not to hold or buy at 60p? Obviously not. If any prospective even expected a pound a share then that's more than a 50% gain.

Investing is about deciding at any point in time whether to buy more shares, hold, stay on the sidelines or sell. If you hold at 60p at an average of 600p and think you'll only see 300p again then obviously you'd hold if you have any common sense, you'd hold until your losses are significantly reduced before selling and moving your money elsewhere.

WBA and others however seems to think it has to be get your money back or bust. That's a recipe for wipeout eventually.

Sure jk but it wasn't me that was calling you and others stale and old, that was some other poster. All I've done is try to share the positive side, of recent operational progress and in return got called a mouthpiece for the board and a throwback amongst other things. No by you, granted, but by the poster I was responding to.

I've consistently played the ball not the man here.

I won't believe forecasts either as for example on the cashew side they went from claiming to quickly reach 50% of capacity in Feb 2022 and to be operationally cash flow positive by Q4 2022 to the latest Q3 update in 2023 which showed they're struggling to achieve 25% of nameplate capacity eighteen months after stating 50% would come quickly.

However I chose to stick for now and there has been significant strides forward on the palm oil side, so much so that we're going to easily see record yearly turnover posted for 2023 and profit too. And at just £10m mcap there's a lot of potential ground to recover.

Don't get me wrong, I don't see only blue skies, I see the whole picture and recognise how much this investment is on a knife edge, short term. The biggest sell off came after the interims which revealed shocking performance from the cashew side in Q2 (which was hidden in the quarterlies) and cash of just 212k against loans of 5.1m maturing within twelve months. The slide from about 3.4p to the low of 1.8p is therefore understandable.

The risk of being unable to meet those upcoming debt repayments makes this a critical juncture. It's why I celebrated the enormous boost seen in November's palm oil numbers that continued an important streak of MoM improvements. It of course needs to continue and the same has to happen on the cashew side but get through this period without being forced into emergency fundraising and the anchor holding down the share price will be removed and we'll see a move swiftly back to at least 4/5p. Fail over this period and it'll get a lot uglier.

Let's not forget Shanta's Tanzanian VAT receivable of US$27.0m - equal to about 17% of the current market cap in cold hard cash.

As more and more profit is produced I'd imagine receiving this money in the form of tax offsets should be a simple solution.