Member Info for HarChris

I would argue that it’s as simple as this not being a ‘sexy’ play right now. Putting WK aside there’s less of a growth story narrative and more of an enormous cash cow and AIM is so speculative that you find the former ends up beating the latter in terms of returns, even when the health of the latter is unquestionably stronger.

This is now extremely low risk and as long as gold remains bullish the rise will come with time, either because IIs buy in and create a new higher base or because West Kenya has progressed enough to excite the market and bring a whole load of new growth-hungry investors here.

As rubbish as the share price reaction has been recently to both the gold price and the tremendous progress made at least now there's numerous options for boosting the share price in the months and years ahead, what with so much cash being generated... I'm sure we'll start to see even more institutions buying and holding but if the SP remains stubbornly depressed then vastly increasing the dividend will do the job and there's even the option to initiate a massive share buyback.

Are we expecting a trading update in July before the interims/half year report in September?

Fair enough I'll give you that. I guess it's just a share that I've followed for a long time and is of interest to me but as I have no plans of even a short term trade unless it goes well below share price i'll be reasonable and leave it at that.

I think it's fair to say that if bitcoin doesn't pump before the need for refinancing then Argo are done with, they won't pull off another £5m+ for the same reason (survival / paying off debt) so Argo basically has til perhaps earlyish Q4 for bitcoin to rally to have any chance of survival.

If that does happen they then have to see a transformation during 2024 so much so that they are able to withstand the halving in mid 2024 and be in a position to first to negotiate a new hosting agreement and then be able to replace their mining fleet a year or so later...

As long as gold stays firm around the $2000/Oz mark then it's going to be no issue whatsoever to fund West Kenya with cash flows and a new debt package in the future (with debt having been reduced towards zero).

Would like to see the $6.5m to double production at Singida prioritised though.

That was meant to say Q2* below. Also worth noting that Largo put out an operational update followed by a comprehensive quarterly update a month later so there's only so much analysis that can be done from this initial readout.

Some more thoughts on the Largo Q1 update:

Largo produced 2639t v205 = 1477mtV equiv, BMN could well be about to post a record quarter of ~1250mtV

Tiny difference in production figures, their mcap now £225m vs BMN at £42m, disconnect continues to grow despite Largo's operational performance shaky at best.

Largo were loss making in Q1 selling at $10.39 per lb + a huge amount of inventory so they'll have burnt through tons of their cash this quarter at just $8.46 per lb. Appears likely that any stockpile they previously had was sold earlier in the year.

Going forward a weakening Largo is certainly something to keep an eye on as they are the largest European supplier.

That slide showing the improvement on every front over the past twelve months and then then decrease in share price isn't able to capture just how much risk has been reduced on top - SHG runs no risk whatsoever of liquidity issues now and the high executional risks associated with bringing a new mine online have come and gone.

Should be more than double the price it was a year ago.

My main takeaways are close enough to BBN to paraphrase his recent tweet:

1. The $6.7m VAT refund not booked yet. If booked in Q2 then it would have reduced net debt down to $2m and will be seen in Q3 results.

2. The first 20 days of July has started well with NLGM on track and Singida running ahead of schedule again. But stressed it is early days.

3. Singida reduced AISC not down to the use of stockpiled ore. Based on higher oz output coupled with Singida being a new mine.

4. Lombard is now on the register at 6.7%. I don't remember seeing a TR1.

5. WK drill results are expected next month.

'Bottom line is can Ncyt actually perform, never mind about Ygen? When will they make any profit post COVID?'

Well wasn't it you who said all it will take it trimming some of the fat from YGEN to be instantly profitable? So that's a start. Then there's the ~£65m which will go towards further M&A (potentially another three acquisitions the size of ygen) and finally it remains to be seen if all the work novacyt have been putting in can deliver profit in the months and years ahead.

To eventually end up with say a group producing £10m profit at a PE of 12-15 and hence a 4X - 5X return from here seems a reasonable conservative target to me.

I'm not sure it does CS because we have a counterclaim almost as large as the DHSC claim - so for balance I should probably point out that there could be a serious drop in the share price or a massive cash injection on top of what I already included.

What needs to be pointed out is just how much the risk here has ratcheted up. So again I'm going to go back to the timeline:

7th October 2022 - Strategic Actions to Strengthen the Balance Sheet. This was the first clear indication of liquidity issues. On paper the update was very positive, a £24m raise at 27.6p, an amendment to the existing equipment financing agreement and, slightly less positive, the sale of 3400 new machines /0.34EH of hash. This was always the first anti growth move we saw.

31st October 2022 - Placing/Subscription at 27.6p falls through and a further 3843 new-in-box machines sold.

28th December - What the previous updates had been leading to if insufficient improvement in bitcoin price, the sale of Helios. This however brought in $65m of much needed cash that was able to keep Argo in operation for what was assumed to be the foreseeable future.

After that the likes of Hexam and I highlighted that Argo were in a race against time for bitcoin to enter a bull run. Whilst it has flirted with that over the following seven months it failed to rise sufficiently enough to reduce the pressure on Argo's bottom line leading to what we've seen this week, a placing at just 10p. It's as clear as day that finances are severely problematic and the first opportunity they got, following a three week improvement in the share price, they took.

But where does this leave Argo? Previously they were able to raise £10.8m selling new machines that tied them over for a few months followed by the $65m sale of Helios + an additional $35m asset-backed loan with Galaxy and still seven months later they were forced into another distressed refinancing. How long, realistically, do you think this £5.75m minus costs is going to see them through?

There's a very simple reason why YGEN holders may buy NCYT... if they truly believe YGEN is worth double what ncyt are paying for them then effectively they can today buy novacyt + yourgene + ~£65m cash and all debt wiped out for £31m! And they consider YGEN to be worth about that alone and a lot more with cash behind them.

Whilst it makes absolutely no sense from a fundamental basis one has to accept that Argo was able to pull off a placing at 10p. If it wasn't for the fact that there is still hype around bitcoin stocks and that Argo is the only LSE UK bitcoin mining play then I'm sure the share price would be 2p now and failure would be as good as certain but we have to acknowledge that there is still interest in Argo and this placing will have guaranteed survival for at least six months or so (or instis would not have bought in at 10p).

This is going to continually be traded with big moves in either direction so it's all about timing/luck ovrest of 2023 before staying out for good if bitcoin hasn't recovered enough by then to prevent bankruptcy.

SF, it’s worth noting that BMN don’t forecast the vanadium price / outlook, that’s done externally. They are using RBC’s figures but they’ve already been well out, forecasting just $32.5/kgV for 2023 which is evidently going to be wrong by a fair margin.

The investment case from the mining side is twofold here - (i) that these forecasts turn out to be plain wrong as they have been historically and that the deficit narrative plays out and (ii) the focus on optimising Vanchem leads to a much leaner operation that sees all in costs reduce significantly as we reach 5000mtV for 2024.

Great post tekanalyst and spot on.

VRFBs (and to a lesser extent the growing chemicals market) turns the vanadium market on its head.

I'm more interested in the producer that set extremely ambitious targets and has gone ahead and smashed them with gold near ATHs rather than more speculative exploration plays but good luck with Greatland.

Anyway back to the global leader in cryptocurrency mining that is Argo.

Oh fair enough. My thinking was simply that it's almost certainly going to go through and a 7% gain over a short period is sensible. But yeah with the markets on the move it's no where near enough of a gain to be worth it, would like to think YGEN holders themselves move first and start buying ncyt.

From the Largo Q2 update yesterday

'V2O5 equivalent sales of 2,557 tonnes in Q2 2023 vs. 3,291 tonnes sold in Q2 2022 due to lower available inventory'

This is interesting as the previous month they had sold heavily into the higher Q1 prices... this looks like they've used up all their stockpile and so have no ability to prop up a European market heading into deficit.