Member Info for HarChris

Prices remain flat with Europe at $32.2/kgV and US $38.8/kgV. 45% of sales were to the US last year and as we know thanks to Paludina and others deliveries are stronger than ever and likely reaching ~50% of total sales. So after very high margins in Q1 it's evident margins have fallen in Q2 but remain healthy thanks to the weak rand, currently at 19.3Zar to the dollar and elevated US prices.

With iron ore rising and steel looking stronger this could turn out to be the bottom and mean we see profits throughout the whole of 2023.

It's obviously disappointing that there's been no big follow up contract wins since the FSS in November but in an industry like this contracts are often like buses, you wait ages for one then a couple come along at once.

I agree with Lottie but it won't be due to lack of effort or drive from JW, just a bit more patience needed.

You have a short memory, we were all saying similar things in 2022, reading the accounts and expecting a cash runway well into 2023, spring to summer, and then in the blink of an eye they were down to nothing and a distressed sale of Helios went through.

It’s the same story again except with barely anything to their name now. I really don’t think they are making it to the next bull run unless that comes well before 2023 is out.

Yeah I mean it is what it is, money talks in this industry and they don't have a lot of it and have no unrestricted assets. I think it's also easy to forget that relatively speaking bitcoin and bitcoin mining would be classified as high risk so raising money now in these circumstances must be an uphill challenge to put it mildly.. and to raise an amount that offers more than simply a few more months cash runway?

Hard to see how.

'We are also evaluating options to strengthen our balance sheet."

What do you think this means? Obviously they can't take on more debt what with virtually all their assets collaterised against the Galaxy loans...

Well I can't see why you're assuming all-in cash cost will still be around $25k per BTC mined when difficulty has increased so much since Q1. I make it almost 20% higher on average which pushes the all-in cash cost to around $30k.

I think there's too much of a cash drain on top of dumping most of the remaining bitcoin to chalk up as working capital changes but fair enough if that's how you're interpreting it.

And in the end of the day three months after the 'transformational' Helios sale all they are talking about now is financial discipline and cost cutting - they may as well have said we're holding on for dear life and praying for a bull run!

The interest payable is eating them up by itself, even if they sneak into cashflow positive territory they'll still be burning through the remaining cash pretty quickly and well before 2023 is out.

And with yesterday's drop in BTC I make margins roughly the same as they were in Q1 now.

I think they run out of cash by September.

So the verdict is not good then!

Cash burn of ~$1.25m + $5.8m in just the quarter alone taking it to over $7m - 6 months of cash runway left from March 31st / less than 4 months runway from today.

Sure they are looking at implementing further costs savings but they've got to say that with cash dwindling to zero. What this certainly is not is a growth stock anymore.

I guess we partially agree. Riot, like a lot of miners, bought machines/rigs at much higher prices and so, due to depreciation, are showing massive losses each quarter. What actually matters is cash flow. They are not burning through tons of cash, they are maintaining a large amount of cash on hand and a significant amount of bitcoin in treasury. They will be able if they chose to continue with their current strategy for as long as they want, selling bitcoin each month similar (or slightly higher if they want to boost their cash position) to the amount they are mining and using up the cash slowly over time.

With zero long term debt they are about the only company that will have every single option on the table, including taking on debt. Why would that be a reason not to invest in them? Funding is the last issue when it comes to investing in Riot and even if they were to issue a few shares as part of the ATM it will be barely noticed. I can see why one might choose to invest in other miners over them though but for different reasons.

That's very different to say Argo that will need financing to keep the lights on.

'Its about cash flow, it's either raise equity, debt, sell btc to get cash, mouths need feeding and they are big mouths to feed too..'

I'm sorry but this is nonsense, well besides the BTC to get cash bit. Riot sells roughly the amount it mines and has maintained a steady cash position for ages now. They've had a $500m ATM placing since last March and have barely touched it after the initial $80m odd of shares sold last year.

Whether others think they are the best miner or not there's a very simple reason why they are the highest valued miner and that's because they have the healthiest balance sheet. $253m working capital + $200m in bitcoin and have eliminated their long term debt. That's a big deal in a sector that is perceived as 'risky'

I'm sure there's a strong argument for other miners having bigger upside right now, what with Riot valued close to $2B, but to make out their in financial trouble is a bit misguided.

'I reckon riot has another month or so before trying to raise some money (so they have 6 months cash burn left)'

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Am I missing something?

'Maintained industry-leading financial position, with $253.6 million in working capital, including $158.3 million in cash on hand (and excluding an additional $29.5 million in restricted cash), and $202.0 million Bitcoin (unaudited), all of which were produced by the Company’s self-mining operations, as of March 31, 2023.'

They also have hundreds of millions in untapped funds from their ATM if they were to go down that route.

It's certainly encouraging that steel is around its six year low whilst vanadium prices are nowhere close to that, with US prices still well above the long term historical average.

Yeah, we all know there's no investment case here currently, it's whether or not there's a 'make it to the next bitcoin bull run before cash wipeout' punt worth having. The cash burn is the main factor in that equation.

Important to note that they finished the year with 141 BTC, of which 116 were Bitcoin Equivalents and by the end of March that had fallen to 85 Bitcoin or Bitcoin Equivalents.

I suspect the cash burn is a lot worse than what you're hoping for.

Yeah you are - it's pounds not dollars, works out at $20m.

The dollar figure is given ($76m total debt / $56m net debt).

You think the cash burn at $22k BTC for three months could be far less than $5m? My $10m figure was finger in the air stuff but I'd have assumed $15m would confirm a reasonably long cash runway still (around end of 2023/early 2024)

I suppose though the 15% jump in average difficulty from Q1 to Q2 means that margins won't be all that different post-period.

So I guess tomorrow what folk are looking at most closely is the cash figure, how heavy the cash burn was through Q1 with bitcoin averaging just ~$22k and how close to cash flow breakeven they are with bitcoin averaging $28k so far through Q2.

What would you consider a positive end of March cash figure given the circumstances? $10m?

After a fair bit of thought I’ve voted no to the majority of resolutions.