Member Info for Hexam

Totally agree HC. I was just addressing the point raised of whether it could go bust but I am less concerned about that as it’s only a possibility. It’s a near certainty though that they won’t have anything much in the way of spare funds to take advantage of any growth opportunities if BTC does rise sharply.

It seems the best that we can realistically hope for in the near term is that they are able to limp along whilst others are sprinting for the line.

Regardless of whether or not crypto is the future ARB needs BTC over $40k to make a profit. It’s less than half that.

So yes, if things don’t change then it will go bust but it can probably survive a few months and, if the raise comes through, a year or two at these levels.

So whilst there’s time there’s hope but please be under no illusion as to the severity of the situation.

I doubt insiders are legally allowed to trade at the moment given the up to date knowledge they will have about the various developments that outsiders do not.

Yeah well, forgive if I don’t take someone seriously who trashed this share incessantly and now suddenly says it’s going to go up 50 fold.

Extreme rampers and derampers have very little credibility in my view - but those that switch from one to the other have none at all.

I presume you’re just being sarcastic given all your past deramping here.

To be fair he’s been doing that for quite a while.

Arb already account this way so will make no difference to them (but will for the rest).

"Is he way off the mark?" - Yes
"does he know what hes talking about" - No

That said the FCF approach is the right way to value the business it is just that everything about the way he has gone about calculating it is simply bizarre and consequently the numbers he comes up with are just plain silly - including his $18bn answer for the value of CINE.

For example:

- the cash flows he has actually used are not appropriate (he's just lifted them off a site without checking they are suitable - which they aren't as they are too high and do not match the numbers CINE have themselves produced. For example they did not have a positive free cash flow in 2021 as his numbers suggest)
- using historic cash flow growth to estimate future annual cash flow growth is just ridiculous (especially the way he has done it)
- he has justified his answer by benchmarking it against 10x revenue but that grossly overstates value. It is normal to use around 10 x earnings NOT 10 x revenue (at least not for a reasonably mature business)

A much more realistic value maybe around $3-$5bn which can be got directly from the 10 x earnings kind of approach rather than an artificially generated set of cash flows.

He doesn't, as suggested, 'work in the markets', that's evident from his methodology but also he admitted that he learnt everything from the internet. If he had done any real-life company valuations based on cash flow projections his approach to the calculations would have been very different. He's passionate and well-meaning but this is just not something he is very clued up on.

They're kept up to date on the Kroll site. Only two future dates there at the moment are the creditors' meeting (Oct 17th) and final hearing on first day motions (Oct 21st).

In addition I assume CINE are still aiming to submit their revised plan by the end of the month.

https://cases.ra.kroll.com/Cineworld/Home-Index

"I think it will recover they still mining and making money"

Making money? Seriously? They are losing money hand over fist which is why they've nearly run out of cash and are in this predicament of trying to sell machines they've only just bought, rejig their loans and raise money at (what was) a large discount.

You’ll be doing better than every mining company then as NO miner is making profits at this BTC level. It’s not just Argo. They’re just one of the first to hit cash problems.

Calamari explained the difference between Chaebol and Sharebel very well so I won’t repeat it.

If anything though Chaebol is the same as Argobull but on opposite sides. The other difference is that Chaebol has been proven to be correct - which AB himself has been very gracious to admit.

It’s quieter this morning as there hasn’t been another dire RNS to comment upon. That’s the simple explanation but stick with the usual fantasies that mindless rampers come up with if that’s what suits you best.

@Portfoliop Power - ah I see. The "what am I missing" was actually me quoting someone else so I just think your post was really meant for them...

@PortfolioPower

Not sure why you are throwing all this info at me? I'm very familiar with the accounts and the monthly financials and the key thing at the moment is that they are losing around $2m a month cash with not a lot it of HODL and it seems not much cash in the bank either.

So they are trying to raise funds with three proposed actions - for a total of $40m.

There are a lot of unanswered questions still (like what is happening now to the intel rigs and the deposits paid). But if they don't get any of the funding and they are losing $2m per month then clearly they can't last that long - as I've already said. So what is your point exactly?

"Just read it. 25% mining margin and hash rate is going to increase from 2.5 to 2.9 by end of October. What an I missing?"

Just about everything.

They have been mining at a loss (using all-in costs) for a while - both in P/L terms and on a cash flow basis. The losses aren't just down to the write down of BTC held. Most of the current asset number you mention represents prepayments on mining equipment - some of which they are now trying to sell.

They have a liquidity issue caused by a combination of factors: increasing difficulty, low BTC price, cash spent on growth, BTC backed loan, high electricity costs (from lack of PPA) etc. The actions they've proposed should see them through this for a year or so but they are just 'proposed' actions at the moment.

They don't state it anyway (not surprisingly), you have to work it out yourself. It is straightforward though, from the quarterly accounts and, for the first two items, from the monthly figures (including those released today). Just divide the costs shown by the number of BTC mined. In the monthly numbers for the mining costs (basically the electricity) there is an extra step as they aren't shown explicitly but come from the revenue less the mining profit.

At the moment Argo's all-in costs are around $40k per BTC mined broken down:

$15k electricity
$10k depreciation
$15k other costs (staff, interest etc.)

So they need $40k BTC to be profitable but obviously less if they can get electricity prices down (or production/efficiency up).

Even free electricity though wouldn't make them profitable at the moment but remember some costs (notably depreciation) are not cash costs. They need less than $30k BTC to breakeven on a cash basis - but of course that would leave them nothing to invest in growth.

Thanks Chae - I'm very familiar with sharebel (and others of his type) from other boards already so not at all bothered by them - just bored. This whole business with the placing is bizarre and will be interesting to see how it ends and maybe we'll get some clues as to why it was announced in the way that it was. It could have been for a very logical reason, it may have been forced or it may just be madness. I'm leaning towards the last of these but I live in hope!