Member Info for Hexam

Hi AB,

No wonder you're so keen on ARB if you think they'll be mining close to 500 btc per month by the end of September/early Q4!

I respect that you always back up your estimates with numbers and logic but I do think each of your assumptions is aggressive and when compounding these you end up with a very optimistic scenario indeed.

It's not just the explicit assumptions you've made (like over-clocking where I think 50% and 25% is ambitious) but the implicit ones:

- You've assumed everything will be up and running by the end of September
- You've assumed no under-hashing i.e. all machines running at 100% for 100% of the time
- I think you've assumed that nobody else will be benefitting from immersion unless this is included in your global hashrate estimate of 300EH. If it is then I think the 300EH, which I feel is already a bit low, is well under-cooked

Personally I think around 300btc a month is a much more plausible figure come Q4 and I'd be really happy with anything north of this - though of course I really hope your estimates are much better than mine :)

This does seem a neat little deal for ARB especially if no money has changed hands as part of the swap. It's a much more efficient way of moving machines i.e. by not moving them at all and getting a newer model in the process!

So a good RNS it seems that ticks another item off the list and in a novel way - even if it doesn't quite perhaps warrant some of the hyperbole appearing today. A solid piece of the jigsaw rather than a gamechanger but very welcome nonetheless.

I agree Wolf, the sp is not in the ideal place for shareholders at the moment for an equity raise, especially for a placing, but I'm not so sure it is as big an issue if it was a rights issue (which I think is what it would be from what PW has said before).

If it's an RI and they want to raise, say, £100m then they would ask existing shareholders for the same amount per share they currently own (i.e. about 20p) regardless of the current sp. So we'd be able to maintain our share of the company for the same amount as we would if the sp was much higher - though the earnings per share would suffer more so in this sense dilution is still worse. Of course those who don't take up the rights will be diluted more because of the current sp (just as everybody would with a placing) but at least they would get some value by selling their rights.

Despite this I agree it makes more sense to wait for the sp to be much higher as this would be better both for the company (in terms of ease of raising funds) and for existing shareholders. In the meantime they have other options (selling BTC, mortgaging assets, other loans, JV etc.) but I think, as with all miners, as investors we just have to accept that it's the nature of the beast that more equity raises are always a possibility and maybe quite a likely one at that.

Ah I see, it was the mcap you were suggesting would be £500m - apologies I misread. With £100m+ of regular profits then I think your £1bn mcap is closer to the mark though I'd be hoping for more by way of both profits and mcap - but recognise it won't be plain sailing to get there. Signs are good though.

FP,

They definitely sold some in Jan as there was an amount in the figures for the loss made on sales. As you say though the number appears to have been small.

I think what Wolf may be suggesting is that there should be a commitment to sell EVERY month not just the odd one or two. I'm not sure I'd go that far but would like to see them sell more regularly especially as the 200 or so they did sell in Feb was quoted as being for operational costs (rather than new machines or other growth reasons). Unless they have a JV or something similar up their sleeve they need to sell a lot more BTC to avoid an equity raise and even then it probably won't be enough eventually.

Personally though I'm not worried about an equity raise so long as they don't solely rely on this method - which it is clear now that they are not. After all, it's more important they grow and the money's got to come from somewhere.

"which based on their current last report profit should nearer £500m, giving a share price of 29.60ish"

If they were to report profits (without one-offs) anywhere near £500m I would expect the sp to be closer to £3 than 30p!

Can't see where you've plucked £500m from though - seems very ambitious. Nevertheless I agree that if they stay on track the sp should rise nicely as profit grows and net debt continues to reduce.

The reason I think it hasn't been mentioned in the 180+ posts is that it's not that big a deal. As I said they've paid off some deficit and they are going to pay off some more next year. That's good but they knew they had a pension deficit and had a plan to pay it off which they are doing. There is lot to like in this report (and a few not so welcome things) but I don't think you've found a hidden gem here but happy to be proved wrong should there be an upswing credited to this in the future.

@JG68 - Are you referring to this?

"the Board expects to review the status of certain balance sheet items, in particular relating to the closed book Life & Pensions business and the Group’s finance systems. Any accounting adjustment arising from this review would be non-cash in nature and would not affect our expectations for 2022."

If so then this refers to the administration services they provide for other companies' pension (and life) business not their own staff pension scheme. Apologies if it isn't (and would be interested to see it) but I couldn't see anything else.

"That £255m switch from deficit to surplus is worth more than an additional 12p to the shares. When the market wakes up to this - and the shorts need to quickly wake up - we’ll see a rapid change in sentiment."

I'm afraid this a red herring so there is nothing for the market to 'wake up to'. The majority of the improvement comes from the deficit payments made during the year (£155m) so effectively they've just paid off a debt - but in any case the 'pension deficit for accounting purposes' is not what is used for determining the company's obligations - that it is the actuarial valuation. The company is still expecting to to pay £30m of pension deficit payments on this basis in 2022 (as expected) and possibly more. What is good is that they are getting to grips with the pension scheme issue but this is not some headline news that's been buried in the detail - much of it has been well publicised already.

@whoknowswat - Fair enough. and agree, that should be one almighty resistance level and a bargain if you can get it but hard to see it going all the way down to book value.

"All I said was if it dropped to 16p I would take a punt, I am not saying it will drop to that price. I hope it doesn't for all those invested, but at least I am trying to back my statements up with hard facts"

Agree to the facts part but do you really use book value per share to value a company and how many are there at the moment where this is greater than the sp? If anything the fact that the current sp is not much higher than the book value per share suggests surely it's a bargain if anything? It's certainly reassured me a bit - thanks :-)

"mcap353.10M with a profit of £285.6m go figure that one out"

Yes, but the operations are still loss making - in fact operating losses increased from £32m to £86m and that's before interest payments. It was only the £400m+ profit on the business disposals that give such a large overall, one-off profit figure.

That said, with everything else in the report I still think this rather unloved company/share is very cheap at the moment so not too worried and look forward to better times ahead - eventually.

FP/Blubay,

I'm not sure but my reading of it, by the way it is worded, is that the funding is for the new transformers and is secured by those transformers and - as it puts it - "the contracts to acquire the Financed Equipment".

This is similar to what a few other companies have done recently when buying machines i.e. take out loans against the value of the machines being purchased so in effect (partly) funding the machines this way. Of course the loans will still have to be repaid over time.

I may be wrong but I don't think any of this money will be for machines but is simply to help fund the new electrical equipment (and if it is then it is a good way of doing it in my view).

Cheers bullmarket.

K3,

Please just get it over with and filter me rather than just give ridiculous responses to points I haven't made.

Some people are fearful of a dilution (as it happens I'm not one of them) but some were suggesting the announcement today took away the worry of this and the uncertainty of how all machines would be funded. I was simply saying that it does not and I can't see how you can argue that it does.

"Do you think a company going through a rapid development, in a dynamic environment of pandemic and war, should have to lay out its entire strategy in front of its competitors, just to massage the neuroses of its faint-hearted investors?"

No - And I never said it did.

"I can never understand why moany, jaded or fearful investors don’t move on to investments that are less stressful."

I don't think I am any of these things. Having a diversified portfolio means I don't get particularly stressed about any one investment and despite being underwater on ARB I am certainly not stressed about it at all. I am optimistic about its future and excited by what may lay ahead - and in the meantime it presents wonderful trading opportunities.

As to being 'moany' it just bugs me that some people only see good news whatever it is and then mislead others by saying things that simply aren't true. So if contradicting someone who is doing this is being 'moany' then so be it.

This board should be open to all views and if you don't like that then perhaps you should stick to the Discord group or just add me to your filter list with all the others you don't agree with.

"There isn’t an insolvency risk."

Seriously? That makes it unique amongst companies as they all have this - just some more than others. Its main risk is clearly BTC price. If this falls below its running costs per BTC mine then it will eventually become insolvent. Another risk is that it cannot grow as fast as it needs to in order to mine enough in order to meet running costs. And as with all companies there will be others.

Such risks don't keep me awake at night, especially given current levels of profitability, but to suggest there is no risk at all is misleading at best.

@Blubay - I agree it's a good deal, I'm not arguing with that - though I don't get your point about this recycling cash from the IPO. It just seems to me to be a new loan secured mainly against the transformers they've just bought.

My issue is with some that have been suggesting from their posts that the near-term prospect of an equity raise has suddenly disappeared, almost as if all those machines are now magically funded. The funding is still required for those but at least this confirms that this type of arrangement is firmly in place as one of the potential solutions.

"Congratulations! It took you less than half an hour to manufacture some FUD."

Great - so you know the answer about how they are going to fund the machines. Please tell, as that would remove all the uncertainty and doubt - and hopefully the fear too :-)

"It certainly has for the shorter timeframes. Good news."

How? It has paid for either something that we were told was already paid for or something that we didn't think was needed yet.

The question pre-occupying many on this board was how are they going to pay for the $100m+ that is outstanding on the 20,000 machines already on order plus all those to follow. This does nothing to answer that question apart from perhaps to suggest that they may adopt a similar approach for part of the solution - which would be good.

"Well this rns has cleared the air about placing"

No, it hasn't.