Member Info for Hexam

Yes, good news indeed and of course the trolls are doing their usual trick of spamming the board with fake news and childish insults to detract from it. All very pointless as nothing here affects the sp but just means useful discussion about IAG for genuine investors gets sidelined. Please don't fall for their tactics - like I did momentarily :)

Friendly advice - please look up for yourself the difference between cash operating costs and net cash burn.

I never said cash operating costs wouldn't be what the FT said for Q3 - that is I repeat a lie. And I'll make my own predictions - I predict for Q4 that cash operating costs will increase from 260m euros to week to over 300m euros per week and next year could reach 500m euros per week. And that will be great as income will be increasing faster and IAG will be generating significant cash not burning it at all.

As I said cash burn worries well and truly put to bed barring return of restrictions.

"The knob argued cash burn was n where near what it actually is. FT.com was correct."

A lie as usual. Cash operating costs have indeed increased to 260m euros a week in Q3 and guess what they will keep increasing as more and more planes fly. Shocker. Costs are going up but so is revenue.

Net cash burn though i.e. cash in less than cash is now very nearly positive (cash and borrowings very close to Q2 levels) and as already pointed out "operating cash flow was positive for the first time since the start of the pandemic".

This is exceptional news and puts to bed once and for all worries about cash provided of course major restrictions do not return.

The improvement in losses to under 500m euros is also very encouraging and should man IAG hits profits in Q4, or soon after, now that the US has reopened.

All looking good.

Basically it seemed to be a wide-ranging and surprisingly open interview with Seb, Alex and Tom Divine. It seemed genuine though? Some points in it included:

- Testing on Immersion has shown at least 25% uplift in hashrate
- They can also run older machines very successfully via immersion
- Focused on getting machines for best price but forced to pay $70/TH for replacement order with Core Scientific when Feb order cancelled
- Seb reckoned BTC cycle will be extended peaking at $150k-$250k before falling by around a half with at least 1 yr downturn before rallying into 2024 halving for a new bull market
- Estimated will cost $1.5-$2bn to fully kit out all 800mW of Texas
- They are thinking about hosting a Capital Markets Day
- Timing didn't work out well with IPO with reference price set at $18.40 but then sp shot up so discount ended up being 37% or so
- Reckon could see 20% of revenue coming from altcoins but expect most to remain BTC

plus lots more...

I thought maybe 165-170 assuming new rigs came on line on average halfway through month?

*selling 20% of BTC mined each month

Unfortunately selling 20% of BTC would barely cover normal monthly costs so would leave very little, if anything, left over for machines. Whatever they do to fund new machines will have its detractors but should ultimately be worth it.

"ADJUSTED OPERATING PROFIT: Citi forecasts a narrowed adjusted loss before interest and taxes--a metric that strips out exceptional and other one-off items--of EUR307 million for the third quarter"

If it really is anything like this low then that would seem to point towards profitability for Q4. Let's see though - but as Woody suggests if this is the sort of figure expected then meeting it shouldn't move the sp much as ought to be largely priced in already. If it's much better (or worse) then that may be a different story...

"Didn't Argo use its 75k Polkadot tokens to buy in to Pluto in the first place?

Yes - this is what purchased the first £1m stake in Pluto.

@Flowerpot - Nor can I. But another equity raise would be very unpopular. As would selling BTC. That leaves a loan but eventually they have to be paid back with something. He could get income from hosting but PW didn't seem keen on that. Even if the rigs are leased the regular payments have to be met from somewhere. So something's gotta give.

In my mind I had about 220p as the point where I would have considered buying more. It got close to this but not quite.

You're right people have taken a bit of a hammering on this share lately and I was trying to reassure that any dip yesterday would probably only be temporary due to misguided selling pressure from those who purchased rights and thought they were making a quick killing. If however you interpreted my comments as being the opposite then maybe others did too in which case I probably should have been more specific and apologies if I did alarm anybody!

For the record I repeat I believe this is an undervalued share and the RI gives them a better platform to take advantage of the skies re-opening - but just my view.

I think you misunderstood what I meant by 'drift towards' but so be it.

@zydecoco - great research, very diligent!

It's odd that this facility is not mentioned (as far as I can remember) in any accounts since then which suggests to me that they haven't paid the deposit to unlock it yet but I suppose they wouldn't have to until they were confident they wanted to make use of it.

If it does still exist (and you make a good case for it doing so) then hopefully they turn to this before considering another equity raise. Quite a few have mentioned further BTC backed loans but plenty of the current HODL is already tied up with Galaxy (from the part of the loan not yet repaid) and from what Alex said on the Q3 call, if I heard it correctly, is that any such loan would only be about 70% of the BTC collateral backing it - and they would need to keep a decent amount in reserve to add to the collateral in case BTC dropped. So until they build up BTC some more I'm not sure they can get too much from this route. So hopefully this facility can come into play (if they need to pay upfront) to fund for more machines to push the hashrate above the currently planned 3.7EH.

Sorry - ASK is itself obviously the measure of capacity and not something that will improve revenue per ASK. I meant here is Revenue per ASK improving and is it due to load factors, pricing, proportion of business travellers etc.

I think if nothing else it will be a very informative sets of results and any clues tonight on what they might look like will be interesting - though like all clues they may just turn out to be red herrings.

I'm sure others will have their thoughts but what I'll be particularly looking out for are:

- How much the operational cashflow has improved. I don't expect them to be cashflow positive in Q3 (though could be) but there may be commentary to suggest that with the US re-opening, and the advance bookings for this in October, that they might be now

- How much more revenue they managed to generate over the summer with the easing of restrictions despite those restrictions not being eased as quickly or as much as some had hoped

- Is overall loss before tax and exceptional items below 1bn euros and if so by how much. Anything close to 500m would be a great result in my view

- Did they meet their target of 45% capacity for Q3?

- Will there be any clues as to why they took out the extra 1bn loan facility (finances worse than expected, possible opportunity or just prudence)?

- Is revenue per ASK improving and what is driving this apart from increased capacity

- Any insight on the impact of rising fuel prices

- Most of all what does the commentary indicate for Q4 and beyond following the US reopening

I'm sure there are others but whereas results can often be boring for me there is more to anticipate in this set - for good or bad - though personally I'm feeling very positive about them. At the moment.

-

"The posts saying theyll be back to buy in level of the RI are purely ridiculous. Hopefully noone actually believes this drivel."

What posts? I can't see any. For my part I said I would buy more if there was a big enough dip yesterday - there was a dip but not that much.

Sadly it is the case that many people don't properly understand RIs and some really do believe they have the opportunity to 'get something for nothing' and sell the rights they bought for a quick profit simply because they are higher than the offer price of those rights. You only have to see some of the posts on the EZJ bb to see that and also how the EZJ price fell once the shares became tradeable.

So my post was really a plea for nobody to fall into that trap. If the price had fallen enough though I wasn't going to look a gift horse in the mouth as what I think is already a cheap share would be even cheaper and for no good reason. GLA

Amanensia - apologies, you’re right of course. In my haste I got it arse about face but I think the gist is correct :)

Last month was the first time they included Non-IFRS measures in the update and that wasn’t released until the 5th working day.

Even though the additional numbers don’t seem the toughest to get at maybe they just take a little more time to calculate and sign-off.

"The reality is it is undervalued"

No, it is not reality it is as an opinion. I happen to agree with it but I accept I may be wrong. There is no objective way to say a stock is truly undervalued - if there was then no stock would stay undervalued for long.

Yes, it may have a low P/E ratio and that is an indicator but it is not proof. Maybe it is low as the lack of delivery of machines for 8 months have made many people wary that Argo can actually deliver on their plans.

There are lots of good signs (machines finally being installed, 20,000 more on order, Texas taking early shape, current financials excellent etc.) but I can't really see a lift in SP, let alone a massive one, unless there is some really unexpected news that has a wow factor. Otherwise I think it's just staying patient whilst Texas is delivered and PW's long game hopefully pays off.

Yes, it could get messy short term but very hopeful longer term and in the meantime some really encouraging results for Lufthansa seem to be helping all the airline stocks at the moment:

https://www.reuters.com/business/cop/lufthansa-jumps-back-profit-travel-restrictions-ease-2021-11-03/