The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Further to my pevious post - from the website:
Each company in a consortium must pay the Participation Fee. The Participation Fee for the Fifth (+) Round Offering is US$100,000 and for the Sixth Round Offering is US$100,000. A company may obtain the data packages and participate in both rounds by paying a Participation Fee of $150,000.
"...It should be noted that this Participation Fee is not a “purchase” of the data package, but a fee which allows participation throughout the process (including access to the underlying technical data, draft contracts, etc., and participation in any workshop/webinar that may be organized)..."
"...If a bidder is bidding for more than 1 Contract Area, a separate bid bond must be provided for each bid. Such bid bond(s) must be presented before the date for the submission of bids. A bid bond will be in the amount of five million United States Dollars (US$5,000,000)..."
Petrel does not even have enough cash to make the bids for its two blocks thus highly likely no bid has been made.
According to Iraq's Ministy of Oil's PCLD $100K is required prior to a bid being made for each block and $5,000,000 for each block a bid is submitted for. Thats $200K for both Block 6 and Merjan prior to making the bid and $10M to submit the bid for both blocks.
As at 30th June Petrel had 51K EURs and has since raised circa £108K from warrant exercises. That's about £150K in cash if all overhead expenses are excluded.
It's not possible for these bids to have been submitted. This is all a load of hype over nothing. Rise on hot air. Baseless speculation.
Monetary criteria for bids can be seen here:
https://iraq-pcld.com/initial-tender-protocol/
Thanks.
I think the key point they need to answer is are they in breach of the minimum revenue covenants for the trailing 4 quarters to Q1'24 (which, based on the numbers they have provided, I believe they are), if so by how much and will they be raising 2x that amount as is stipulated in their agreement with SWK when a breach occurs - if not why not.
Will be interesting to hear what they say
Helium One also had Helium shows, Helium was leaking out of the ground at their first drill site - we saw how that went and how many drills, time and $ it took them to finally hit something.
The gas that flowed to surface in the HEX historical drill is not confirmed to be Helium. it is not known what that gas is. It could be anything. This is not an appraisal drill as it has been promoted.
Riz - read the RNS of the 28/9/23 (titled 'Shield Therapeutics - $20m secured debt facility &proposed equity raise'), ive copied the relevant section below note that the minimum revenue covenants detailed below were renegotiated lower (albeit are still substantial)- the revised figures are in the RNS of the 30/4/24
Additional details on the SWK Financing
Shield has entered into a Loan Agreement in connection with the SWK Financing pursuant to which Shield has, conditional inter alia on Shield repaying the Existing AOP Loan and lien release on IP rights and satisfaction of other customary conditions precedent for a transaction of this nature, obtained a commitment from SWK to fund a US$20m term loan with a maturity date of 28 September 2028. The first nine quarters following closing will be interest only periods and the interest rate will accrue interest at an initial margin of 9.25% plus the greater of: i) 3-Month CME Term SOFR ("SOFR"); and ii) 5.0%. Interest will be calculated on the basis of a 360-day year and paid in cash with the first payment due in Q4 2023. Shield is required to pay SWK a 1.0% origination fee on the value of the term loan and a final payment fee of 6.0%. Post the interest only period of nine quarters, quarterly payments of US$1m will be due for capital repayment. The SWK Financing will be secured by way of perfected first-lien interest in substantially all existing and future assets, including intellectual property, subject to the release of the AOP's lien on IP rights in connection with the Existing AOP Loan. Financial covenants apply with minimum revenue targets and minimum liquidity of no less than the greater of i) trailing one quarter of cash burn or ii) US$2.5m. Warrants over 8,910,540 new Ordinary Shares will be issued to SWK with an expiration date of six years after closing and a strike price of 11.1p per Ordinary Share. The table below details the minimum revenue covenants:
Trailing Four Fiscal Quarters (i.e., 12 months) Ended - Minimum Group Revenue
Q3'23 - US$8.5m
Q4'23 - US$14.5m
Q1'24 - US$22.5m
Q2'24 - US$31.5m
Q3'24 - US$38.9m
Q4'24 and each fiscal quarter thereafter -US$45.7m
In the event of the breach of a minimum revenue covenant, Shield can avoid default by raising equity or subordinate capital equal to, or greater than, 200% of the breach. Shield has a period of 40 days from the date of breach to evidence to SWK the raising of sufficient capital to cure such breach. Shield can utilise this cure route three times over the life of the facility and not more than twice in any 12-month period.
The SWK Financing is not conditional on completion of the Equity Fundraising.
The drill is billed as an 'appraisal well' but appraisal wells are for discoveries to test commerciality.
There is NO Helium discovery here. The previous wells that were drilled just encountered GAS. The gas was not further tested to identify it. That gas could be anything, therefore to call this an appraisal well for Helium is misleading.
Yes, these are just Accufer revenues. The $17.5 m in the update included the one off payment from Viatris and the Texas revenues. Going forward there will be no Viatris payment. Excluding Viatris they made $13m so would still have been $1.5m short if the Viatris payment hadnt got them over the line. So granted, on this occasion they're ok for the Q4'23 period but are in breach for the trailing 4 quarters to Q1'24 by about $1.7m and need to raise about $3.4m for that. The Q2 revenue target is 16.5m so they would need a c.25% increase over the Q1 and they are going to have to achieve that without Texas as it still was not back online by Tuesday. So with almost half the quarter gone without TX its looking unlikely (given they only hit a 1% QoQ increase in Q1'24 over Q4 without TX) they will hit the target for Q2'24 either.
Whats more concerning
Update:
I found the actual updated sales figures, they're in the RNS of the 21/2/24:
Q Sales Avg selling price Total $ Sales Trailing Target Gap
Q1 10.1 119 1,201,900
Q2 14.9 119 1,773,100
Q3 23.3 145 3,378,500
Q4 28.6 145 4,147,000 14,500,000 -3,999,500
Q1 28.8 140 4,032,000 15,000,000 -1,669,400
As STX have to raise 200% of the gap it needs $8M for the Q4'23 period and $3.4M for the Q1'24 period - that is a total of $11.4M to address the SWK breach. 40 days are up for the Q4'23 period and we've not heard anything so they are late on that and have about 10 days to address the Q1'24 period. The next week or do should be interesting to see what happens. Extremely poor form the management did not even discuss this major issue in the investor call on Tuesday
This is not about being cashflow positive, it's about minimum revenue covenants. I suggest you read the small print in the $20M funding RNS from Sep 23.
Ps. My last post probably explains why the CFO and CEO haven't bought any shares at this price
Company must meet minimum revenue targets set by SWK as below.
Trailing Four Fiscal Quarters (i.e., 12 months) Ended Revised minimum revenue targets
Q3 2023 - $8,500,000
Q4 2023 - $14,500,000
Q1 2024 - $15,000,000
Q2 2024 - $16,500,000
Q3 2024 - $22,500,000
Q4 2024 - $31,500,000
Q1 2025 - $38,900,000
Q2 2025+ $45,700,000
If it doesnt meet these targets it must do a placing for the difference according to the following conditions:
"In the event of the breach of a minimum revenue covenant, Shield can avoid default by raising equity or subordinate capital equal to, or greater than, 200% of the breach. Shield has a period of 40 days from the date of breach to evidence to SWK the raising of sufficient capital to cure such breach. Shield can utilise this cure route three times over the life of the facility and not more than twice in any 12-month period."
If it cant then SWK can step in and takeover the assets. This is high risk bet on STX being able to hit these targets. The ability to hit these targets just became more difficult not only by the downward revision in the prescription data but the Texas PMB issue discussed on the Investor call yesterday. It was noteworthy that the CEO said he could not and would not commit to a timeline as to when Texas would be back online. Even if it does come back online how long would it take to come back to the levels previous to the issues? This will impact the trailing 4 quarters numbers and if it means the trailing 4 quarter revenue is not at the minimum revenue level then its a placing for 2x the difference.
Q1'24 trailing 4 quarters (T4Q) are Q2'23, Q3'23, Q4'23 and Q1'24.
Based on RNS data we know revenue in Q1'24 was $4M from 28,800 prescriptions. Company has not disclosed Q4'23 revenue figures but has said Q1'24 prescriptions were 1% greater meaning Q4'23 was c 28,512 prescriptions. Avg selling price in H2'23 was $145. 28,512 * $145 = $4.1M. Q3'23 had 27,750 prescriptions, at $145 per prescription thats $4M. Q2'23 had 15,800. Avg selling price in H1'23 was $119 (see call yesterday) thats $1.9M.
Thus total revenue for trailing 4 quarters to Q1'24 is :
Q1'24 - $4m
Q4'23 - $4m
Q3'23 - $4m
Q2'23 - $1.9m
Total = $13.9m. SWK's minimum revenue target covenant for Q1'24 is $15M meaning target has not been hit and company will have to do a placing within 40 days for approximately $2.2M. And then potentially the same again if Texas is not online for Q2'24/company can't hit that T4Q target. If thats the case and company doesnt hit Q3'24 target either ($22.5m!!) then its failed to meet revenue targets given it can only avail itself of the placing route twice in 12 months according to SWK conditions and SWK has claim over co assets.
To sum it up, seems placing for circa $2m is definately on the cards within the next 40 days and there is high risk of another after Q2 or SWK taking charge of assets if Texas isnt online in time.
Here comes the seller again
For the regulars - any thoughts on who it may be? Amati, Perry, a Director? If Perry then one would assume not much further to go, either of the other two then may be a while yet...
I don't think any junior miner on AIM is being valued at 'true value' ATM on AIM. There are many that are undervalued according to metrics of the recent past. At a fully diluted 9m at current price EST is already 'q bit rich'/commanding a premium when compared to peers
They wont be triggered at this price but a level or two up at least which when taking spreads etc into account would mean selling would be at these levels/a level up meaning that anyone buying now or above would have to content with a fair bit of selling at their spread loss/be level before they would see profit. Take into account the risk of a deal not concluding/being delayed to announced timelines (which is common in AIM) which would cause SP drift makes it a highly questionable endeavour to buy in now.
65M in warrants and options just waiting to be exercised of which 50M are warrants with 36.4M of them at 3p. That is a heck of a lot of dilution and a massive headwind on the shareprice. Will take a tonne of liquidity to get through it all, far more than is currently traded on average per day
Bolivia step closer to full lithium potential as $1bn Chinese deal closes
Bolivia finalised a major deal this week with China’s largest battery producer CATL and largest cobalt miner CMOC in a move that could finally see the South American country untap the full potential of its huge lithium resources.
State-owned producer Yacimientos de Litio Bolivianos (YLB) said the group would invest around $1bn (919.97bn pesos) to build production plants that would use direct lithium extraction (DLE) in the Salar De Uyuni and Salar de Coipasa salt flats.
The consortium, which also includes CATL’s recycling subsidiary, Brunp, will produce 25,000 tonnes (t) of battery-grade lithium carbonate by 2024 and 100,000t by 2028, using DLE rather than large evaporation ponds.
https://www.mining-technology.com/extractive-industries/bolivia-step-closer-to-full-lithium-potential-as-1bn-chinese-deal-closes/?cf-view