Re: strong balance sheet & liquidity, likely to be a balance between:
(A) Additional flexibility for spend on Regua / other assets without needing to tap into equity markets,
(B) Provide additional coverage against any continued downward trend of APT which could otherwise impact earnings & cashflows
(C) Help attract II's who are increasingly sensitive towards financial integrity/strength of companies within todays' markets. This needs to be put in perspective of increasing probability of a recession within 18 months, and also noting that other tungsten mines have got significant levels of debt which nobody seems to be caring around. e.g. China's Xiamen Tungsten is looking to invest $750m for 2/3 stake in Upper Kayrakty mine for 2023 start. Or IFG $300m investment into Uzbekistan mine last year. Ironically, WRES debt is so low that there may be several II's out there that don't believe the numbers given the wlfe fiasco
Morning @Jaf, If I remember rightly, the discussion at the time was that the interest and warrants were fairly steep, but relatively standard given the development phase of project and risk. The hope was that Blackrock name would be used to attract more II investment, but that has not been realised... Consequently, fair to say that everybody is right. High cost, but a necessary one.
Assuming WRES get 6-12 month of production figures in there (or at last an interim report with half year financials) WRES should be able to improve rates on the loan.
Re: equity raise. I don't see this in the report. It's also worth bearing in mind that the Shard review takes on quite a bearish note. They assume commercial production from Q1 2020 and book zero revenues in for 2019. Given than we're already booking revenues (in a somewhat small capacity atm) and have the grant money due end of year, the cash situation in Shards report is almost guaranteed to be beaten.
It does feel that LP is coming online around 6 months behind our initial expectations, knowing off a good $10-15m in revenues from this year. Which is def' significant. However, so long as Regua expenses are pushed back until LP is profitable and there is no more splashing out on this gold resource, we should be good.
Confirmed that 5% applies for US IIs.
What we dont know tho is why they are selling out. E.g. larger move against diamond market downtrend? In which case sell off will likely continue for a while. OR Negative sentiment towards PDL post results n Berenberg review? In which case, potentially the RNS could limit the sell off
We'll likely not know for sure and only time will tell.
Certainly Sep will have some key newsflow. Additionally, a nice RNS following sale of this latest diamond find with explicit statement that proceeds will be used to repay debt at faster than forecasted levels would be welcome
@Oldy, currently on travels so lacking v specific references. However, my meaning was that all investor ppts for past few years have shown same slide on commissioning. There has been no change on this note in terms of the reality. The change has been in terms of our (PIs) understanding. Whereas the info has always been available, we've been thrown MMs interviews where he constantly quotes deadlines for plant completion. This has resulted in 2 key misunderstandings. (A) That there are 3 key plants, not 1, and (B) that plant completion is excluding commissioning time
Adding on to the is the reference to quarters by the end month. E.g. Q4 being Dec Quarter.
Apply these 3 misunderstandings together and the unravelled message is: final plant completion (concentrator) imminent, + 3 months commissioning and ramp up, = full production from early Nov (i.e same as the Dec quarter), and ultimately being Dec month as first full month of full production
Am i frustrated at wres performance? Yes! Do i think comms have been poor? Yes. Do i think that PIs have been screwed this past year by placings n warrant malarky? Yes... However, once interpreted, the message of full production from Dec onwards has been consistent for several months now
@TT: Wouldnt go as far as saying that MM is the problem. If wasnt for him, blackrock would never of happened n wres would be in much worse position. Obv the comms is poor (per my response to Oldskool above) but shareholder comms alone is not what CEO performance should be based on
Quick scan through recent posts, and just a few comments:
@Oldy: 3 month commissioning is "illustrated" in all investor ppts. I dont ave latest on my phone, but p.16 of May 18 ppt shows clearly that each piece of major plant equipment has indicated commissioning time of 3 months... now, i've interpreted that as including ramp up also. But am now just going with Dec for full prod targets per MM interviews.
RE: Gold RNS. I'm fearing the worst. Latest investor ppt showed 250k. If we've waited over a year for that, then that's shocking! 1 mill, yes. 400k, i'm not enthusiastic. 250k (given the wait) deserves to have near zero impact on share price IMO as it offers nothing other than more expenses
@AA, cheers for the balanaced ref' ;)
Otherwise, emotions on here are v high. Comments on this BB are multiples of share transactions! That's gotta be the first. But only shows the frustration. Hard to think that MM cant be aware... his last RNS was better worded. Still a nothing RNS, but at least acknowledged frustrations. Hopefully next one will be same conscientiousness, but with something to actually write about
Pretty significant gap between 13-15p... Guess question is at what point the new trading range be set. Obv would be nice to return to 15p pronto, yet sure shorters will have tricks up their sleaves to find ways of getting out without being destroyed in a gap-up. So will be satisfied with 13p in near term, then "attack on the gap" following a broker review from either one of our 4 brokers or GS
Some positive movements taking place on chart this morning. RSI decline reversed by 6pts (still oversold, but a significant change). Short-term MACD at 3.8.3 on day chart, along with standard via 1hr+4hr charts all changed direction to face positive.
See 11.65 being the hurdle to break to really indicate a reversal. We'll likely retrace a bit during the day, but this week should see a bit of a rebound. My pot here is a small fraction of what it was a week ago, but would be nice to make a few grand back from those losses!
@Mogwhy, Oh. I thought you were using $110 opex cause that'd be taking into account the $102 (per investor ppt) number and then adding in a 5% safety buffer. This would make sense to me. Personally, I discount the $94 figure as meaningless until either (i) we reach year 4 of production and this figure becomes achievable, or (ii) APT prices start rising again resulting in an improved market sentiment towards tungsten producing stocks.
With regards to "rewards diminishing". It's self evident that a poor short-term market sentiment due to concerns about Fanya overhang and US/China trade war, combined with unconfirmed numbers is going to result in minimal rewards in the short-term. The trade war is a bigger impediment as whilst Fanya could release 30% of global annual supply & flood market, the trade war has resulted in huge drop in tooling needs which equates for 30% of tungsten use. There will be quite a lag before investment returns as nobody trusts Trump any more.
Personally, I think 50% SP increase by end of next year is still realistic. The combination of current market sentiment + skepticism towards MM for delays + forward capex for T3.5 + natural teething problems during ramp up + blackrock and double bag warrants = a cap to any rise above 0.6p (IMO).
Is 50% good for an 18 month investment. Yes! But for some of us LTHs, is 50% good for our 5+ year waits (of which 0.6 won't even let some of break even), then the answer may not be quite as enthusiastic. Profit is profit. But wres is not sounding as exciting as it used to
Role on October and our first quarter production update. This is most important near-term milestone for setting forward trajectory. Fear other news (regua dev, gold, commissioning etc) will just be sold into by frustrated PIs wanting out
Perhaps there may be ongoing confusion for some of the newer followers on here about the pricing which will be achieved by WRES. Needs to be remembered that APT = market, and WRES achieve a percentage of this per MTU (stated at 80% in the FID, page 10.
The $20m EBIDTA numbers quotes on here about a week ago (coming from June PPT) are slightly misleading as they are a rounding up of 3 year average. This means that they also take into account 1 year of T3.5 production & are forecasted at higher pricing than currently available (but not significantly for the 1st year, so all still probable). The problem with taking this $20m number is that it will probs have a 24 month delay factor from today before it bears any impact on SP.
Personally, I'm more alongside Mogwhy's recent postings Re: OPEX in region of $110 (and even much higher for this year) and EBITDA from Q4 this year of around $1m.
That's pretty good for our mcap. But bearing in mind that we will have debt repayments and capex costs for T3.5, without a u-turn in the tungsten price, it could be a few years yet before the multi-bag scenario becomes likely.
Near term news flow is key to determining our future direction. We need to get this gold out of the way, confirmation on production commencing from new concentrator, and then a few months with increasing numbers. SP will respond in accord...but likely Q4 before too much momentum I'm thinking
We're currently sitting on the 50% retracement line from peaks of Jan & May. Shorters may push down to 62% which'd be as low as 8.5p (somewhat inline with bearish forecasts). Alternative perspective could be to view the retracement post-rise from the Blackrock sale, which'd have a target of around 9.5p
Buyers n shorters (needing covered) are out there, so will be interesting to see how far down they're willing to take this before buying. Also wondering who is borrowing to the shorters. Sure some of these guy will be wanting their shares back.
Ask is now at 11.07, already 5% down with 23mins of trading.
BTW: Re brokers, note that we've not heard from BMO for a year now! Barclays issued 28p a few weeks back, and our 2 new brokers (as of May) haven't done anything... Given that we've 4 brokers on our books. It shouldn't be too long post-results before they give an update on forecasts here. May bring a bit more positive messaging into the mix
Seems that Berenberg have basically taken fcf of 17mill and given a multiplier of 5x. They must be taking assumption 2020 is not going to show ANY improvement in numbers, which is kind of somewhat implied by recent trading update.
PDL officially became my second worst ever investment today... Will need to take a longer step back to find the key learning points in here. As posters on here are commenting, there is no question about near-mid term liquidity. So shouting out at the moment is that it's not just the biz, but wider industry sentiment that can drive SP. Perhaps stocks like PDL (now) should only be for day traders or for loose change until rationale returns to market. Would hate to think what could happen to PDL if there really is a recession in 12-18 months time!
Thanks Trek for confirming my interpretation.
Whilst noting that we have established an all time low today (fractionally), given that the previous low was due to Blackrock sell-off, and most shorters cleared out within 24hrs of that final notification - gapping our SP up to 20+. It would seem safe to think that we won't see much more selling pressure from shorters at these all time historic lows. They may be willing to see where this heads for a bit before buying back their stock, but it's fair to think that we may be at the bottom now. Topped up another 4g at 16.8p which is my lowest purchase yet. Hadn't expected this to sink down to such a low as otherwise would of held off that other 10g purchase last week. All in hindsight, right
Fairly high-risk short term play, but have consistently commented that thought rise would be H2 post-FY results
Strategy clear in terms of targeting larger diamond finds. This is inline with what we're wanting. Potential risk factor in that they're assuming price stability within market that is bearish. Defo recent mine closures elsewhere will help, but there is a lag there.
With regards to fcf, my interpretation was fcf AFTER debt and bond payments. Given that these are significant ($40m), it would therefore be equivalent of around $270-320m fcf. This is my interpretation based upon how fcf is worded elsewhere in RNSs... This being the case, then net debt reduction by 50% over 3 years is not bad. Esp when this be a fairly reserved target.
If however my interpretation is wrong, and fcf is pre-debt/bond payments. Then this will sink further yet
Shorters are having a field day in the markets at the moment
A nice bounce off 18.7, but amazing that we even dropped so low. Very tempting to top-up further, however a bit risky for me at the moment given overall market sentiment.
No probs @DC2007. Bit unfortunate in timing, but let's see what happens come Monday
Whilst fully agreed with the points of post... let's not hope that such ongoing performance knocks another 40%+ off our SP. Cause despite the half bill debt reduction n all the rest of it, that's currently where we are. Over 40% down
This drop on open is a farce
TD just said that Info Memo to be sent out next week for Sea Lion... This could be what our shorter followers are after
btw: just to note, that whilst TD is dull and not exactly a message man. His background is finance. He's also been learning dangers of being too positive which burned PMO badly 3-4 years back. So sure, now his messages are somewhat underwhelming. However, better to have targets and exceed them rather than have targets and miss
@SK. 180mill equates to about a 30% MC increase since 31st Dec 2018.
Now, yeh, our SP is actually hovering about 30% above, so that aligns...
The other difference is that oil prices have also risen over 20% since then too... So whichever way you look at it, we've either had zero compensation for a 20% increase in oil price, OR we've had zero compensation for the 180mill debt reduction...Given the above, a further rise is well in order. But shorters'll likely be upon us soon enough, so who knows
1) Production: Maintained at high (84.1 average). Should easily beat EOY target
2) Net debt reduced 1.1million USD (1.8mill during the period, but former since last update)
3) Current debt to EBITDA ratio of 2.4x. Significant improvement from 3.1 at year end
4) OPEX further reduced down to 12 from 13$ just 2 months ago. That's due to higher production than forecasted, but excellent news!
5) 68.6% of all production from UK assets. So this should make good use of our tax losses at year end
6) Bison, Iguana and Gajah Puteri fields remain on target for completion at year end, with potential for flow rates being higher than expected
7) SEAsian production hedge nicely. Low hedging for 2020 (14%)suggests that mgt are confident that they'll get op to hedge at a higher price later in the year.
Overall, no revolutionary news as HoInvestment had given a good PPT just a few weeks back. However, this is definitely a solid update