RE: Transformational news20 Jan 2024 08:17
Unfortunately the precipitous fall in prospects, delivery, outlook and share price here have made anything remotely like on topic debate and challenge to views here basically impossible. Anyone raising fact based challenge to the baseless optimism of the cult here is shouted down. Such as the following;
One point not raised for a while, I believe it was me who raised it after the AGM in the summer, is in my view a key reason for the delay, or one of a few critical and very uncomfortable realities that will be laid bare to SHs very soon. It is this. The bank funding requires 35% of the phase 2 raised by other means, but a critical caveat to the overall total cost of phase 2 (sign posted sneakily by GL at the investor event in the summer, and buried in a video I think) is the revised cost calculation needed for the 120km pipeline & associated infrastructure construction. Materials and labour costs have soared over the last 3yrs, and current cost estimates date back to pre 2020 by the company’s own admission. This in my view is a major piece of bad news coming down the tracks for existing SHs. The funding of this much higher pipeline cost needs to be either from SHs or CalVal, but I doubt they signed up to such inflationary increases without a much larger % of the asset. The fact is, existing SHs own an asset they have no funds to develop, no way to realise the value. Lenders and new partners will take pounds and pounds of additional flesh to fund these projects. I feel the pipeline cost inflation is a key hold up, and will turn out to be a large part of the explanation for some very bad news in the next few months. GL avoided a direct question / challenge about this obvious risk at the presentation in the summer.
And indeed yes, the survival of this company and the vague possibility of any value at all being returned to SHs rests solely upon phase 2, there is no value in phase 1 to SHs as the company’s own research broker SPA states in black & white in their now very out of date and way too optimistic (given inflation, recent dilution, lack of knowledge of funding metrics) last update, viewable by all on the sou website. Not that I think many here can or do understand financial detail sufficiently.
But the good news…..GL hasn’t engaged SHs for months, treats them with contempt to be honest, and continues to get paid far too highly for utterly terrible delivery. No wonder the sp is low, but I fear not as low as it will be in April.