The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Wimb - As if he would say any different ! Why hasn't he got some indication from them yet ?
Kat is tanking, because observers saw from the very beginning that it needs £ms to develop imweru. The info was all in the docs related to the failed merger with Victoria Goldfields. LC, as usual, hasn't informed his shareholders.
Re cash burn
I spelled it out the other day
"At the last June balance sheet Kibo had £1.7m cash, and raised another £0.5m in July. After £0.4m trade liabilities, it started out with a net £1.8m.
"But basic cash burn is £160,000 per month, plus a minimum of £100,000 pm on development costs. So even if all development has been stopped, cash will have run out by May, but if continuing, cash will be running out next month.
Sepco is looking ahead 2
THAT is what DD is all about. Sepco is looking ahead. LC has never, since 2012, shown any signs of being able to do so. Any other intelligent 'entity' will do the same.
Why else the panic issue of a grotesquely exaggerated research note?
(I will explain on the other place why it's so crashingly wrong)
In view of all this, anyone wanting a stake in Kibo's projects will want to avoid losing their investment. They will be much safer investing in the projects' unlisted SPV's rather than Kibo itself - which won't help Kibo's cash crisis.
Even if, despite that, they did want a share in Kibo itself, in view of the certainty of being diluted by the fund raisings still to come they would want as big a say and as big a share, as possible, at as low a cost as possible.
Which means more, possibly massive, dilution for the other shareholders.
Its no good denying this as scaremongering. Its all in the Maths !
In the immediate future, if FC on MCPP doesn't happen, then neither will the $3.5m due from Sepco.
And as for getting tough with Sepco. ? Somebody's 'avin a giraffe
I could go on. There are many other things DD will throw up. What reputation does Kibo have with investors so it can it rely on raising funds from them ? What reputation does its brokers have ? What reputation does LC have ? Why did the corporate team at Novum, who've 'supported' Kibo (under different brokers) ever since it listed, finally 'walk' ? Why has no other broker (including Nomad Ambrian who has respected research capabilities) ever wanted to take on Kibo ?
A few newcomers, unblinkered by all the uninformed ramping and LC's smoke-and-mirrors bluster, have spotted the snags - eg as Swifty points out (being trashed as usual by the usual innumerate clappies) LC has been driving Kibo up an investment dead-end, with never enough funds to ensure his projects get over the line. Even then, after all its investment and effort, its not certain how much cash dividends Kibo will get out of them when up and running. Hence his desperate last-minute idea to plug the gap with Med. It might prove too late.
Doing the maths and looking ahead, it's now impossible to see Kibo's shares ever getting back to 10p. I believe 5p is the most to expect even if all goes well, but only in five years time. But meanwhile they could continue on down, and dilution will get heavier and heavier.
Some Basics - Don't forget Kibo doesn't 'own' its projects. It is merely a 'sponsor', charged with attracting investors, together with a chance to invest itself. So whatever happens to Kibo won't necessarily affect its projects. Kibo could go bust, but its projects could continue. What we don't know is the terms of its 'concessions' as a sponsor', and what happens to them if it does go bust, nor whether, for instance, Shumba would retrieve ownership of Mabesekwa.
Sepco is looking ahead
UK Reserve Power news is all very well. Kibo desperately needs to plug its annual £2-3m cash outflow over the next five years before it sees any income from its projects.
But apart from wondering how Med will finance its new plants (Up to £10m for a 20MW plant going by UK Power Reserve figures, which might deliver a £1m annual profit - meaning five will be needed) Kibo has a much bigger near term problem.
The fact is another cash crunch is approaching, and with the delays continuing to build, Sepco's Due Diligence becomes even more necessary.
At the last June balance sheet Kibo had £1.7m cash, and raised another £0.5m in July. After £0.4m trade liabilities, it started out with a net £1.8m.
But basic cash burn is £160,000 per month, plus a minimum of £100,000 pm on development costs. So even if all development has been stopped, cash will have run out by May, but if continuing, cash will be running out next month.
The outflow will continue because it's going to take at least five years from now for even the first of Kibo's coal projects to start generating profits and cash, and their majority shareholders aren't likely to declare a dividend for themselves and Kibo until all is running smoothly a few years later.
That's why Med was going to be crucial to deliver cash flow to plug the gap.
But even that is now going to be delayed by the UK government's moratorium on the reserve power market.
Kibo's basic problem is that eg in the case of MCPP, over 60% of cash generated in the first 13 years will go to repay the 75% bank project loan, leaving only $50m pa cash for all its shareholders. (the maths has been done and posted based on the Jan 2017 IBFS)
And because no project as risky as power generation would ever pay out all the cash it generates, cash available for Kibo (assuming it has 25% - the most share it will get unless it stumps up cash to buy more) will be less than $12.5m.
So the first MCPP dividend Kibo will get might be some $8m, in six years time.
What is it going to do to keep the lights on meanwhile and to meet the development costs for Moz and Bots ?
BFS's for those projects (which, for MCPP was $11m - LC hasn't bothered to tell us what has been spent at Mabesekwa. It only has a PFS , so is going to cost a lot more)
So unless over the next six years Kibo can rake in enough cash to meet that large total of running costs and development costs (not to mention its own contribution to equity) it will go bust. Med doesn't look enough to solve the problem.
Think about it. What is Kibo's current market cap ? - What dilution will be suffered by shareholders meanwhile even if it can raise the cash ?. Its not unrealistic to foresee shares in issue doubled by the time MCPP comes on line. That would mean its eventual dividend to Kibo would be worth only 0.5c per share. Moz and Bots will be smaller, but we have no idea what shares will have to be issued to get them up and runnin
These other entities will have to do their own due diligence. Given Sepco has known Kibo for years, yet its 'due diligence ' has now taken some six months - what has it uncovered ? Many on here could tell them. No need to hold on to your hats.
There won't be a market price for 100m shares !
Mike - I've tried to have it out with admin. They bend over backwards to delete posts they 'deem' offensive or 'disruptive'. ! My posts based on research and maths that contradict the reporter's fantasy valuations and which thereby 'offend' the likes of Mr SYM are counted as the latter ! Admin don't have qualifications to know the difference. And they don't insist that rampers disclose whatever large holdings, and therefore what agenda they have. If they did we wouldn't have had the misleading ramps by yous know who on here over all the time since the 9p peak - and some might have avoided their losses.
Swifty - the j--k has LSE delete posts pointing out what a j--k he is ! And also of course anything that contradicts his fantasies. Sad really.
After hours on a Friday is the traditional time to release bad news !
It says 'could potentially ---" so its not reporting a done deal. Must be referring to announcement months ago.
Capo - yes, that RNS was about sharing 50/50 with Kibo the development costs and granting Sepco sole rights to bid. It replaced the previous agreement which HAD included a committment to contribute equity to MCPP, (not the same thing of course.) My point is that, having mulled it over and seen MCPP at closer quarters, Sepco decided not to invest ("SepcoIII will no longer earn any equity --") Starnge that ! - and no wonder LC didn't expressly draw attention to it !
B42 - what deal was that ? The only one I know of was that Sepco withdrew from offer to part fund MCPP ! Never mentioned by LC, but contained in small print in RNS 25 Aug 1916 !
BB - So far the 'curve balls' have tended to be googlies. Lets see what the next one will be !
This broker note repeats the grotesque schoolboy howler perpetrated by Doh!fort - plus some new ones. One wonders why a broker - especially a house broker - wouldn't wait a few days for an important announcement before publishing something might be be completely out of date ! - Is it to divert attention from what it knows is coming ? - Does he think it will persuade Sepco to pay 15p ? And why the big buy just before the bell the day before? It all stinks !
If they're traders, they're not losing their heads ! They've made the killings they exist to make. Two types of investors living side by side !
Yes Smelly, and its because you ignored (or rubbished) all the red flags pointed out to you (dilution, lc's track record, Kat's and Haneti's low value, the nonsense of thinking MCPP's NPV 'belogs' to you - it goes on and on) that you've all lost so much of your investment. And I suppose you haven't worked out just how vital is cash flow from Med to what is the non-cash flow but cash hungry business model LC has devised for you ! Its the dilution still to come which means the shares will never recover very far, and if Med doesn't plug the cash drain the flags will turn to purple . There are many more red flags you haven't noticed. They'll be explained once we know Sepco's stance.
That Business Live journo doesn't seem to have heard that the UK has suspended the reserve power market that Med was supposed to serve. Looks like LC hasn't either !
I've no idea. Depends on investors' priorities at the time. My opinion still stands I think.
They're selling because the only thing that counts, and will put a value on the shares, is financial close - and that's a long way off.