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Hi all,
Iām leading a shareholder proposal to change strategic direction here with main aim of stopping the cash dwindle, growing current cash through independent investment strategy led by shareholders and giving shareholder liquidity in a more defined timescale
Iām leading this from within a Telgram group of shareholders and have gained 47% vote support so far for proposals that were submitted to the board end of last month. This was following a series of discussions I and TR1s have been having with the the BOD since December.
If you wish to be involved or know more, you can DM on Telegram searching for username @mafioso71.
Alternatively u can email me.
email address is my full name separated by a dot and usual gmail account suffix
Cheers
Marco Schezzini
Last day for warrant holders to exercise extended warrant and provide company with further much needed capital to help meet its funding obligations for rto
Failing that, It is largely left reliant on its Ā£5m CLN facility and it s revenue generating sources to keep operational.
Interims are not due until end of Q1 to give shareholders a view of revenue and cash flows till end of Dec, but there is nothing stopping the BOD providing a brief trading update as a stop gap to provide some further transparency and assurance to shareholders of operational progress being made on cash flow side
Indeed, many early stage growth companies do choose to provide trade update to show rate of progress in between regulatory published results and this help shows confidence to mkt that progress is being made.
Not unreasonable for shareholders to request the BoD to provide brief RNS trading update with some high level figures of past few mths revenue generation to keep shareholders regularly informed and abreast of both operation and financial progress which are the backbone of any aspiring business
Hopefully the BOD would consider this
The mkt mechanics of the latest CLN facility taking effect with each drawdown made.
Shareholders should be familiar with this price action as this was the same situation with Macquarie bank who did something similar as CLG with their facility before Mr Swann swooped in to replace it.
This time tho, 12 mths down the line with lots of promises made by BOD of deals in pipeline and cash flows post EA approval of plant nothing has
So BoD are now relying on Warrants a lifeline to rto to help plug liquidation gap.
340m warrants have been extended and discounted to 1.2p. So just over Ā£4m worth
Alex has said in QnA warrant holders have been given āall the information ā to make a decision.
How generic a sentence is that for investors to draw upon.
But more telling only Ā£100k worth of warrants have been Exercised todate at this 1.2p offer and expiry of this offer was only until 15 Jan.
Clearly this is becoming a case of the warrant holders now telling the BOD we have helped finance these 2 plants, you have hired supposedly industry leading experts in automotive space ealry last year , as advisers, who are going to be on extortionate contract rates, to close deals with automotive companies, so itās now high time BOD step up to plate and meet investor in middle.
No doubt, pressure and stress levels will be rising with BOx here if this is indeed the case, but this now needs to be done.They canāt keep extracting. funding from investors when they have 2 plants up and running.
It s now time they show investors revenue. Itās all well and good getting plants built and EA approval, but these are all due processes, a business key differentiator is to bring in the business and have consistEnt demand and revenue streams.
Not seen this yet, so hopefully BoD understand once and for all. No more excuses and no sāmore handouts.
Deliver those revenues they keeep Telling us of
Elrathia / Deadgrateful,
Thanks for acknowledgment..
This is purely an objective view which is what is needed here to provide some balance.
Itās fine to be optimistic, but itās when you compare roast interviews with BOD from as recent as 30 Oct 23 following the rns update on rto progress and compare it to the QnA expectation setting and tone changes when requirements for rto become more transparent
2mth ago Alex was quoted as saying they had feedstock coming from all sorts of sources and cash flow was beginning got look healthy and they were now on 3rd round with fca and all on track for sign off end of year.
But Now from a more in depth shareholder led QnA , rto is now end of Q1, 18mth capitalisation hurdle requirement come out no shareholders was made aware of previously , another Ā£5m CLN needed and BOD are still in due diligence talks with likes of OEM manufacturers for feedstock and this according to the.BoD is taking longer than anticipated due DD checks But this was not the case 2 mths ago and nothing like this was mentionedā¦.
All the excuses have now come out form an investor led Q&A which they have always known about but kept from investors when they were doing roast pr interviews.
Investor trust inevitably starts to become tested and this. is a key problem when BOD are not capable of being upfront and transparent when they should be.
Just imagine if QnA , which was shareholder led did not take place here.
No one would be none the wiser.
Anyway, for the rto to get signed off, I believe 18mth capitalisation requirement is the key hurdle left
So 4 possible options
either they need to have have ample cash inflows from feedstock and black mass which doesnāt look likely as you would have expected any big deals with feedstock suppliers to be announced via RNS which has not been the case to date.
OR they get the cash injection from exercised warrants. This has been attempted without much success todate
OR they do anther equity raise via a placing, which will dilute sp and shareholder value even more.
OR they raise required funds through sale of some of their mining exploration licences which will not dilute shareholders and also cut some cost drain
Letās see if any of these are achieved in Q1
2 mths on since I last posted so where is TM1
Well - another funding facility set up in Jan as predicted this time for Ā£5m.
Still suggests cash burn rate is very close to Ā£500k/mth and still nowhere near cash flow positive whcih Robin suggested back In Sept they would be by end of Nov.
So what else do we know.
Well - thanks to the QnA session e earlier this mth, weāve now learnt a key piece of information which rto of Recylcus hinges on.
It needs to show an 18mth working capital statement to be able to pass.
In other words, it needs to show it is sufficiently capitalised for 18mths and must not have the need to raise more funds in that time period.
Thatās quite a hurdle for a company still no cash flow postive.
So to help tackle that yet another CLN facility has been negotiated for Ā£5m as well as an attempt to extend warrant holders who expired last year to exercise their warrant itās by Jan.
So challenge here to meet rto hurdles of 18mths.
Worst case scenerio , it Recyclus had zero cash flow ( which is highly unlikely ) then based on estimated run rate, the CLN facility would only last 10-12 mths.
For it to meet the 18mth period, cash inflow would need to be greater than Ā£200k / mth or Ā£2.4m annual for the Ā£5m to last the 18mth requirement. Or alternatively they need the warrants to plug the gap if cash inflows are not there.
So this is the catch 22.
From an investor perspective, itās clear that regardless of what this BoD have said, particularly Robin Lst year , they are nowhere near cash flow positive given the actions they have had to take.and no one has any idea when it will be.
They have also had the option of reviewing the business strategy and being shrewder of which sources to raise fiancƩs rather than going to mkt as the have other sellable assets in the form of explorers licenses they could have used.
But yet, you have the likes of Robin preferring to talking about further expansion plans of more recycling plants near term before even have the first cash flow postive and self funded.
This type of business agressovd business. model, is simply. It good for shareholders and shareholder value of BoD needs to constantly come the mkt to raise funds as dilution levels will be crippling. Mcap value might of up, but at the expense of March larger share float and therefore diluted sp.
Given we were told original,t that BOD were supposedly in deal discssuion during the EA approval stage , how they still havenāt closed deals large or small in past 18mths is not what I personally expected and am not surprised warrant holders are not exercising.
This BOD unfortunately are not treating. Investors with respect at all, and are simply. Ot delivering what they have said and promised.
Robin just talks the talk, but nothing else.
More pressure should be placed on them to find. Kre cost savings within or worst case consider sealable assets for the greater good of the company in the king term
Mkt probably want to see a truer JORC resource estimate based on sample findings rather than just relying on historical data before revaluing.
But Seller looks like they have got plenty of ammo judging by last few trade days.
Will Need a decent wave of buys to test it more as 400k+ block sells doesnāt seem to be a problem right now
TW bearcast today talking about a profit warningā¦.
Final point.
Latest loan facility will only carry company till end of Jan.
This appears to be in line of when the BOD are hoping to complete the rest of buY out of Recyclus and an influx of over 35% more shares.
BOD will likely use that major event as an opportune moment to do another placing and a share consolidation in the hope of attracting IIs and fund managers to newly named group
Been a mth since I last posted, so will continue where I left off in my last post.
Click reply if you wish to read the audit trail.
Main aspect of my posts just concentrate on facts derived from RNSes.
No point speculating on anything else when no formal data or info to prove
So As predicted another raise was required completely. early Nov for the the princely sum of Ā£1m .
This maintains the cash burn levels for latter part of 2023 of c Ā£350k / mth or Ā£500k every 6 weeks for the business to operate in a pre revenue state.
However, this latest loan thru inter- related parties that was agreed does not appear good news for the sp but does line the pockets very for the directors and itās the lenders.
In simple terms, a Ā£1m margin loan facility has been put in place in exchange for nearly 12% of the company in shares.
2 issues I see with this to my mind.
At the time of issuance sp was c1.3p
So effectively lender was given over Ā£2.5m in value shares in return for Ā£1m margin loan
The other issue is here is giving up 12% of company shareholding for only a Ā£1m loan gives the impression (rightly or wrongly ) of nominal value of company of c. Ā£ 8m.
So - crux of matter here. If lender has been given Ā£2.5m of shares (at the time ) to provide a Ā£1m margin facility , what are they gonna do?
Based off recent interview conducted by Robin, he clearly stated that TM1 is still in pre - revenue phase and the hope is for the company to turn cash flow positive in Nov.
Therefore it can be safely assumed for this that up to now that company is still cash flow negative and the cash burn rate which it has been servicing this through regular funding is still valid.
Last fund raise for Ā£700k was in early Sept, and on current burn rate for this year , this would carry until Nov.
So barring any significant uplift in revenues, there is still a strong likelihood further funding still needed to see company thru to year end and this undoubtedly would be a contributing factor weighing down on sp.
The other point is just the slow expected production increase from both battery plant before reaching full production which is talked about in periods of mths still post commissioning rather than weeks which also dents mkt expectation. This is a bit difficult to comprehend when we are told there has lots of businesses waiting on wings to use Recyclus, and itās was EA sign-off and commissioning holding things back.
Would have thought The Li-batt plant at least, given it passed EA mths ago and been commissioned for mths now should be ramping up to full production IF the demand indicated by Robin was indeed there.
Continuation of audit trail of cash raises I posted earlier
7-Sep - Ā£700k
Cash burn rate remains steady, maybe a touch higher now, probably now accounting for new recruits that joined recently .
This shud last till end of Oct / early Nov
Not much sign of any revenues coming in sufficient enough to reduce this rate, not even a mini trade update has been provided. hmm
I guess we will have to wait till they rns results to see what they have done.
Cash drawdowns 16 Dec - 6 July
These are official figures, so shouldnāt be contested
Audit trail via RNS of drawdowns
16 Dec - Ā£500k
27 Feb - Ā£500k
Both Above came from original Ā£4m loan facility from Macquerie Bank which was opened 6 Dec and then terminated end of Mar due to death spiral share conversions and replaced with below
28 Mar - Ā£2.5m from HNWI
6 Jul - Ā£500k from HNWI
In other words, Ā£4m identified by company as sufficient for launch of at least Wolverhampton plant has now been fully drawdown in 7mths. With the last Ā£500k sum drawn 6 weeks ago.
This should be enough to go on to figure out the run rate of cash on run up to Wolverhampton launch.
Should also add for completeness that in Mar , TM1 was also award Ā£1.96m from Innovate UK but this is solely earmarked for a R&D project to develop mobile recycling trucks so canāt relay on that.
So Now is the key litmus test
We are approaching window whether we will know for sure whether this Ā£4m budget has indeed been sufficient for the Wolverhampton plant to complete commissioning and become fully operational and self sufficient with cash flow from gate fees, new contracts, etc to keep it going with no further financial support
Until I see something officially announced via RNS Iām not going to rely on any podcasts, especially Roast ones around what cash might or might not be being generated
Been here before with CMRS, BEN, CHLL (prev ZOETIC), and others, where perfect world scenarios get drawn up by Kev on revenue streams which are simply nowhere near reality
And judging by recent price action past few weeks, mkt isnāt either.
Havenāt even covered Recyclus buyout yet nor state of play of Tipton plant and whatās still need there. But one hurdle at time here with Robin et Al.
Anyway ā Show me the money Robinā and put it on a RNS to us shareholders please , not via a PR team on a crap pre edited podcast where anything goes.
To my mind this whole investment case right now is a play on gas prices.
Gas prices like coal have benefited from the Ukraine conflict, but historically gas prices have been sub 75p / therm.
Given IOG have had to defer debt payment on bond, at a time where gas prices have approached historic levels, it begs the question what poroduction levels are required to meet cash flow requirements and debt requrirements, etc.
Eg Min production vol @75p/ therm, @100p, @125p , etc is. What we need to understand I think to help make a proper assessment here