Member Info for McSpaff

Been holding for years since 4.5p. I'm very much enjoying the news flow at the minute but looking slightly further ahead, I can see the SP building quite nicely into the BFS release.

But what happens next? A plan to get REM out of the ground and actually doing it are two different things. Talaxis are footing part of the bill, but who or what will plug the funding gap?

I've been shafted at this stage before, so I'm a bit wary of dilution or bond sale that goes tits up from the point of view of the small shareholder. Sirius still stings (yes i know, I'm an idiot.).

Is some magical partner going to swoop in (Pentagon etc)? Are we going to be funded with takeoff agreements?

Answers on a postcard please

Talaxis traded the option to pay MKA £792,000 for 12M shares (worth £1.85M @15.4p after dilution) for 1M free shares (worth £175k @ 17.5p)

I don't believe this was because Talaxis can't find 800k to instantly turn into 1.85M overnight.
I also don't believe this was because the above maths suggests Talaxis believes that MKA will be 5x its current value any time soon.

As Myles suggests, I believe there is something cooking behind the scenes. Either Talaxis, MKA or both didn't want the dilution that may unsettle the status quo or allow/prevent a party making a takeover bid.

Reading is hard.

The presentation: https://www.youtube.com/watch?v=HUy1yh05RLg&feature=youtu.be&ab_channel=TurnerPopeInvestmentsLimited

Presented 30/9/20, slide at 16:26: Plan to start construction 2021, production from 2024.

Can't fault the argument about green investment momentum, the evidence is there to see and I'm delighted. I wrote my Diss on biofuels, particularly Fischer-Tropsch, I've been harping on about it ever since.

Another snippet in the presentation I picked up was their JV with a reactor maker that specialises in micro-channel cooling (10:00). I'll be digging further into this, as this seems like one of those unique, patentable, game-changer type twists on old tech that means it might actually work this time. FT has been around since WWII, it's just been crap. Stranded methane feedstocks were the only feasible markets (SASOL, South Africa). This caveat, coupled with the Oxford catalyst seems to be the edge to make a go-er of it.

I'd be interested to hear another engineer's opinion of the reactor photos (https://www.velocys.com/technology/). Vessel design isn't my area, but what I can see looks far more prototype than production. If VLS are looking to manufacture these, I hope they are working towards slick production process. It may be a certification thing for vessels of this pressure, but those welds look like very time consuming from a very well qualified human.

As for our old mate hydrogen. I really don't know what to think. Like 3D telly it seems to fall in and out of fashion. It's a well known substance, that's being burned in turbines (CHP) for ages, but it's low energy density and leaks very easily. It's on my radar for my own factories, but I wouldn't try and fly an aircraft with it. That said, airbus know a fair bit more than me about planes.

Again, this company reminds me of Sirius minerals. The business case was pretty strong, but the product was fairly novel. Ultimately it asked too much of lenders etc and PIs got rinsed, myself included - My own fault, lesson learned.

The presentation on 30/9/20 says construction to commence at Immingham in 2021. If that is still the plan, then an element of fundraising is necessary. My own internal yardstick suggests a 0.5MT processing plant in the UK would cost £100M-£300M depending on the process (I work in humble construction products, not novel FT catalysis).

In the same presentation they hinted that their business model was not one of high capital intensity, but more of a supplier/licensor of technology and catalysts. This would potentially avoid the risks and dilution, I'm not sure that's true for the Immingham project, however.

In summary VLS has a lot going for it. But it'll be a bumpy ride, and they aren't the only horse in the race. Airbus is backing hydrogen, and they can lobby/backhand much bigger brown envelopes than VLS. Shell will happily supply either. Short term I'm happy to stick with it, but will be stepping back once I hit what I think is the short term limit. There will be 'crash' of sorts as the project finance is sorted out, but once the plant looks to sell its first dram of sweet sweet kerosene, it could be many multiples of where we are now. I wish the guys the best of luck, and I may be sending them a CV soon enough!

For every Expat there's someone spouting the opposite viewpoint. See you at £1, MM playing games, value this, potential that. So rather than playground finger pointing, can we try to create some discourse of value?

We're all here to make a few quid. I'm in, and while I believe in the process behind the company, I also believe that it's very easy to back the wrong horse on AIM. Jetzero has many companies attached to it and they won't all succeed. I believe that in the short term (6 months) the share price will be higher than it is now. I won't be sticking around to see how it goes, I got burned on Sirius and Hurricane. I'll ride the hype wave then cash out.

Some out-loud thinking:

These guys are M&A specialists, particularly defending against hostile takeovers. This isn't free, therefore the board must believe that these guys can increase the value of the company by either fending off a hostile takeover or negotiating an acquisition better than the board. Therefore there is a risk/chance of an attempt to buy MKA that the board do not want.

Looking at the fee structure ($30k now, 325k shares (£45k @14p) end of Jan, conditional 625k (£87.5k @14p) in Dec), there is work to be done immediately with a stage complete in Jan. The conditional December payment is interesting. Do the board expect their services to be no longer required and therefore do not intend to make the payment? Could there be a series of bids to handle throughout 2021? The payment in shares makes sense. It ensures both parties are working for the good of the company in the short term.

I know the founders will not what to lose control of their baby, but by fending off a takeover bid, is this a potential negative for the PIs? A takeover bid is a good exit at a premium. This business has a bright future but its value will take years to realise. A takeover with a decent premium to reflect the future potential would be an ideal option for many I suspect.

Thoughts?

Since a takeover bid - hostile or otherwise - is perceived by the company as a possibility in Q1 2021. Shall we have a bit of fun and hazard a guess at the offer price per share? (Show your working, don't be part of the "See you at £1" "#multibagzzz" crowd, they are simple folk)

Can't remember the details, but someone mentioned the Talaxis deal valued MKA at 26p. With a bit of dilution, expenditure and some resource upgrading; fag-packet maths puts me in the 30p region. A 10% or 20% premium puts that to 33-36p.

My average starts with a 4, so I'm rather excited by this.

Have VLS indicated anywhere what the approximate price per barrel might be from Immingham?

I imagine due to limitations of their production scale that it will never be as cheap as old fashioned dino juice, but are we talking a 50% premium? 500%? 5000%?

I'm sure they have a figure internally, but I'm wondering if they've released it.

I'm not sure there is a short trader per say. If so it's a very small positon. Otherwise it would be listed under the Short positions tab of this website. Or is that just retrospective?

I think people give to much weight to what PIs can actually do to the share price. Maybe I'm just naive. As for shorts, how many PIs actually short with their own private cash? I imagine it's quite seldom.

Don't wanna **** on people's bonfires, but let just all get a grip yeah?

We aren't breaching 20p any time soon. Nor should we. Volatility attracts the wrong crowd. A steady build of the SP through the project delivery milestones will set us up for future funding and hopefully a graduation to a more regulated market where the SP will be a closer reflection of reality than the AIM wild west.

Huge risks remain. This is not a sure thing.

The Fischer-Tropsch process has been around since the 40s, but has only been utilised at scale a handful of times. Previously this has been to utilise stranded methane that would otherwise have no value. The USP for VLS is that we are now in a era where emissions are becoming very costly and alternative fuels still in infancy. VLS have synthesised a product that looks like jet fuel, smells like jet fuel, doesn't melt steel beams like jet fuel - but doesn't pollute like jet fuel (NOx/SOx/Particulates). This process has not been proven at industrial scale. Typically it takes a 2-3 iterations to do so. From Lab scale, to pilot scale, to first working example.

For me the principle risk to PIs is the route to funding this first working example (Immingham). The government, Shell, BA etc have all pledged money, but in the age of Corona, cash is king, and investing in pipedreams are not looked on fondly by the thousands of people being made redundant. It is a very real risk that these players suddenly wash their hands of the project. This will force VLS to either fold or get creative with their fundraising. When this happens, PIs get shafted. Sirius minerals all over again.

I have faith in the chemistry and the chemical engineering. I am raising a skeptical eyebrow at the path to profitability. If anyone has any insights, or comments about my thought process, I'm keen to discuss it. Happy Friday.

Not sure what Shell hydrogen page has to do with VLS.

VLS utilises FT, which requires Syngas, with a water:gas shift reaction.

Sadly, there's no mention of VLS on Shell's alternative fuel page either, but hopefully that'll change soon.

...But right now the 6-8p range seems a fair risked value.

Before the fundraise, the MCap was ~£40M - VLS raised ~£20M and created more shares. - Mcap is currently ~£60M at 6p

Quick mafs

Seems fair to me. A company with no money to do anything is worth 0 as it's assets will depreciate. Now VLS has funds to do stuff, the question is "Will VLS turn this £20M into something worth more than £20M?"

BA are currently in a huge dispute with unions about getting rid of half their flying staff. Whilst there is a lot of posturing going on, I really don't think they can play the victim regarding cash burn then buy an additional airline. CapEx is hard to come by right now as most companies are being tentative.

Are Shell and BA under any obligation to match either the original £10M or £20M? What's the story here?

Kiss of death confirmed. Will hold until the bitter end anyway.

I'm trying to catch up with the goings on around here and the criticism of the technology involved seems to be a little on the harsh side. I'm a chemical engineer, I wrote my dissertation on biofuels and a large part of that was FT diesel. As a wide-eyed optimistic graduate, yet to understand how the real world works, I hailed this process as the future as long as funded pilots of increasing size could be built.

The diss focused mostly on stranded methane in South Africa (SaSOL), but postulated that the fuel could become fully renewable by being combined with gasification and water shift. Glad to see that someone has agreed with me and built a company out of it.

The main barriers to a commercial scale process in my view is the expensive road of development and scale up, and the performance of the very complex 3 phase slurry bubble column reactors. It would appear that they've cracked the second one, so now it's on to the first, which is a businessman's game, rather an hairy arsed engineer. They've got some big backers and choosing aero fuel rather than diesel is the stroke of genius that passed me by completely. Assuming they pull it off, offering an industry with a polluting image a shot at emissions reduction is a win win. Best of luck to them.

Reckon there's a job going?

I'm an AIM rookie, but after monitoring this stock since 3p, and not fancying buying in due to fears of dilution in pursuit of funding the Immingham project (been burned before) - I've been burned again from the other end! I'm now trying to figure out what I did wrong and how this sort of thing happens given the info provided. If anyone would care to enlighten me, or point me towards some AIM-focused reading material, please feel free!

I'm looking to take a small punt on the hope that something miraculous happens, but I appear to be the kiss of death for aim stocks.

I'm also relatively new to investing, but dilution, as I see it, is when new shares are issued through a placing at a given value (sometimes higher than current SP, mostly lower), or through an issue of convertible bonds. These are effectively new shares that "rank pari parsu" with the old ones.

So if you own 10,000 shares in a 100k company with 100,000 shares in issue (£1/share) and they want to raise some funding - they may issue 50,000 shares in a placing at 75p/share. If this goes ahead, there are now 150,000 shares in issue and if you didn't buy any, then you've gone from owning 10% to 6.7% of the company and the share price will drop to ~75p. So your investment has gone from £10,000 to £7,500. Quite a kick in the nuts.

Longer term of course, a company with no money to do anything will fail anyway. So taking a hit in order to realise future potential is part and parcel of business.

Happy to be corrected by an wise old sages

I'm fairly new to this company, and currently doing my research.

There's a lot of capital to raise between now and first fuel at Immingham, has there been any news on what route that may take? I'm wary this could go the way of Sirius and involve a lot of dilution.