Member Info for ShearClass

This is the key part of the annual report and very relevant to today's update;

• The base case is the board approved budget which has been updated to April 2022. The budget was prepared assuming that some COVID-19 restrictions, consistent with those in place in January 2021, are in place in 2022 and 2023. The restrictions in place at this time resulted in reduced footfall on the high streets and at airports resulting in reduced sales of non-prescription items. Consideration has also been made of increased costs and challenges in fulfilling orders because of the risk of disruptions in the supply chain.

• The budget does not assume any acquisition expenditure.

• The budget was prepared before the Ukrainian/Russian conflict. However, the Group does not currently have any operations in Russia or Ukraine or source materials from these locations. The main effect from the current crisis is on raw material costs driven by the increase in the price of oil. The Group expects to be able to maintain its budgeted margin throughout 2022 and 2023.

• A downside scenario updated the base case scenario with a further 10% reduction in sales from October 2022 as the Group has certainty over its customer orders up to this point. We have also assumed some cost saving at a conservative level by reducing expected bonus payments to senior employees. A second downside scenario was performed which used the same assumptions but made consideration of the poor trading in April 2022 due to a lockdown in Shanghai which resulted in a significant number of orders being held at the port.

• A reverse stress test scenario updated our base case scenario with a further 22% reduction in sales and 3% reduction in gross margin from October 2022 which results in a covenant breach in June 2023. We also assumed some controllable cost saving by a reduction in employee expenses and removed discretionary CAPEX spending."

Today's 13% fall in the group order book isn't as severe as their 'reverse stress test' which led to covenant breach, however it's not that far away. It has a lot of potential as a turnaround but I'd be wary of buying right now...

Yeah it was brilliant, refreshingly open and straightforward I thought. Had to laugh at NH getting into trouble for stating on IG that the DFS isn't really required - he's right in the sense that a project with a 224% IRR is so obviously 'feasible' any study looking at economics is irrelevant, however it remains important from a technical perspective to increase confidence in project costing & mine build. NH stating that their intention is to pay dividends from free cash flow post mine ramp up was the highlight though, that is an extremely exciting prospect given the amount of cash this could throw off between 2025-2030. Will add to my holding on any dips back to the low 30's, if it doesn't go back there then I'll add on material milestones. Hold for gold here.

The overall narrative significantly improved with yesterday's interviews, we had confirmation that discussions with MIIF are ongoing, that we are looking at options to increase production by up to 50% to take advantage of a larger resource and higher prices and that the board / exec team are going to evolve considerably. DGR will soon become irrelevant, their entire stake of ~33.8m shares is valued at ~£12m and will be taken out by either II's or private investors in the next few months.

Hazbeen, Neil Herbert outlined the steps needed in both interviews yesterday, do yourself a favour and listen to them!

I said 40p as a target buy in price on 14th September and inevitably got given abuse. It looks more likely now IMO. It's little wonder they aren't winning new business when they apparently can't deliver existing agreements...

Crikey, I thought the VOX interview was good but that is several notches above! Where has Neil Herbert been hiding all of this time, fantastic stuff.

What a refreshingly bullish interview, by far the best since we lost Vincent Mascolo.

- Resource upgrade from 30mt to ~35mt by the end of the year

- Potential to easily double the resource to 70mt and possibly triple (to over 100mt) it given the project footprint and geology

- Looking at increasing the production profile by 50% to take advantage of a larger resource (this would significantly improve already stunning economics)

- In Neil's opinion by far the best project in Africa & the simplest mining project he's worked on in his 25 year career

- Hope to be in the position to break ground by this time next year if in possession of the mining license

- Starting to hire key personnel for construction phase / moving away from being an explorer

BOOM.

A really positive write up that, when I read the below I immediately thought of the Metaversities project…?

“We actually came across a platform that has been used by a healthcare provider for CPR training. The same platform also offered a digital twins use case which is central for our manufacturing and automotive clients.”

And I definitely thought they were referring to us on the security point, that was always a significant competitive advantage for engage in my view.

Comments and likes certainly look promising…

Every week we have an exciting find… looking at their website I’d guess they think Engage will be perfect for uploading their 3d renewable energy facilities and sharing with third parties etc. It’s another excellent use of VR & would add significant value to LINK if they upload them all

Goolang, I see you are a holder of Bradda Head Lithium, something tells me that you don’t understand lithium grades if you hold BHL and think Ewoyaa is low quality (LOL).

Let’s take BHL’s RNS from last week, the ‘headline’ of which was apparently;

“Bradda Head has now received all assay results from its 14-hole, 1,200m, sonic drilling programme completed at BE earlier this year. Promising intervals were identified including hole BES-22-01 with 14m at 1,221ppm, and hole BES-22-02 with 16m at 1,512ppm. Full results in table below.”

1221ppm = 0.12% Li2O = awful
1512ppm = 0.15% = awful

Ewoyaa averages 1.26% Li2O, so 10x more lithium than those holes reported by Bradda head.

As a tip I’d avoid any lithium explorer reporting parts per million (ppm) intercepts. They are polishing a turd.

Oh and one last thing, the whole of Atlantics Ewoyaa resource has been reported with a ‘cut off’ of 0.4% Li2O, which is 4000ppm… those BHL intercepts are nowhere near commercial.

BHL may well find something of interest but it’ll likely take them 5 years to get to where ALL are and that’s if they are lucky.

Goolang, you’ve clearly done no research here otherwise you wouldn’t be posting such silly nonsense.

The Ewoyaa project has an IRR of 224% at a Spodumene price of $1359, the current price is $7000+, the payback period at $1359 is 5 months for goodness sake.

We do know the details of the Piedmont deal, they own 50% of the cape coast portfolio if they fund a DFS and $70m of pre production CAPEX. They’ve also reserved 50% of annual spodumene offtake at ‘market prices’…

So if Spod is $3500 in 2024 then they would pay us $446m for the 127.5mt they would purchase, another party will very likely take the rest of the annual production, so our revenues will multiples of the current market cap. Cash cost is $278, so the margin of safety is massive…

There are hundreds of shi* AIM shares to deramp on, this ain’t one of them!

Just to add a bit of context on PLL, yes it's bounced hard over the past week since the grant award however the share price is flat over the last 18 months and well down on the ATH of $89 reached in March 2021. That's almost all down to permitting problems in Carolina overshadowing everything else they've achieved in that period.

ALL is incredibly frustrating right now with one big seller overshadowing the massive progress that's been made, crazy to think that the share price hit 25.5p on the day of the PLL deal 16 months ago... at that point in time we had a scoping study for a 14mt resource, Spod was ~$1000/t and we didn't have much clarity on when production would start. Now we have doubled our resource, released a PFS, submitted the mining license application and Spod is trading north of $5000/t, yet we sit just 20% higher than that day...

Of course within that time period it's traded a range from 16-67p which once more evidences why you need to trade around a core holding on almost all AIM shares, however I'd be very surprised if we don't retest that 67p high in the next 6-12 months.

And there I was wondering who could possibly be stupid enough to buy after that RNS / the shi* show of the last 2 years here. You’d be better off betting on the greyhounds…

Indeed, it’s a major win no doubt about it. I suspect the initial contract value will be small but it should rapidly grow as they expand usage throughout the organisation. What a vote of confidence for the fundamentals of engage too, should really boost the sales team when talking to new clients about security etc.

Re. running out of cash, clearly that risk has increased with them reducing the 2023 revenue forecast from £22m to £12m, that's a significant change vs what they said when they raised the funding in July. Focusing on the bigger projects makes sense, but the market is quite rightly nervous about moving goalposts a bit. Cash burn from March to September was around £16m and they have £23m left at present, so it looks touch and go and depends a lot on when things really ramp up. It's classic AIM - this is a really promising company and has done almost everything right but still struggles to raise enough capital to achieve their goals. If they were in the US they likely would have been able to raise £100m at IPO and they wouldn't be in the current position...

Ps. Worth looking into Sondel which listed today which looks quite decent & raised £20m which is an achievement in itself in the current climate!

Fair play Slider, they are all valid points and I was guilty of being too cynical this morning! I’ve taken some at 47.25, volume is impressive and I suspect given the momentum shares will break the all time high pretty soon…

Couple of nice comments re. ENGAGE on that post OT;

"It's hosted in Engage environments from what I can see here. They're not the most realistic avatars' but they're one of the few platforms that can assure security and they have very pragmatic, useful features., (media + object sharing, spatial recordings, quizzes, etc) that probably work well with Interpol's training programs."

"Mitch Buzza EngageXR avatars are much more realistic than, say AltspaceVR, for example. Definitely secure, and with features that pretty much many an organisation would find useful. Engage is the Swiss Army Knife of VR; there's something for everyone-casual, educational, or enterprise level user."

Another brick in the wall…

Here’s an interview from the end of September which I don’t think was posted here at the time;

https://digitalcxo.com/video/leadership-insights-jobs-in-the-metaverse/

From 4 mins in DW talks about the ‘metaforce’ and the importance of ensuring security;

“So you’re going to need a level of security and some of the professional locations where you might have people logged in, as I said like the meta force, who can mute people’s audio or kick people out if they’re messing. Because there’s going to be loads of different jobs in that; a lot of stuff that we haven’t even thought of today will become very, very popular and places to generate revenue and to generate income for a person”

Interpol choosing Engage is another major validation of the platform & strategic vision, focusing on security is turning out to be a very smart decision indeed.

Slider77, who’s going to be providing the ~$400m for the DLE plant then? Lake Resources are years ahead and still haven’t been able to raise the $550m capital for their plant, lithium power international have spent years trying to get environmental permitting & again haven’t been able to raise pre production CAPEX. I’d also ask the very simple question, if CTL is were the real deal then why didn’t they list on ASX where all of its lithium peers trade?

It certainly should be, although the market makers seem intent on dropping the share price back down at any opportunity. On Tuesday they dropped it 2% on a 5k sell (£800!) and just now a 50k sell has seen WINS drop down to 13p straight away. There are all manner of reasons why people sell but I can’t believe they have the faintest idea what EXR have been up to lately… as for new buyers, AIM is a ghost town at present where even good RNS’s normally take an hour or two to get noticed.

We are in miles ahead of the crowd, just got to be patient as you say. I’m still amazed that Victory XR have already signed up 38 unis - phenomenal progress from the 10 announced in April…