Member Info for SloppyG

@Simms. They need c12m annual revenue to b/e using the 30% gross margin they have themselves stated as being a realistic margin.

In your own words they are looking to land at only 3m Rev for FY24 which I think is about right.

They are absolutely miles off b/e for now. They will require some monster orders to land between now and Q1'25 to avoid some sort of funding gap imo.

The only signal imo that we may have reached the end of the dilution cycle is if a juicy options package is announced to PDMRs OR if we see some heavy Director buying; the mere absence of either of these is revealing in itself in my view given the lowly SP. The closed period argument is actually a bit of a fallacy. There will be plenty of opportunities to acquire stock outside of the financial reporting cycles.

My own view is we will see Operating losses of c1.5m in H2 (H1: -1.7m) given Opex is still at 4m annual run rate despite the so called cuts that do not appear to have had any impact. Consequently the net 2.5m raised recently will largely cover H2 op losses + some possible one offs leaving the company a bit thin on cash entering FY25. I suspect we will therefore see another raise in Q1'25 hence why the market is in a wait and see mode in this regard.

So until we SHs interests aligned with PDMRs, then the fear is further dilution to come and/or the worst case scenario of taken into private hands.

It seems there are a couple of angles to this hence the company cite "multiple breaches".

On the one hand Morocco may not have adhered to their own defined process either in the form of materiality (project value) or the appeal process itself whereby National did not make a final decision. It is easy to see why CRUI stated "they do not have the ability to review the submission again".

The other more contentious issue is applying a "reasonable person" test to ESIA rejection (originally). Is it purely subjective and down to local ruling (regardless of whether reasonable) or does it have to be benchmarked to comparable projects to define if the reasons for rejection are deemed reasonable/practical. If indeed it is the former then it opens the entire system to permit abuse.

The final angle is that even if Morocco can argue that yes there were some process irregularities but that the final decision would still have been "Rejection" due to water management issues; AND that this is indeed determined to be reasonable given recent weather pattern changes then surely Emmerson should still be given the opportunity to submit a fresh application piping De-sal water.

I cannot envisage a world where Morocco can argue that the EIA would not be forthcoming under any set of reasonable circumstances. Intuitively I think it is these multiple angles (breaches?) that will give Emmerson a strong case here but it is of course all guesswork at this stage.

Completely agree with that.

I have been saying for a while that the SP pegging here had very little if anything to do with the so called SI. The Junior market, in particular, is completely broken. Every RNS has to be 100% perfect/positive just to tread water; if neutral/negative then will get hammered. Bres RNS' have been near perfect for a couple of years so flatlining at 5p has been the equivalent of a significant rise under normal market dynamics.

What I have also noticed is that certain PIs take their own positions in various juniors, watch their investments tank, and then take some sort of compensatory satisfaction in predicting the SP demise of other juniors. At present you can stick a pin in just about any junior (maybe gold aside) and look like a genius saying that the SP will come under pressure, whilst all along experiencing the same if not much further devaluation in your own portfolio. Sound familiar to anyone ?!

Quality will out and the tide will turn but for now a least it's just a case of battening down the hatches.

Https://www.lse.co.uk/media/BRES/blencowe-resources-placing-subscription-retail-offer-p7jy4v0l5jw1cvr.html

Final slide "Now fully funded to deliver its DFS in H125"

Presumably this has come from BRES themselves given its a deck with their company logo ?

I do agree however wording/statements have been a bit ambiguous "well capitalised" etc

Whatever happens it feels very unlikely, at least in my view, that Emmerson will walk away from this completely empty handed. Once one reaches that conclusion then it's all about establishing a minimum price for compensation of costs + interest + rights etc (ignoring KMP). 10p ?

To walk away with zilch, Morocco would have to convince all that firstly there were no policy/regulatory breaches, secondly there was no unreasonable/discriminatory behaviour behind their decision making and finally that it was all simply due to Emmerson not being able to adequately address water management issues inherent within their EIA submission/s.

If Morocco can establish all that then I think it sends shock waves through the wider investor community in similar pre-production projects in certain jurisdictions. It essentially means the EIA, which is largely subjective and down to local ruling, can be used to kill projects and transfer ownership. A license in itself effectively becomes worthless without the final permit. Incidentally I did read an article at some point which concluded that the ever increasing importance placed upon the EIA in such projects may mean that the order of events needs to be reconsidered before a business can committing millions.

Anyway I like the odds here so lets see how it plays out.

Re.warrants to be fair the previous times they have raised Apr 22, Oct 22 and May 23 all came with warrants attached for the cornerstone investors so there is nothing really new here. The raises were also at 4p or 5p. The problem has been that Mike created a rod for his own back when announcing the SI to come in for £2.5m at 5p (without warrants) hence that has been the reference point for SHs.

I get therefore the frustrations with yesterday's raise but as said, in the absence of the SI RNS, this is not out of the ordinary from past behaviour. What is being overlooked somewhat imo is the significance of 2 x Senior Mgt including the COO putting in £250k each. This is a significant chunk of cash and a ringing endorsement for Bres' prospects. Typically to soften the blow of a discounted raise you see the token £5k Director purchases; this is certainly no the case here. BRES only have 2 employees (CEO and COO) outside of the BOD and they both now have significant skin in the game.

I do think Bres fully expected all the previous warrants (at 8p) to be in the money by now hence that would have filled the DFS funding gap. This has not happened, the SI clearly fell through and the once optional Drilling became a must hence had to raise fairly promptly which I get.

So on balance I am okay with this. The state of the junior market and investors' risk appetite is really what is holding this back imo. The downstream SPG plant, whilst significantly value enhancing, brings with it more risk and adds cost and time to the DFS. It is important to remember though how much work has gone in to getting Bres to this point and how difficult and costly it would be for others to replicate.

Admittedly the discount and timing seems a little strange. Until now they have managed to raise at a premium (5p) without warrants and now, with the company in a stronger position given developments, they raise at a discount with warrants. Clearly the dynamic has changed somewhat.

It's possible that to obtain the rest of the funds from the DFC they needed to match some of their funding at this point and therefore show that the DFS is fully funded to the end. Perhaps backed into a corner somewhat given timelines.

On the positive side £500k chucked in by "senior mgt" is not insignificant even with the warrants attached. I don't see this as the usual case of selling the equity and letting the warrants ride given it's stickier hands with RAB and management; it will also be very apparent if they go down that route.

The bigger issue is in part the trust as others have pointed out and the fact that being an early bird investor in the junior market no longer seems to be worth the risk reward. Smart money can sit on the side lines and wait for projects to be significantly derisked before committing at a similar share price to those taking all the earlier risks. Looking at Emmerson (EML) with their recently refused permit (ESIA) for their £2.5 BN NPV8 potash project in Morocco shows that these licenses are actually worth very little until all the permitting and funding is in place; especially in certain jurisdictions where games can get played at the eleventh hour to get their hands on the asset.

Anyway here now and added this morning when dropped sub 4p as that seemed crazy to me. 99 positive RNS and can barely tread water, 1 not so good RNS and hammered. QED !

Thanks WhatYouThink.

So basically, as per my suspicions, this is all about not adhering to process and nothing to do with Water management at this point. Fascinating to see how this plays out.

Joining the dots on all the recent RNS' make me believe that the cited "breaches" by Morocco are simply due to not following their own internal processes. Water management is therefore no longer the issue as BTS said because a rejected EIA with a recommendation of piping De-sal water would not constitute a breach of anything; that would be their right unless Emmerson could show they were being discriminated against. Emmerson would have the option of submitting a fresh application with a pipe etc. Also by now we would have definitely heard rejected EIA due to XYZ and we have not.

So the breach of process ? CRUI rejected the initial EIA, Emmerson referred/appealed it to National who in turn upheld the referral and kicked it back to CRUI. This should not have happened as the appeal was with National who should have made the final decision. CRUI probably then made some noises that all looked favourable before at the eleventh hour making a "recommendation" that "they did not have the ability to examine the EIA submission again". In their view this was not a fresh EIA application so they had already made their final decision and it was under appeal. So CRUI have not even examined the revised EIA as that is not the process when under appeal (no ability). Consequently No rejection and no formal communication of a rejection but not just mutterings that they are not even going to look at it which Emmerson have picked up on.

Emmerson are now caught between a rock and a hard place with no obvious right of appeal and knowing it could take months again to get in a room with National; hence the issue of an intent to take it to arbitration due to multiple breaches knowing this should flush out some face time with the relevant parties in short time.

I suspect Morocco have tied themselves in knots with devolving decision making to Regions and not having a fair and transparent appeal process subsequently. In my opinion Emmerson are therefore in a relatively strong position with regards to achieving some form of favourable outcome. My niggling doubt is it just prompts Morocco to formally issue a rejection again and say needs a fresh application piping De-sal water.......over to you Emmerson

Market waking up to what an interesting binary bet this has now become at these levels. Scenarios:

1. National, who have already effectively shown support by upholding the referral, force the EIA through

2. No EIA forthcoming but Govnt agree a suitable compensation package to make it go away

3. Successful arbitration

4. Failed arbitration

£5k at this mornings level into ISA/SIPP could easily become (imo) circa 1)£100k 2)£250k 3)£500k 4) Zilch

3 bites of the cherry with the obvious risk of wipe out. No idea of relative probability of success but it's an interesting one for sure.

All good points both thanks and on balance I am tending to agree and have even add a few recently at these lows.

I guess, playing devil's advocate, that a favourable outcome either through obtaining the permit or mediation/arbitration has to see this being worth c10p per share; so the market is currently attributing a c3% probability of success in this regard. So either someone has this horribly wrong and their exists the potential to make some serious money at these levels or the price reasonably reflects their chances and wipe out is by far the more likely scenario.....hopefully the former !

@WhatYouThink

All good info and you have clearly done your research. However surely everything you reference points unequivocally towards skulduggery by authorities and show that OCP/The Sate will go to whatever lengths necessary to obtain Emmerson's licenses; even more so the case when Emmerson are show a willing to export product and have excluded OCP from MOU offtakes (I am sure they held conversations with them regarding this).

So out of interest, based on your observations, how do you conclude that the likelihood of Emmerson getting their permit is 100% ?

@99 tend to agree.

I remain of the view that CRUI have not even "examined" the revised ESIA submitted by Emmerson as they don't believe they have to; they have previously made their decision and the Appeal is with National so has nothing to do with them now in their eyes. If this were not the case then we would of heard by now that they have rejected due to XYZ. They have simply removed themselves from the decision making process imo.

Consequently I think we will see National step in before this goes down a legal route. It could get even more interesting !

The more I think about this I am convinced that the confusion is that after the 1st Appeal, it is National who should have technically made the final decision as that is how an Appeal process works. Instead National kicked it back to CRUI to make a decision: probably because firstly they thought KMP might make CRUI alter their position and secondly they have devolved decision making to the Regions.

Regional (CRUI) are now simply saying we don't have the ability to examine it again as we made our final decision and the Appeal is with National to make a call not us.......hence we are caught out in the tit for tat.

Agree GW that was my point earlier. Every RNS they write is ambiguous imo.

If the decision or the recommended decision is "Rejected" just bl *ody state that and the reasons for said rejection and that there is no right to Appeal. All this unfavourable recommendation and do not have the ability to examine the EIA submission again....

My own take on it is it' tit for tat between CRUI and National. National kicked it back to Regional who are now in turn saying we do not have the ability to examine the EIA submission again (so no decision has been made). Ability could mean anything from expertise to resources or simply saying National this is your call as they appealed to you not us etc

The only thing I would say is that for it to be "Dead" then the CRUI recommendation is "Rejection" and there are absolutely no circumstances whatsoever Emmerson where we will ever approve your EIA for this license area. We don't care if you submit a completely fresh application piping De-sal water or whatever the answer will always be an unequivacol "No" for your license area.

There has to be confirmation that it has been officially rejected , the reasons for said rejection and if it is indeed insurmountable to remedy then why i.e is the ML fit for purpose for anyone other than OCP.

..but you maybe correct Latino !

I think this is the issue nothing is ever completely clear.

The CRI and CRUI are different bodies. They appealed to the CRI (the boss of the CRUI so to speak) who came back and said the CRUI don't have the "ability to examine the EIA submission again"..................so in other words they have not even examined the revised EIA submitted by Emmerson as they don't have the ability to do so. That was my original take on it which is quite damning if ability in this context refers to expertise/skillset etc.

However honestly not sure. The fact that we are however not hearing that the the recommendation was for rejection due to XYZ makes me thing this is perhaps a decision too big for the Region and somehow National will need to get involved again. Quite a bit of action in the market suggesting some think nothing has really changed with this RNS from where we were.

I do wish just once the wording would of an RNS would be devoid of any ambiguity whatsoever.

Does it mean that that CRUI are unable to make a comment on the revised EIA as they do not have the "ability"/expertise to do so. Hence the recommendation is unable to approve once more. There was speculation here that the original referral to National was due to this so called lack of "ability" hence it possibly remains the status quo. Perhaps the technical aspects of KMP and water management in general is beyond what they are comfortable signing off on.

OR

Does it mean that the recommendation by CRUI was officially rejection and on appeal to the CRI they came back and said that the CRUI don't have the "ability" as in the resource/time to review the EIA for a 3rd time.

My initial view was the former but now not genuinely sure. Although the outcome is the same it puts a very different slant on things especially if going down the legal route and "ability" of decision maker is not fit for purpose.

The MA's have tried to restructure to empower Regions (CRUI) to be able to expedite decision making. Perhaps this ha backfired as they do not have the expertise locally to make these big calls on such projects.