Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
So nothing much down below then. You sound like a well matched couple.
On the positive side, there's no recent evidence of a major regular seller (unlike, for example, Duferco who were dripping shares out for months and months). Any selling seems to be PI based this calendar year. A seller may appear, but I get the sense that in the short term at least any sustained buying will push against an open door and will cause the share price to rise quickly. As you say, newsflow would really help.
A couple of positive observations from the ARC report.
1) They estimate year end cash to be $9.2m. This is UP on mid-year and a very considerable distance from the run out of cash scenario the doom merchants are promoting.
2) They assume Orion will convert at or near current share price leading to 1,992m shares in issue. However based off this number they give NAV estimates of 12.0p to 16.5p per share suggesting a NAV based mcap of approx £240m to £330m i.e. somewhere around 4-6x the current share price. The implied EV mcap range was 10% higher still. I expect some dilution will occur when setting with Orion, but not on the scale ARC suggest. I expect some (perhaps half or a bit more) of the settlement to be in cash and the balance at an adjusted CLN price around 10p, but that just my guess. ARC are basically setting the worse case post settlement share price at 12p, but the NAV/EV mcaps suggest double this or more is possible if can settle most or all in cash or with a share price higher than today. This is very positive.
I should clarify...the purpose of building up cash is to show BMN can settle much or all of the debt this way. It needs to do this over next 6 months to convince the market it is on the right track ahead of the Nov due date or the market will get jittery about the resolution plan.
I should also say that if the share price does reach 17p ahead of Nov and there's cash available to settle much/all of the debt, then BMN can strike what it thinks is the best balance between cash and conversion to leave some cash available for other uses versus limiting the number of new shares being issued.
The Orion debt is one of the main share price overhangs alongside the inconsistency and unreliability of meeting production targets.
I wouldn't rule out the 17p conversion price being reached by Nov and some/all of the conversion going ahead. The key is BMN demonstrating it can build up cash over the next 6 months:
1) by hitting the 2023 production targets in 1Q and 2Q
2) showing predictably of Vanchem production through the recent agreement with the municipality
3) showing they are selling the inventory backlog quickly in 1Q and 2Q
Increasing V prices would help as well but these are out of BMNs control. A handful of Belco contract announcements would be the icing on the cake.
Should these happen then confidence and sentiment will quickly return and the share price will respond. In these circumstances I can also see one or two serious investors arriving (II or PI) looking to buy 10s of millions of shares on top of generally increased buying.
Lots of ifs and buts and maybes I know, but none of these are out of the question. There will be selling into any share price rise but there's no longer any obvious massive single seller who is going to drip tens of millions of shares into the market over months and months to suppress the price.
The Orion section of the RNS specifically mentions financing longer term growth ambitions. I know these were put on the back burner last year, but perhaps they are taking the opportunity to reconsider these to see what might be possible as part of resolving the CLNs. Talking to other lenders would make sense in this context.
It is also worth remembering that we appointed RBC Capital Markets as a joint broker last year. This is a Tier 1 broker not a backstreet bucket shop. While the initial purpose was probably the Enerox/Mustang deal perhaps they can also open a few new financing doors for the V side of the business.
The previous large rise was triggered by expectations of higher Chinese rebar standards coming into effect. In BMNs case this coincided (almost certainly as a consequence of these increased expectations) with a Hong Kong based investor called Golden Summit purchasing over 50m shares on the open market and this jet propelling the share price even more that the price rises alone would have had (we had a lower number of shares on issue at that time so the effect was even more pronounced). Sadly, the rebar standards didn't get raised as high or as quickly as initially expected and GS later sold out and these began the slide back of the share price.
Marc - yes, but that doesn't mean there wouldn't come a point where agitation for an upward adjustment to the agreement occurs. However, my point was more about SA labour and unrest. BMNs agreement with its own labour is one thing. It doesn't cover transport or port workers though so BMN isn't immune to wider pressures on cost or delivery delays due to strikes. This is all out of FMs control and may not happen in any case (eg I did recently read that the US Fed is coming under pressure to engineer a slight softening of the dollar as some in US are concerned about the impacts more strengthening is having), but it is important to keep in mind there may be some downsides for BMN if the rand falls further against the dollar.
Yes, but diesel is priced in dollars so will increase costs where used for electricity generation and for transporting product to the ports in SA. Shipping rates are also quoted in dollars. A weaker rand also makes life in SA more expensive which increases risk of labour and general unrest. It isn't all a one way street in BMNs favour if the dollar keeps strengthening.
Lawrence - capex (sustaining or otherwise) is not the same as cash in the bank so the bottom line that your statement that we have $9.5 cash in the bank is plain wrong.
Lawrence - where does your $9.5m cash in the bank figure come from? We didn't get an update on cash in the RNS.
This is a production report RNS not a financial results RNS. The cash position is reported twice per year in the half-year and full year results.
The article is just a re-hash of words in company RNS from Sept and Nov 2022. It's doubtful there's an original word in there. The 2 quotes you provide about Belco are word for word cut and pasted from the RNS for example, and are not more recent insight on whether these items will still occur on the planned dates.
I thought it was established last week that HMHG is just the latest incarnation of our long-standing cycling agent provocateur. In mythology, a Saytr is a HMHG and a Saytr is a make of bicycle. The usual MO of these avatars is to start off amiably and with some knowledge, but then increase their number of posts, then (typically on a Friday afternoon) start posting repeatedly and provoking arguments until eventually there's a lot of swearing and general nastiness so that good posts are removed and a bunch of posters get banned. The aim is to make sure the nastiness starts after LSE moderators clock off at the end of Friday. The pattern seems to be repeating today. Don't get sucked in.
I was going to say, better Comms, hitting production targets and some director share buys might have helped mitigate these to a limited extent, but the sheer number of shares being offloaded would have still cratered the share price given the ongoing world events of the past few years.
It has also been very unfortunate that the very difficult world situation over the last 3 years coincided with Dufferco bring awarded and the dumping 106m shares onto the market in under 2 years. FM isn't entirely blameless for this - after all he cut the deal with Dufferco that allowed 2 lots of dumping - but even in his worst case scenario he couldn't have foreseen the global events that whacked the company at the same time as the share conversions.
This came after Golden Summit dumped 60m shares (though their purchase proved the previous share price rocket fuel so can't really complain about their sale) and,I suspect, one or two major PI holders selling most or all of their shares. Several had 10m plus shares and Nick had nearly 30m. Bett
Indeed, it also needs to be remembered that the vametco and vanchem capacity expansion plans have been put on hold in the short-medium term and will be gradual as finances allow thereafter. Therefore once we consistently hit capacity (ideally next year) then any diversion to electrolyte production will be at the expense of revenue and profit from steel and other industrial uses not in addition to them. If V demand grows as some of the other posts today suggest then the company is going to have some tricky market balancing decisions to make to maximise returns across their various investments (particularly not to leave the electrolyte plant as a very expensive white elephant).
On Alibaba it looks like I can buy vanadium electrolyte for $20 per kilo or from $2 per kilo for orders over 1000 kilos so I'm not sure how you extract the sorts of profit you are projecting from these sorts of sales costs. Though I doubt the missus would be too amused if I ordered 1000 kilos of the stuff even at such a bargain price!!
The most likely outcome of the Orion debt is partial settlement in cash plus an adjustment to the terms of the outstanding balance in the form of higher interest on the new balance alongside a new lower conversion price for the CLNs. Yes, it'll hurt a bit, but it's not going to bring the company to it's knees.
However, if the company can demonstrate a V production rate above 5000mtv per annum in the first few months of 2023 and the V price rises and holds another 10% above current levels (both perfectly feasible) then the share price may well reach the 17p current CLN conversion price in time for the debt to be repaid via this route.
Yes, we will almost certainly see revenue from the electrolyte plant in 2023. However before we see revenue we will see operating cost once the plant commences operations (indeed as soon as the plant takes on labour, uses electricity etc) which may be some months ahead of the revenue arriving and it will be some time (months certainly, possibly years) before the plant gets its production costs per litre below revenue per litre i.e make an operating profit. Thus it will be a net cash flow drain in 2023 and probably into 2024.
We have no visibility into any sales contracts so it is unclear whether production or sales will get anywhere close to the 8m litre capacity anytime soon. Every litre below maximum drives the unit cost up.
Finally, it is likely that load shedding will impact production and so drive up unit production costs.
All in all, the plant is a move in the right direction but it'll almost certainly be a negative on the bottom line in 2023 and beyond until it is producing and selling close to max initial capacity.