Member Info for SquirtyFlower

You're not the only one wondering that, Daisydog. I'm also struggling with the comment that debt has fallen from $76m to $20m. The RNS was very clear. All $45m of the original CLN (loan plus accrued interest) remains in place and so all of it remains debt on the books until it is repaid. Yes, it has been restructured so that it is now a straight $27m loan and $18m of CLNs (plus interest), but it is still all debt that has to be repaid over the next 3-5 years. It hasn't vanished or been magiced away. I do expect the revised CLN share price conversion levels to be easily met so the repayment will be via conversion rather than cash, but either way it's still all there on the books until it's cleared. Similarly with the long term $30m production agreement debt. The terms have changed, but it's still got to be paid off and remains on the books.

Don't get me wong. FM has done a good job and addressed the immediate debt issue 6-7 weeks ahead of when I thought it would be resolved and it's clear to all that there's a very good and supportive relationship with Orion. Like you, I'm also a bit surprised there's no cash paid back now. My own suspicion is that a) 1q23 isn't as profitable as some claim once all the corporate overheads are accounted for and 2q23 profit outlook is uncertain given failing V price b) the Mustang deal is going to cost us even more still (Enerox must be running on fumes now given all the delays and their lack of revenue) and FM is needing to preserve cash for this possibility.

Orion might get their 6p today the way things are going!! Great news.

LawrenceH - Why not start with the simple maths. Earlier this week you said the share price would be 8p by today. How's that working out?

I'll happily take 700p per share (wow!), but I presume it's a typo and they mean 7p per share!!

Pricing section of RNS also states that demand for BMN products is strong.....bodes well for shifting the inventory we want to shift while maintaining or improving prices.

Read pdubs post from the other day. Reliability has much improved and the last 7 quarters production results have always appeared within a month of quarter end.

Eatstocks - I didn't read your spreadsheet.

Harchris - 37m in 2020 plus 66m in 2021 makes 100m in my book. No exaggeration from me, in fact a slight understatement.

Little dilution....are you sure? From Nov 2020 over 100m shares were issued to Duferco in part payment for Vanchem which is around 8% of the total shares. They then sold the lot on an almost daily basis for 18 months or so which totally negated any possible buying pressure from building. On top of COVID impacts and the various delivery missteps that occurred it's pretty clear why the share price has declined. Buying Vanchem should turn out to be a good move in the end, but there has been a high impact to the short term share price.

The point appears to be if there is up to another ZAR160m (£8m) to spend in 2024 ( on a plant that has so far cost ZAR100m) then it is far from just a few months work to get up to capacity. I accept it isn't clear whether this extra spend is to get to 8m litres or 32m long-term full capacity (or something in between), but the article talks about 4 years to get to 8m so I'm inclined to think it's the former.

Correct Jimbo. And when you (and I earlier today) say rates are way down, for example, we're talking over 90% down year to year in the case of China to US West Coast rates. BMN doesn't pay the shipping, but it certainly removes this as a cost headache that our customers had to bear big time during 2022 so helps us out indirectly.

Also worth noting that global shipping rates have dropped massively over the past 12 months. This indicates shipping logjams have cleared and will make it easier to get V shipments to customers.

Read it carefully. The 6p valuation is based of $35/kg pricing (where we barely break even depending on all-in cost exchange rate used....RBC assumption is worse for BMN that it is so far working out in 2023), 18p off $40/kg pricing where we make substantial profits. It's not unreasonable to have a 3x increase in valuation in a profit making versus barely breaking even comparison.

We'll also get the FY22 results before the end of June. These will clarify the cash situation as of the end of Dec 22. This will be the low point of cash as we know revenue and operating profit have strengthened and costs reduced since then. The fact there has been no cash call (placing or other financing) over the past couple of months means the cash didn't run out as some allege it would do and the cash position is now getting better by the day. I would also hope FM takes the opportunity to update on cash and debt in the 1Q23 production report. It doesn't need to be audit level detail, just something that takes away the absence of info that allows the doom merchants to spout their stuff.

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.