Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
I accept that the accounting date is quite hold but due to HARL not providing an update it's the best we have. However, we know very little has been spent since on CAPEX because there has been no cash to spend. The broker forecasts for 2024 and 2023 were losses and there were no other sources of cash going into the company. The debt with Riverstone has been maxed out for some time now, the company has been loss making and they have not raised any equity or sold any assets.
Therefore you statement that they've spent a huge amount upgrading assets is clearly just wrong.
You have to stop listening to the crap JW tells you and look at the accounts. They can't have generated cash from contracts because their own broker has told us they've been loss making. They can't have generated from selling assets because they have not sold any, they can't have generated it from selling shares because they haven't issued any and the debt situation has only got worse due to PIK interest so no cash from issuing debt either.
So where has all this investment in CAPEX come from? I think what you are assuming is the what HARL wanted to spend on its facilities should it had raised the £200m which it's been trying to raise for 18months+ now.
If CAPEX had been spent it would be on the balance sheet. You can't invest in property plant and equipment to the tune of £100m as you suggest and not see it in the accounts which show that at £26.6m. Are you suggesting the accounts are wrong?
"At the half year to 30 June 2023 (latest accounts). Property plant and equipment on the balance sheet was £26,670,074. As a reminder they own Riverstone c$115m."
Xenor, if only your waffle was backed up by the numbers in the accounts. There is massive net negative tangible assets, an eyewatering payroll to fund, huge losses last year and this year, no significant capex spend has happened as you suggest.
The banks cannot subordinate Riverstone without their permission and why would Riverstone allow that when they want their money back first? The banks would if they allowed the loan and could subordinate Riverstone have call on the assets but the assets are not worth very little.
At the half year to 30 June 2023 (latest accounts). Property plant and equipment on the balance sheet was £26,670,074. As a reminder they own Riverstone c$115m.
If that were the case Xenor then the UK Gov might as well just back every small company in the UK with cheap loans. Why not? It woud be a huge boost. The obvious reason is that in a very large number of cases the tax payer would not be repaid and the endeavour woud be hugely loss making and hit public services badly.
Since Riverstone have senior secured debt any new cash made available to HARL by a Gov back loan will immediately cause them to be repaid and bailed out. In effect Riverstone would directly benefit from UK tax payer back loans. If that happens there quite rightly woud and should be a massive backlash in parliament.
If HARL gets bailed out by the government the only one really getting bailed out are the two billionaire founders of Riverstone. One of them put his NY house on the market last year for $72.5m. That would make good headline that the gov are giving these guys free money. https://www.curbed.com/2023/05/gilded-age-mansion-973-fifth-avenue-for-sale.html
I don't think for one minute the UK public want to see the NHS deprived of funding to bail out US billionaires.
Before you all tell me that the gov is only backing loans and not risking any money that's obviously not true. The cost of debt for HARL should they be able to get it would be far far higher without government support because the company's balance sheet is so weak. Backing a 200m loan would be extremely risky. For this reason unless HMG and its advisors at UKEF have gone soft they won't back the loan.
Hate to burst your bubble but this is not particularly bullish.
It's is that, paying them in shares "Further to the announcement of March 20, 2023, the Company has also issued 26,842,036 common shares (the "Shares") settling $2.2 million of payables to arm's length creditors of the Company. The price at which the Shares were issued was at a premium to the LSE share price."
It's possible they can raise more equity and avoid going bust but I doubt it will be at a price attractive to most people here. the CB will want to reset their coversion to VWAP and in any case their interest payments (even for the converted bonds) are already VWAP so a wall of new shares will hit the tape just to take care of these. Furthermore, the covernants on the senior prevent any money going from COPL America to the top co where the share capital resides so there is no chance of anything going to shareholders until the senior is dealt with.
ART has stiched us all up.