Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
I think its an important lesson that a profit is a profit, and sometimes the right course is to just run taking as much as you can. Clearly the "right way" to trade this was selling out at 40/30/20p etc, and then re-buying whatever sized holding you want in the low 2s. But I never thought it would fall that much through the process.
Now I think we are at something of a bottom - and the question is how much it might go up by. There are possible pitfalls, but this share can move when it wants. But do you want to cash out at 5, 10, 20, 40? Thats the trick of it.
Or you can be a long term holder, and hope that one day this will be bought out for a massive amount of money. I can't see it ever becoming a significant producer (again) and being in a position to pay out dividends.
I'm not sure if OMI is a dog - but I do think its not the best share for day traders. Sure, there are big swings - but it isn't that liquid.
Its why I think claims that we often see on forums to the tune of [I got the lowest price of the day] and [I sold at the highest price of the day] are kind of... Walter Mitty trading? If you managed it that often, why are you not a millionaire? Why are you instead on the LSE forums every day, messing about in the AIM?
Its probably not good for my own long term holding, but I have no idea where the short term price is going. I'd like to think once 100% ownership is confirmed, this will go for a walk up to 10p. Maybe even 15p. But this isn't really based on anything but hope. It could even be a signal for hot money to sell out - but I'd hope the prospect of drilling would guard against that.
I think the graphic does do a good job of explaining why Brad felt Agnico were insisting on digging in the wrong place.
So basically if you take figure A, he thinks they should have drilled perpendicularly through the known Gold location. Instead they drilled parallel to it, some distance away, to see if this was a monster deposit, and consequently completely missed.
For the uninitiated, how does the 4.43 wall "work"?
My simplistic reading is that anyone who bought a 2.95p share has the option to also buy another share at 4.425p?
I guess another 8.25%~ dilution isn't great for existing holders. But it would give Omi another £750k to play with. Not a negligible sum, if the company's value were at about £10m. You'd like to think £1m would fund a good throw at Pepas.
Drills poised?
I'd probably save the full on ramping until the agreements are actually signed - but I don't think you can say we know nothing more than we did. Admittedly it probably always had to be thus, as Omi has no money, but getting Anza back with no upfront cost is a great achievement. I think the current share price now looks rather low.
I'd like to know whether the $15m starts kicking in at 1 oz production (in which case its a bit of a hurdle) - or is at more meaningful levels of output, at which point it probably won't matter that much. But in either case this is years away - and I suspect Omi would have been bought out by that point.
At least as of this morning, I don't think I can fault Brad.
As a strategy, does tilting at Pepas make sense? Hopefully, if they don't miss. I think its something Omi can do to demonstrate value while hopefully hunting for a long term partner that has the $millions necessary to develop the whole site.
Maybe I'm just a bad gold bug, but I'm not sure I see any of these exciting gold valuations.
You can certainly have supply/demand and mania driven spikes. But over a medium to long term, commodity prices tend towards being a function of production. AISCs have risen - and if interest rates were to stay up will rise further. But if the cost of getting gold was say $1500, and the realised price was $3000 (never mind $5000, $10k etc) then gold mining would be outrageously profitable, and there would be a massive increase of investment into the sector. This would take time to come online, but soon there would be a flood of gold and the price would rather quickly be brought back down to something normal.
You can, I guess, argue it round the other way. A lot of recent investments have had difficulties. Arguably they need better returns if they are to go ahead. (This feels a bit cart before the horse, but if its raising the idea of a future shortage/squeeze can happen.)
You can also I think correctly point at the level of debts around the world. These will probably have to be inflated away. It will certainly be easier to do that than explain to voting public that more of your cash is going to pay creditors rather than hospitals, schools, tax cuts etc. I think the issue is though that there is a fundamental difference between countries running at a slightly higher average level of inflation (say 3-5% rather than 2%) and some hyperinflation scenario where the dollar is worthless, buy bitcoin/gold bars for the coming Mad Max apocalypse etc.
Anyway, Pens Poised and Pepas awaits.
Valuations include a lot of hope value which is hard to measure properly.
It didn't turn out that way - but the Majors were committed to putting $30m into Anza, and completing feasibility studies, presumably ahead of buying Omi out. It seems like you'd put some sort of multiple on that investment. 40p was probably the market getting ahead of itself - but Omi had to rise sharply from its few million valuation.
I mean CNR is an interesting subject - but lets be honest, if they ever complete their sale, and they were to get +/- the current share price, people would be kind of upset. Will they be disappointed? I think Seingred has said he's hoping for double. Some are hoping for much more.
Omi doesn't have the resources - and will never have the resources - to bring Anza to production. So they'll have to cut someone much bigger in, no matter how sparling the results. Unfortunately until that's clear, the market is likely to be negative.
The directors got $594k year ending 2022, $578k year ending 2023, and okay, we aren't quite at the end of 2024, but I think we can assume it will be higher based on the quarterly figures we've seen. So by the end of May it's going to be around $1.8m for the 3 years.
Yes this isn't all Brad - there's a whole menagerie of them. But this is not peanuts given where the company is.
In the past 3 years the directors have extracted nearly $2 million from this company (without getting into stock options etc). I think they have been more than amply supported.
I feel there should be some rule that links how bad a share is doing versus how much people start thinking the price is the result of a few posters.
As I think Chicken said - from a neutral position, this share price is low. Sure it could go lower, but it wouldn't take much to hit the heady heights of 4-5p. If you are disciplined, you could therefore make a reasonable trading profit. Whether you want to be doing this in AIM shares is however a reasonable question. If you already have a lot of shares, whether you can average down enough to potentially flee the building at 5p depends on where you are standing.
On the fundamentals, well, my lack of faith in the board is the killer there really. I'd love to believe Brad and co are carefully getting everything ready. I.E. 100% Anza back and new sugar daddy on board to fund it (even if at worse terms). Instead I think we are going to get it back (with its $500k-700k cost just to do care and maintenance), they'll say they are in conversation with various parties - but they need to stay in radio silence for 6-18 months while it happens. They'd like to spend a million on Pepas (its a free hit/walk up/easy) - but the money is already rushing out the door. Dogs will continue to eat the homework on the 3 other projects - which notionally also require millions over the next few years etc.
As someone else who's ridden it up and ridden it down, my frustration is with Brad's strategy.
I mean I hope they prove me wrong. Release some data from Argentina, Brazil and Nigeria to indicate these are worth anything to anyone. But instead we get told release is imminent and then woops, its nearly a year later and a dog has eaten all our lab results. I mean the latest message was "oh, we'll be showing some leg for PDAC". Well that starts on Sunday. Has there been any news? No. Will there be a major release on Monday? I doubt it.
I mean more fool me if they hit the greatest find in one of these places. But it feels like the company would be in a far stronger position if Brad had been told to just play golf the last 2 years. We'd have millions of dollars more in the bank and be in a far stronger position on finding another partner for Anza. Instead we are going to instantly find ourselves with commitments of about $1.5m, i.e. most of our current cash pile, and theoretically more spending needed in 3 other countries.
I think if you've never tried to renegotiate a deal, you've probably not been in business for very long.
The original Omi deal was very good - and caused the share price to rocket accordingly. Unfortunately Omi will have to negotiate another agreement which is unlikely to be as good (although it doesn't have to be to lift the share price from this dismal position). There's got to be a non-zero chance that ends up being with Agnico.
6% is a lot as a percentage, but I'm afraid £30k isn't really a lot for doing this sort of work.
The issue is doing all this to raise a relatively tiny sum.
Brad reckons he's raised money so they can manage Anza when they take it back. Arguably this isn't unreasonable - as Omi would, even without any drilling, take on the $500k or whatever a year cost they have just to hold the site. Although given they have $1.7m its not a completely convincing. The message of "we had to raise at sub 3p because we might not be able to in the future" is prudent - but not exactly great news for investors. Companies should raise where they can - but prices matter.
Beyond that there just seemed to be jam tomorrow statements. Maybe - maybe - there will be some actual reveals from Nigeria and Argentina (Brazil seemed to be omitted but I might have misheard) before the PDAC in 2 weeks time.
How long have we been waiting for the Brazil tin assays? It feels like almost a year?
Maybe I'm too negative - but if the results were good I can't believe Brad would have sat on them this long.
I wouldn't perhaps mind Omi's sideshow adventures if there were clear signs and statements of progress. But every time it seems to be "things are looking promising, we are shoving another $1m into this" "ooo err, hang on, lets go silent for 6-12 months."
I feel I said this would happen, but it doesn't make me feel any less annoyed.
The Anza deal was what the deal was.
That deal hasn't forced the Board to bankrupt Omi through a combination of greed and ego. We are paying around £500k a year for these "poor men" who can't afford to dip a toe into the company - and have shot the rest of the company's money on 3 adventures elsewhere which have, as yet, produced nothing. Newmont and Agnico have messed us around - but under a year ago we had nearly $4m in cash. Now its all drifting away.
There have been plenty of AIM companies that operate on this "raise £500k-1m, the board bank half, and spend the rest on some drills (for oil, gold, whatever)" model. Find nothing? Ah well, there's probably another generation of mugs to give me another go". The hope for many I think was that Anza would make Omi different. The gold after all having already been found.
There doesn't seem much point cashing in at this level, but if there share price was to walk up to 5-6p again, I think I might cut a significant portion of my holding. I'd hope we'd hit 10p on some good Anza deal news - but its going to be dependent on a whole new generation of investors willing to get on board this train.
The issue isn't really dilution - which, as they say, is a fact of life for companies like this.
The issue is having to dilute when the share price is so low. I'm not sure why figures like 6-10p are being floated, when the current share price is about 4p. Maybe you can pitch the opportunities to them, and that the current market value is irrational - but its a bit of an ask.
You'd probably have to raise at around 2.5p or something. And in that case doubling the shares still only gets you about £5m.
Now if Omi could have a re-rate back towards 20p, and then could issue some shares at say 15p, then its not so much of a problem.
Yeah - I don't normally like being bearish, but I feel this company is sort of in a race.
I think getting 100% of Anza back should be great - although it sort of depends on finding a partner ASAP. I'm not loving the idea of "Agnico want out, but then might come back in on better terms". But Omi simply isn't going to have tens of millions to do prospecting - especially with the other commitments.
The other projects might come good but I continue to feel like they are sideshows giving Brad something to do. It remains unproven whether Omi can actually prove up a resource and then sell it for profit. What is proven is their capacity to consume cash.
Which leaves you in a chicken and egg. They will need to raise cash. Which you'd hope they'd do at a higher share price. But isn't that going to tank the share price? So why would you buy in more now? But if they were to try and raise say £4m when the market cap is at £8m, thats going to be kind of horrible too.
So I sort of feel like it all needs to come together at the same time. 100% of Anza back, plan for how to take that forward (including a partner), and btw they are raising a bunch of money, new shares issued. Share price hopefully bounces on the back of that, even with the inevitable dilution.
The negativity is due to a lack of clarity on the strategy.
If Omi's share price was say 20p, with a market cap of £40m, then I think we could tap markets for say $5-10m without annihilating current holders.
Unfortunately the share price is at 3p, with a market cap of £6m. I'm not sure they can raise much money at all.
Which is a bit of an issue given overheads - and undertaking commitments for $3m in Argentina, $4m in Brazil and now $5m in Nigeria. I don't know if any breakdown has been made public on what we have spent so far, but given we had $2.35m in the bank a month ago, we seem a bit adrift.
Ultimately there's nothing wrong with spending $5m (we'll ignore the issue of how you get it) to prove up a lithium deposit that can then be sold for several multiples of that (probably to some Chinese firm). But as a shareholder you've got to believe Omi will get to that point. Given how things have gone with Anza, its not obvious they can get to a close.
Now if in Anza the majors were to turn round and go "that was an interesting 18 month holiday, but now its full speed ahead on spending the $20m" then I think there would be a massive rerate. But as far as I can tell its a complete gamble on whether that happens or not.
The negativity is because Brad's strategy seems completely at odds with the interests of the existing shareholders. And being told "well, if current shareholders are too stupid to realise I'm running the usual AIM con, more fool you" leaves a bad taste in the mouth. Could he strike the Motherlode in Argentina, Brazil and now Nigeria? Maybe. But its far more likely he finds absolutely nothing having spent millions of our money. Then he can turn around and go "ah well, bad luck, lets find another bunch of punters to give me some more millions to have another go." While helping himself (and the rest) to significant salaries year after year.
If you want to invest in an AIM company doing that then there are dozens of them. Frankly even the ones that that get lucky eventually find a way to screw over long term holders.
If the share price was back in the 20-40p range, and he wanted to do a little raise of $3-5 million so he can play around then I wouldn't mind. But we are not. We are at 2p. Due to his mismanagement we're basically worthless beyond the cash we've got - and the plan is to go throw that into Nigeria? Its insanity.
We are here for Anza. And I fear we are going to go bust and then the majors will pocket Anza for a song. As people have said - why pay $20m exploring to get an additional 15%, when you could buy the whole shooting match for £4m. (Less, assuming the majors still hold a significant stake.) You'd be free of any obligations and you can proceed as quickly or as slowly as you like.
Obviously if they tried I'd hope the share price would go up a bit - but how much of a multibag from a joke is fair? If Newmont or whoever said "5-6p for the lot, or die" I'd think it was an insult - but due to having got in early enough, I'd at least keep most of my shirt. But then I can't vote so who cares what I think.