1/7 From today's #ACP half year report ;
"advancing project level funding discussions with two prospective parties so that we can progress our project through to mine construction in a way that minimises dilution for shareholders."
Important to appreciate how low ACP keeps...
2/7 ...operating costs.
H1 2020 running at c. £150k, which at c. £436k remaining cash, means the company should make it through to finance close without running costs based dilution.
Such stinginess also reflects well on the above quote on funding and dilution.
3/7 There are also a considerable number of warrants still in play, which should feed through on the coming months, as such things as the mining license and
"binding offtake agreements for the supply of our graphite product" are brought to a close.
4/7 Personally, I can see an equity stake at project level being agreed, lowering ACP's ownership but likely delivering the vast majority of the build costs.
That said, I am still planning for all in c. 800m shares. That sort of level allows a c. 30% equity stake sale and...
5/7 c. 60% total ownership once the government 16% free carry is agreed.
I do feel this BOD with Matt Bull as the driving force, are tenacious enough to do much better than that, but I see that as a free shot to the upside because the above scenario, will make investors a great
6/7 return over the medium/longer term.
Also, the timing of the warrants, will also have a direct affect on what ACP need to do, in terms of dilution etc. So they are certainly something worth keeping an eye on.
On the news front...
7/7 I expect the mining license, finance partner and binding off-takes prior to YE, with actual financing not very far behind.
That would place first production at Q2 2022, which is absolutely perfect in terms of market demand uplift.
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1/16
It's difficult to call this market but my view is that assuming no more operational glitches #TGR now steadily re-rates as the operations sign off the various stages to 30ktpa.
2/ Front-end valuations should depend on where graphite prices go but as Syrah demonstrated yesterday (graphite fines not large flake) orders are buoyant.
Forward orders there running at 90,000 tons which are 50% of their current yearly output. So substantial.
3/ Note also Syrah cannot produce for less than FOB C1 $543/t even at 15,000 tons per month output and that's fines.
It is clear after last night's presentation that TGR C1 costs have also risen but this is to be expected in this current market.
1/12
Here are Verde Agritech's expected sales targets for 2022 which were revised in May and offer a significant read across to #HMI and what it can achieve this year and also.
1/9 In a previous #HMI thread, I highlighted that the $600k write-down in the FY2021 accounts meant that trade debtors (so effectively trade receivables) almost doubled between YE 2020 and YE 2021.
1/18
I've been running an extensive exercise on Verde Agritech also a relatively new but expanding fertiliser producer based just c. 70km from #HMI in Minas Gervais in Brazil. The results to date are rather fascinating and certainly worthy of review.
2/ Verde is a TSX-listed producer with a current plant capacity nearly double the size of HMI (0.6Mtpy) but with a phase 2 expansion due to come online in 2023 which would take output to 2.4Mtpy.
So a much bigger operation to come and soon.
3/ Those that remember my 5th July numbers on #HMI sales prices will perhaps remember that they demonstrated a $53.20/t average sale price for 2021.
At the average achieved AUD/BRL for 2021 of 4.054, this equated to an average price of BRL216.
1/7 Based on what I have just talked about if #HMI had received all the monies from its sales in 2021 then this would have amounted to $4.52m and the business would have been profitable at the operating level in 2021.
2/ What's more, the $4.454m paid out in 2021 reflects more accurately the true costs to run the business over the course of one year.
One cannot conclude exactly how much HMI produced in 2021 because the cash receipts reflect payment dates and not when the goods were received.
3/ Inventory was fairly minimal which reflects an operation that leans towards producing to order.
However, the costs associated with administration clearly eat up the vast majority of this with the consolidated statement accounting for c. $3.85m in the period.