1/9 I will mainly park the #BMN interims for just a moment because for me, a loss was coming.
The story is about the future and what it will cost shareholders.
I am still working through the very detailed finance agreement but would highlight several stand out points.
2/9 My take.
$65m in new finance.
To pay
$6.15m Duferco
$22.2m Nedbank
= $28.35m
Dilution at this stage
Duferco $6.5m (£5m) @ c. 10p (worst case) = 50m shares.
Cash on hand.
$24m
Planned Investments through this finance
Vanchem phase 1 = $14m
Vametco phase 3 = $26m
3/9 From today's RNS ;
Firstly the PFA from Orion, who I regard as a very solid and trustworthy lender.
"to provide the necessary funding to finance the Vametco phase III expansion project to 4,200 mtV and debt repayment."
Annual Report page 42.
4/9 $35m Convertable loan
"Funds raised are to be used for capital investment purposes for the first phase of Vanchem's critical refurbishment programme, and the balance for debt repayment purposes."
5/9 So at this stage, it looks to me that for this total investment, BMN can chart a course to Vametco 4,200mtV and Vanchem at 1,100mtV.
Thus giving us a 5,300mtV producing business.
Phase 3 Vametco is previously stated as being on line by 2025 but I see a twist coming.
6/9 Vanchem phase 2 is stated as being a $21m build cost achieved across 2021/22 and taking production there up to 3,100mtV.
So why is this finance centred around Vametco?
I appreciate that Vanchem has phase 1 to complete first but phase 2 dates are in line with that.
7/9 CEO Mojapelo gives us a clue when he says in today's announcement that today's finance ;
"puts us on track with our expansion plans" and "we look forward to further elaborating on these plans and the impact on our business in the coming months."
8/9 So something is certainly afoot at Vametco, be it the PFS has still to be completed, which means the finance shouldn't all be required straight away.
The same goes for Vanchem where one would expect cash reserves to be employed, first and foremost.
9/9 So for now I have an open mind on further dilution.
The combination of business progress and timing of draw downs, will have a substantial affect on the dilutive nature of the CLN.
My est. right now is c. 200m new shares, incl. Duferco first tranche. Not a deal breaker.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
1/16
I've been doing some detailed research on #STX and found something important.
With scrips growth now back on track and net pricing expanding the 2 biggest risks I could find were working capital to breakeven and a covenant breach on the SWK financing.
2/ The $5.7m AOP Milestone Monetisation + the $10m Sallyport invoice factoring facility are stated by the broker as delivering them to +cash flows by H2 2025.
The same message is coming from the company although I could imagine a small amount of additional equity in 2025.
3/ The numbers say this would be small (c. $5m) and could well be in the form of a further expansion to the Sallport facility as expanding revenues allow it.
That then leaves the SWK finance covenants.
They are based on quarterly rolling group revenues up until Q2 2025.
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.