Ironveld Share Discussion Threads

[rec0very stock] 24/9/2022 13:53

It does not matter what your average is. When it goes to 0p you lose 100%.

With the massive black hole in forward cash flow, noting that without the extra CAPEX to do HPI - HPIP conversion the company burns cash forever even if it does do the rest, there will be a going concern emphasis of matter when the audited annual report comes out in Dec. How will that help raise the money to fill the black hole?

The likelihood of 0p at some stage is extremely high.

DYOR, make your own investing decisions and be prepared to accept the consequences of them.

[ladeside] 24/9/2022 11:35

I can't argue with most of what's been said, however like all share dealing / investing / trading, it's about entry points and exit points and remaining both rational and disciplined.

If I was sitting on an average of 2p+ then I'd be furious and even an average around 1p would undoubtedly present a bit of a problem / mountain to climb to realise a profit.

However, for those buying in at current levels and those with an average of 0.60 to 0.80 then I believe all is not lost and they can at least look forward with some confidence to balancing the books and making a small profit.

All that said, that's not what we bought into and of course it was only a couple of months back that this share was trading above 1p and 2p to 3p looked easily achievable. Since that we've had broken promises, missed targets, boardroom disputes, large shareholders declaring war and a general feeling of doom and gloom.

As I say though, all is not lost and providing they can get the deal fully signed off in the next week or so and REALLY start the refurbishment then I believe we'll soon have a mini re-rate which will at least get us back on the right track, if not exactly, what we had all originally hoped for......

[rec0very stock] 23/9/2022 11:48

Leopards don't change their spots.

For your outsourcing of the HPIP to work, the contractor doing the HPI to HPIP conversion would need to be doing it for nothing.

Locals can be sorted if engaged with properly, but there is a cost and time element.

From a company that has been doing it properly for many years (whilst they wait for civil wars to end so funders will make a binding commitment to provide the dosh):



Interestingly when I look at their licence area on Google Satelite there are a few roads and houses but no marked shops, schools and graveyards. There does not seem to be much agriculture there either so those locals are really looking forward to their relocation package and being employed at the mine (would whoever IRON contracts its piddly amount of mining to be remotely interested in employing locals?)

[al101uk] 23/9/2022 11:33

RS,

To be fair it's hard to argue with you on much more than on the quantum of the problem. I can only claim an extremely small chance, if any, that they can get away without another placing and that would involve:

1. Flawless execution
2. Accurate costings
3. No contingency requirement
4. Bills falling due at very convenient times
5. Debt negotiation running to expectations (in a rising rate environment)
6. Smelter refurb hitting the bottom end of their expectations (with high inflation)
7. No other additional funds required for as yet undiclosed costs (restless locals)
8. Cashflow from sales arriving as and when expected
9. My assumption of their ability to outsource the HPIP being true.

All of that from a company that has not had a stellar track record of even meeting expectations never mind blowing them out of the water.

You could argue that Grosvenor is still the answer... but that would still be further dilution.

I think the story GC told to get the support of shareholders was absolutely to form, he basically said that following the placing we will have the money to buy and refurb the smelter and then jumped to what production will look like when fully up and running. It gives invetors and potential investors a success story and a path to finally being profitable. Technically he wasn't lying but the story he allowed investors to tell themselves wasn't true either. He left huge gaps in working capital requirements, and capex costs for kit that isn't currently available at the smelter. He's done this countless times before and it can hardly be a surprise that he did it again.

This is the typical next stage, release the true picture disguised as good news hidden away in a report or a presentation (not an RNS), then just pretend everyone knew there were obviously going to be more costs involved and move on.

Want the prefect example of this? The Amerisur pipeline. After four years of delays the pipeline opened to great fanfare but production didn't ramp up as expoected. There were issues at a pumping station on the other side of the river. Those issues were hidden in a presentation that private investors weren't even invited too. It would seem incredible to me that GC didn't know about those issues (and the follow up issues with the re-opening Plat field) when he was talking about the pipeline capacity and the oil "not going anywhere"... which I guess was true in a way investors didn't expect.

[purchaseatthetop] 23/9/2022 10:22

Actually most AIM miners never mine anything. They issue confetti and pay insiders.

[malcolmmm] 23/9/2022 10:12

They need to dig something up that is what most mining companies do except this one

[purchaseatthetop] 23/9/2022 08:17

And so Jennings has become the fool and the excuse. It means GC can soak up all the cash Scot free. Jennings company gets a massive loss. PIs enticed into it by that laughable Grosvenor RNS get burned. Welcome to mining in Africa.

[rec0very stock] 23/9/2022 08:13

The fact is there is a funding black hole. I agree we still don't know exactly how big it is, we just know it is big.

Does the company itself know and does it have a credible plan for resolving it?

I was working on the thesis that they did, but just were not telling us the full picture and that the £8m from Grosvenor was the answer - the RNSs last year said it was. What we now know as fact is: when you add it all together, had the £8m arrived as promised, there would still have been a black hole just a smaller one and much smaller compared to what MCap would have been. A proper DFS would have identified all the costs and worked out sensible contingency so a fully funded position could be achieved before blundering down a path where investors money is squandered for nothing.

Having had the thesis that the company knows what it needs and has a plan DISPROVED, my thesis is now that they don't really know and certainly don't have a credible plan other than keeping the BoD fees gravy train on the rails for as long as possible through more and more discounted placings until the market finally gives up on them and the smelter gets repossessed and there is not even enough money left in the kitty to pay the liquidator's fees.

It does seem really laughable now that the company's arguement for doing their 0.3p placing was that it provided certainty. The only certainty that has been provided is that the company will fail without a series of ever more diluting placings. If memory serves Jennings said something like that. No doubt, when it does all go horribly wrong, GC will continue to try to deflect the blame onto Jennings.

[al101uk] 22/9/2022 21:49

RS,

I think if we take my first draught of costs to get to profitability and compare with your initial thoughts, we're on the same page.

I think the difference between us is that from there I look for ways that they could possibly make it work, while you look for more reasons why it will fail. I guess I'm just an optimist.

I'm still not convinced by the marauding villagers awaiting resettlment and I'm not sure how you seperate out the ramp up of production and processing from something being outsourced or not. You may be right, as it appears to be a very poor attempt at a DCF, but I don't discount the possibility that your not.

I wouldn't blame anyone for discounting my attempt at making what we're being told make sense. I've made plenty of speculative guesses as to what they may do and any one of or all of them could be wrong. Both opinions have plenty of speculation and the answer (unfortunately) probably lies somewhere in between.

I agree that much of the issue is that the company simply haven't provided any detailed costings, nor even a clear view of what needs to be paid for. This report may be the closest we get for some time.

[rec0very stock] 22/9/2022 20:50

LADESIDE,

I think you are grasping at straws regarding Grosvenor, but as ever time will tell.

Interesting what you say about the spat being engineered so GC could convert cheaply. Certainly had a placing been done at 1p through Jennings they would be much better placed to raise what they need to fill the black hole, as it would not be so large when compared to the current MCAP.

[purchaseatthetop] 22/9/2022 20:36

True true RS. In South Africa there are a lot of load shedding in many many ways some of which might hit the fan. Which must be turning fir comedy effect.

Let’s face it here. Nothing is ever going to be built. This is salaried and expenses for the insiders for a couple of years. Then we do it allllllllllllll over again…..

[ladeside] 22/9/2022 20:09

I know many have written off Grosvenor, but don't be surprised if something appears with a revised price of 0.40.

Once all is said and done, you could be forgiven for wondering if the spat with the board, Align and the carry on with Grosvenor wasn't all engineered to give certain parties a large discounted stake.

Time will tell and we'll never ever know what REALLY took place behind closed doors...

[purchaseatthetop] 22/9/2022 20:09

Recovery. I love the 12/9/22 RNS that refers to the 1MW pre operations power facility. And that Enernet will complete installation of pre operations power in Sept 2022.

A 1MW pre operations facility is a 1MW diesel generator costing $98k new and much less to rent a month. You tow it in. Turn it on. Job done.

[rec0very stock] 22/9/2022 20:05

Al,

I don't believe they do intend to outsource the HPI - HPIP stage. The full revenue uplift ie $900 to $1.5k occurs at the interface between 2023 and 2024 with no uplift in costs that would imply outsourcing.

We both agree there is a massive black hole in the funding - that it is there comes as no surprise to me because I said so many times, I am however shocked by the size of it as it is clear that even the £8m that was supposed to have come from Grosvenor would not have been enough to get to cashflow positive. We also both agree the note was very poorly and confusingly written - deliberately to obscure the black hole? We also both agree that there are a lot of new costs both CAPEX and working capital we were not informed about and still have not been informed about officially via RNS. Ie yet another breach of AIM Rule 10. How long are they going to breach AIM rule 11 before they do tell the market?

What other costs are not included in the note and the company has not told us about - there will be costs associated with sorting out those pesky farmers, that is a fact, how much and when is the unknown.

A proper DFS would have highlighted all this and been writen clearly with a sensitivity analysis around key assumptions. This paid for note written by a mate of Peter Cox falls so far short of a DFS it provided zero confidence that the project will ever succeed.

[aceuk] 22/9/2022 15:24

Thanks chaps - super to have people with more analytical brains than mine around :-)

[malcolmmm] 22/9/2022 08:50

Another buying opportunity? Will the price collapse even more.Will holders be able to sell.It seems to be an extremely risky company

[ladeside] 21/9/2022 18:13

Considering the 0.30 placing was taken up by those closest to the company, the board and friends and family, I really don't think we need to worry about "running for the exit with 10% or 20% profit".

There would be MUCH easier and MUCH quicker ways to make that sort of cash with ZERO risk and you of all people should know this only too well......

[rec0very stock] 21/9/2022 07:46

I suggest you look at the figures a bit more carefully. There is another £2.5m of CAPEX to make HPIP and that is not in the DCF. Without it the HPI is only $900 per tonne and the project does not make nearly enough cash to fund the eyewatering London (BoD and adviser fees) and SA overheads at that level. It is only by assuming the £2.5m is spent in 2023 that 2024 looks so good, as that has HPIP being sold at $1500.

We now have the mining and smelting costs - about £4m of working capital needed before first sales (within 12 month of completion of smelter refurbishment). All the money raised goes on refurbishing the smelter and paying GC's salary, so over £6m needs to come from somewhere in 2023. Grosvenor? don't make me laugh, how they have the nerve to keep playing that card and think anyone will fall for it is beyond me.

£700k per year from 2024 assumed as debt repayments, but at the moment there is no debt purchase agreement. It will have a lien over the smelter, which could easily end up being repossessed if they can't make the payments. With the black hole in funding to do mining and make HPIP there is a very high risk of slippage, especially as there are still those pesky farmers to deal with (nothing allowed in the DCF for paying them off). Every so often a smelter lining will need to be replaced and that is not in the DCF either.

It is of course paid for research done by a mate of Peter Cox. How valid are all those assumptions? There is no spot price for HPIP - purity in everything with HPIP and the purity figures given previously really are not all that impressive. V and Ti by product credits are pitiful.

Continuing to put the boot in to Jennings in this childish and vindictive way is not particularly impressive either. GC should either bring a case (which if successful might get the company some money it desperately needs) if he has one, which actually I suspect he does not, or shut up and focus on all his own very real problems. Who's he going to blame for the next mega discounted placing?

DYOR and make your own decisions based on a proper analysis. Mine says piddly little project with high risk of total failure, loads more shares to be issued to keep the gravy train on the tracks with very little jam tomorrow if it does ever really make it to being genuinely cash generative at PLC level. Watch how many placing shares get sold as soon as the bid enables them to get out at between 10 and 20% profit.

[aceuk] 20/9/2022 19:16

I thought it was quite well put together at the same time as giving Mr Jennings another good kick. In time I might have to buy some more but (probably for the first time with Mr Clarke) I'm going to wait until something visible actually happens!

.... but then again, at some point, as with Amerisur, it may just run away with no obvious catalyst.

[purchaseatthetop] 20/9/2022 19:11

Use a DCF of 25% to reflect the risk beta and risk free rate and you might be more accurate.

[ladeside] 20/9/2022 18:50

A discounted cashflow model, using a real DCF of 10% results in a market capitalisation of £22m.

This is on the current smelter complex and does not take into account any expansions.

The recent shareholder dispute drove the share price down from 0.7p to 0.3p and increased the number of shares required to raise the £4.5m. This was detrimental to all shareholders, but even with the increased number of shares in issue there is value up to 1p based on the cashflow model.

Just a snapshot but a very in depth research note.

[aceuk] 20/9/2022 15:37

1p target when all the bits and bobs are in place