Ironveld Share Discussion Threads

[rec0very stock] 16/12/2022 17:50

Personal philosophy: Every day is a school day. You can never learn too much. You can learn as much from success as you can from failure. Making falsifiable predictions and then seeing if you are right or wrong is a really good way to learn.

Whenever I have tried to work out how much money a company has left and from there when it will run out of money I ALWAYS get it wrong, but ALWAYS in the same direction ie I ALWAYS estimate it has more money than it does have and it ALWAYS runs out sooner than I predict. The main reason why I ALWAYS get it wrong in that direction is the figures and how those are changing over time I am using for my analysis mainly come from the company.

Maybe IRON will be the one I get wrong in the other direction, ie it does have a bit more money than I expect and maybe it will last a bit longer than I expect, however it WILL run out of money - even LADESIDE now seems to agree.

Sometimes running out of money is terminal, sometimes it can be rescued, however it is ALWAYS painful for existing shareholders. Sometimes it presents an opportunity for those bailing it out, but sometimes the hole in the Titanic is just too big to plug and the ship is going down no matter how fast you try to bail it out - those are just inescapable facts of commercial life and not speculation based on analysis of available evidence.

Leaving the sinking ship analogies aside, and switching to a medical one. Iron has a cancer - the primary is GC IMHO. It has metastasised into the secondaries we have been discussing. Maybe cutting out the primary and treating the secondaries with Chemo and Radio therapies will save the patient, maybe it won't. However it is going to be very sick and lose all its hair, but maybe one day it will be able to run a London Marathon in aid of Cancer Research. How can anyone say I never see any positive scenarios? ;-)

PS apologise to anyone offended by the cancer analogy because you have someone close who has a diagnosis. Standing by and supporting that person is exactly the right thing to do. Standing by and supporting a company led by IMHO a useless, arrogant, cowardly charlatan that has repeatedly screwed you and all other shareholders over?

[aceuk] 16/12/2022 15:03

Replied Rec

[aceuk] 16/12/2022 10:48

As I said, I think you are too interested, I don’t know the reason, possibly it is just your good heart.

[aceuk] 16/12/2022 10:28

Rec I'm not sure about forensically dissecting, we are all guessing and subjective to some extent, even your good self.

I find your repeated dissections quite useful for my understanding, as I do those of al101 but I still think you are rather too interested. It strikes me you do not discount entirely the possibility Clarke may still have one or two unexpected tricks up his sleeve which you could profit handsomely from.

[rec0very stock] 16/12/2022 07:54

Al,

The range of possible scenarios, which are all in my posts, have to be within the bounds of reality not fantasy.

Key facts which we agree on:

The company is going to run out of money and needs a large injection of cash from somewhere. I have acknowledged the remote possibility of a "White Knight" investor, but such investors do it for their own benefit, not as some sort of charity act for current shareholders. To illustrate (a scenario not a fact):

When staring completely into the abyss, an offer of £4m @ 0.1p is better than 0p, which is a credible scenario for any company that runs out of cash and cannot raise more, that would then require under takeover rules for an offer to be made to acquire all the share capital which could also be at 0.1p. Given how much of the company they would already have, I doubt it would be hard to get the 75% needed to make it unconditional.

The fact that the company will run out of money will become clear to everyone very soon when the Annual Report comes out in a few weeks. I can't believe Mike Staten bought 90m knowing the company was a few months away from hitting a brick wall and it has taken this long for LADESIDE to at least admit it is a risk he was aware of.

The company does not currently own the smelter it has been refurbishing. I have commented on the range of scenarios there and counter argued your view that it is the biggest risk (it most certainly is a risk and one which would have a massive impact on sentiment which contributes to the next fact).

The company has misled the market repeatedly - largely through what it omits in its various communications. We both agree the company has a major credibility issue.

The company has not followed the industry standard methods for understanding, managing and communicating risks (DFS), instead it has made it up as it has gone along - this is a root cause of the above, along with having an arrogant cowardly bully of a Chairman.

I have even given a "best case" (7300) which could see a route out of the mire. I just feel it is unlikely to be followed.

Ace,

You could be right. I don't think they have ever twitter ramped Titanium, so maybe I should bang on about how the Ti slag is probably only worth $100k pa @ 40KT (If correct this alone would make the anorexic, best case, gross margin disappear entirely) to see if next week we get a Twitter ramp based on Titanium. Maybe you should run a weekly guess the Twitter ramp contest ;-)

[rec0very stock] 16/12/2022 07:19

Silly me how could I have forgotten the other thing we have to look forward to in the next few weeks when I wrote 7304?

LADESIDE admitting I got it right yet again, because he can't work out anything for himself and has no idea what risk actually is and is unable to put together a coherent logical argument supported by evidence to support the short term price target he plucks out of thin air to convince himself he has gambled wisely.

Keep averaging down at these crazy prices.

[al101uk] 16/12/2022 00:16

Ace,

Not sure RS mentioned Brazing as a potential use of HPI, maybe that particular use doesn't need 99.99% purity, maybe Ironveld are listening ;-)

[al101uk] 16/12/2022 00:14

RS,

I've been trying to tempt a positive narrative from you for some time now, maybe your spectrum of outcomes is little narrower than mine ;-)

Ladeside,

Unfortunately I think posts here can damage the shareprice at least short term when there is little newsflow.

Ironveld is illiquid, I've moved the share price when the market cap was far higher than it is now with my modest buys and sells.

PI's represent pretty much all the liquidity here and many PI's use places like this to at least take the temparature of sentiment towards the company. I know when I've been 50/50 on a company, stale bulls moaning on advfn have been enough to put me off further research, particularly when the complaints have been about ongoing management failure.

For you of course that short term movement makes little difference.

And having said all that I'm still happy enough to talk to RS. I don't mind his views, I just think he could tone down the frequency and volume a bit, if for no other reason than to let me actually read it all :-)

[ladeside] 15/12/2022 20:24

Excellent posts Al and I'd agree with almost everything you've said.

I've never denied the risk here but while taking a hit due to the Grosvenor issue combined with the Align debacle, then I made the decision to average down as believed 0.30 or below was a very good bet from a risk / reward perspective.

Things may not come off but I believe they will so it's a no brainer for me at these levels.

Remember, success and failure are all unique to each individual and depend on entry and exit points as opposed to the life cycle of the company.

As you say, Recovery only wants to see negatives and push worst case scenarios as a given, why ? I really don't know, but while I'm happy to acknowledge that things may go wrong I'm just sick of reading the constant deramping garbage pushed on us on an almost hourly basis, so I've decided to just stick him on ignore as I'm well aware of the risks and don't require to be constantly reminded !!

Anyway, what we know is all out there now so we just need to sit back and watch it unfold as nothing posted here is likely to make the slightest bit of difference to either newsflow, market reaction or entry and exit points of the individual....

[aceuk] 15/12/2022 14:53

Another short and, according to some, pointless advert

[rec0very stock] 15/12/2022 12:12

al,

I agree we are in the minority, but it is not a minority of 1, as I do the same - you covered best case very well, I looked at best, worst and mid. I am invested and have been for a long time, so I have watched things unfold and did form an opinion much earlier this year - sell. As you never held (very wisely) and are watching from the sidelines you don't need to make any decision so you have a different, entirely valid and very useful perspective.

Ultimately time will tell what is right and what is wrong. Until it is 100% one way or another we are discussing risk vs potential reward. All discussion from all view points is valuable for those who are trying to make the best investing decisions for themselves.

The key thing to do is to make the decisions before it is too late - no problem for you as you made your decision not to invest but to see what happens a long time ago. I enjoy forecasting, making falsifiable predictions and then seeing what happens, especially now I have cut my losses, which were not particularly large anyway and would have been even smaller if I had not taken a small punt last year thinking it would be different this time - the Grosvenor announcements breached rules 10 and 11 repeatedly, nothing has changed since with regard to the contempt with which GC holds all rules, norms and anyone he considers to be beneath him.

I would be much more interested in the ultra positive case if it was supported by logical argument backed up by evidence. Simply plucking a figure like 1p out of the air and calling it a short term target does not really cut it, without the logical argument and evidence to back it up.

[purchaseatthetop] 15/12/2022 12:00

I can see an ever growing number of potential outcomes and they range from a complete and utter destruction in shareholder value to nearly complete and utter destruction of shareholder value but in all cases with Directors and insiders being paid high salaries and expenses.

[al101uk] 15/12/2022 11:49

RS,

I was giving a best case scenario, I think I must be in a minority of one here who can hold a spectrum of potential outcomes in my head and decide if I want to invest based on:

1) If I think there is enough information to have an opinion.
2) If I think the bullcase is likely enough to make it worth a punt.

The only thing I allocate any amount of certainty too is their need to raise more funds at some point so currently I don't think '1' is satisfied. As a result I carry an ever growing number of potential outcomes around in my head and sometimes I post them here. I'm not taking a definitive stand (I don't need too, I'm not invested), so it seems pointless arguing who is right and wrong when all I did was give a best case scenario. You're posts cover the extreme negative views extremely well, so I see little point adding to that side of the argument. You'll never see a worst case from me, unless the bulls take over ;-)

[rec0very stock] 14/12/2022 18:38

Let's look forward, not back and there's lots to look forward to:

The Annual Report (with going concern emphasis of matter).

The AGM Circular (how many more shares are they going to ask for authority to issue).

Possibly finding out what "shortly" means this time wrt the DPA (as a minimum, it meant over a year last time).

And of course the main event - the guess the date, price and how much is raised in the 2023 placing contest.

It is worth waiting for the first 3, as the market reaction to them will have a massive bearing on what guesses to go for.

To illustrate: a crash to 0.2p on the AR, followed by the cat coming out of the bag yet again that a discounted placing is being prepared could drive it down to 0.1p. If they are looking for £4m that's 4 Bn shares and therefore 7Bn in issue to multiply your price target by to then compare against a risked NPV of whatever project may then evolve. Finding out what "shortly" means this time would have a positive effect if it is just a few weeks to do some bureaucracy and that bureaucracy does get done and IRON does finally own the smelter (with £5m of debt to repay on what repayment terms? Risk of repossession in 2024?). "Shortly" becoming never ie the deal is off would be disastrous. "shortly" remaining "shortly" would just be an increasing worry which would drain the share price

Hope this suitably whets your appetites for the fun times ahead.

[al101uk] 14/12/2022 15:11

On the purity of the HPI that Ironveld believe they can process, I guess the first thing to mention is don't they already have an offtake agreement or at the very least they have had one?

The second is that the Iron they will sell is certainly more valuable than pig iron and has a different market, which has been the primary point Ironveld have hammered home. I guess the third is that iron is priced on it's mesh size and it's purity, different markets have different requirements and it's not that difficult to find 97% pure iron powder for sale.

It's hard to find a specific definition of what constitutes HPI. I think Ironveld use it in the terms I explain above, ie that it is not pig iron, it has value add. I have also seen HPI described as another term for Electrolytic Iron which as you say has far higher purity than 97%.

[al101uk] 14/12/2022 12:48

"Current Market Cap is based on current shares in issue"

I think you have that the wrong way round :-/

"BEST cases never happen"

True, but there is a lot of room to down grade my best case and still have a result for shareholders.

"It is £2.5m plus working capital"

I would agree, but I'm speculating that the working capital requirement is reduced dramatically with the shortening of timescales. Might be more than a couple of million, the point was that if they can prove up their ability to mine, transport and process in the next quarter, maybe an investor would be willing to take a punt on the HPI to HPIP capex. Remeber I'm speculating they prove up, not necasarily run themselves in to the ground actually trying to produce and sell.

As for shares in issue and market cap, if "profits" are £10 million, the market cap should be a multiple of that and any dilution would be worth it.

Shareholders not being happy with further dilution... you think GC cares what shareholders think?

Again, this is best case and I'm not claiming it will happen, I'm just pointing out the spectrum of possibility and you don't seem to fundamentally object to much of it.

I disagree with your key risk too. I think the key risk right now is convincing the creditors that the plan is solid enough for terms to be agreed and the facility getting purchased... finally!

"The key issue from a company perspective though is can they be trusted."

True.

[rec0very stock] 14/12/2022 08:43

My BEST case scenario for going forwards (very unlikely to happen)

GC is sacked / resigns without a big pay off. Happy to see counter argument, but Jennings was right, GC has screwed it up royally and the only way shareholders stand any chance is to get rid of him.

JW takes over and stops the refurbishment at 1 furnace to preserve cash. A small commissioning sample is done to produce enough HPI so that there can be confidence in the purity of it. If it seems pure enough get someone else to convert it into powder and market the powder so there is confidence in what it can go for. In the meantime do a proper DFS and on the back of that DFS look for a debt / equity funding package which includes the debt on the smelter (the creditors would need to be prepared to extend the exclusivity period until the DFS is done and the equity portion is in place).

A white knight could also come a long and make this happen, but they would probably want and need a controlling stake, which they could potentially use to take the whole company out cheaply.

[rec0very stock] 14/12/2022 08:28

The only parts of your BEST case I would challenge on a purely factual basis is:

"happy to stump up another couple of million quid if Ironveld can prove up the production"

It is £2.5m plus working capital - there are a whole raft of assumptions that would need to go into the working capital part and the last thing the shareholders would be happy about is running out of money yet again. Which leads to the second part:

"something in excess of their current market cap as profit" Current Market Cap is based on current shares in issue and there are going to be a lot more shares in issue to fund getting there. We don't know how many, but 6Bn is not an unreasonable guess. There is however a reward in this BEST case scenario.

BEST cases never happen and the presentation gives a range of prices and costs. The "worst" case is significantly less attractive but there is still a reward. A proper DFS would include a sensitivity analysis. And that would give a much better bounded potential for reward against which to balance the risks.

The key project risk in my view is the totally unproven nature of the HPIP's marketability. I covered that at post 7296 - It would however be good for others to do their own research and analysis and to post it so it can be discussed.

The key issue from a company perspective though is can they be trusted. I posted the 2019 saga, but there have been many other false dawns ever since 2014. I won't rehash the Grosvenor saga but yet again the company breached AIM rules 10 and 11 repeatedly then too. They massively diluted existing shareholders to raise far too little cash which will shortly run out and at no stage has the company been remotely honest about it.

[al101uk] 13/12/2022 23:25

Here's a best case from my point of view:

Ore processed: 40,000 Tonnes (From note and extrapolation from Iron recovery rate in slides)

Revenue: $32,000,000 (Page 16 of slide deck, best case Iron as HPIP)

Mining: 40K*$73 = $1,720,000 (Page 16 of slide deck)
Transport: 40k*$43 = $2,920,000 (Page 16 of slide deck)
Processing: 40k*$363 = $14,520,000 (Page 9 of Note, converted from Rands)

Total Cost: $19,160,000

Margin: $13,840,000

With admin costs at $2.5 million (note, page 11, converted from Rands), that gives them something in excess of their current market cap as profit, obviously they would have to pay down the debt with some of the proceeds and there is likely some additional overhead in doing the HPI to HPIP conversion.

On that basis it could be that potential investors are happy to stump up another couple of million quid if Ironveld can prove up the production. That kind of cashflow would enable them to develop their onsite smelting facilities and progress from there.

Does that potential make them undervalued? I think that depends on your attitude to risk and the probability you give them of success.

I'm in the happy position of having made the decision to sit on the sidelines until some more risks resolve, I don't care to do a valuation because I think the outcome is too binary and I'm not interested in that bet. As a result I don't have to value the company in it's current state, nor do I have to worry too much if things turn out as Ladeside expects or as RS expects.

For the record, I want Ladeside to win :-)

[rec0very stock] 13/12/2022 17:03

A bit of pointless time wasting research:



"High purity iron (HPI) powder is highly sought after in an array of industries including metallurgy, food and beverage, food packaging, electronics and pharmaceuticals. Different grades of high purity iron (HPI) powder include 99.9, 99.99%, and 99.999%."



"The Study confirms the Project's viability to deliver an exceptionally high grade iron product (99.5% Fe) called High Purity Iron ("HPI") which commands a premium to the pig iron price"

Is there any point in spending £2.5m to produce HPIP if the HPIP is not HP enough?

We already know, and finally even LADESIDE seems to agree, that the company will run out of money in the first part of next year and would just burn cash forever at full production because Gross Margins are somewhere between negligible and negative making Operating Margins heavily negative. Given how GC has obscured these facts, can we have any faith what so ever that if he did have the money (CAPEX and working capital) to produce HPIP instead, that the HPIP would be marketable at the prices in the note / presentation?

[rec0very stock] 13/12/2022 16:28

"why has nobody stated that with all that given that the share price is still materially undervalued at current levels and that 1p is the near term target price ??"

Fine for you to state it, but you need to back that up with a credible evidenced argument / counter argument.

Companies that run out of cash and have to raise just deliver more confetti and no products that make a profit which is what drives the share price up.

Please give us your analysis of how the company does go from the dire position it is in, to 1p based on fundamentals. I would love to hear it and discuss it. How many shares will be in issue by the time it makes it - 6Bn? so justify a £60m MCap company trading on a P/E of 8 in the near term.