Ironveld Share Discussion Threads

[ladeside] 02/11/2023 14:13

Cutting through all the maybes aye, maybes naw type of stuff, the fact remains that the company is likely to be sold for £30 MILLION + which is an increase of over 300% on today's share price

We all know that the project as we stand is struggling to break even (that was always expected), however the distinct possibility of funding for the Iron powder and the proposed addition of the 75mw smelters is where the money is, we all know that. We also know that there's major profit to be unlocked if and when this can be achieved, however most of us also realise that this is WAY beyond a company of our size.

The bottom line is that people itk are stocking up at these levels in the distinct likelihood that either the whole project will be taken out by a major or that there will be a farm out of 75%+ which would allow the project to advance at pace.

I've often said that I don't expect pie in the sky figures and I also agree that lots of long termers are likely to lose out as purchased at much higher levels but as we stand right now £30 Million and above is a distinct possibility (0.75) but the question would be if JW etc would even accept that (and he's in a position to know the REAL value).

I think it should also be pointed out that the £500k facility provided by the Directors and the subsequent £1 Million placing announced last week should be viewed as positive rather than negative as it removes any doubts for the next few months and also proves that the company can raise cash easily enough from it's existing holders.

As I say, things aren't perfect but the company is moving forward and I'd expect a positive re-rate sooner or later and even a left field take out bid wouldn't surprise me in the slightest.....

[rec0very stock] 02/11/2023 12:03

They ought to be putting clear information out in RNSs. I agree with your latest assessment - admin costs have gone up significantly, which is to be expected as there is now production to administer.

The reason why a loan was required in Sept and a placing needed in Oct is because insufficient funds were raised back in Mar and the company is and will continue to burn cash - all entirely predictable. Estimating the cash burn rate requires a degree of supposition tempered by experience - I have plenty when it comes to small miners and you have plenty when it comes to GC companies. It is interesting therefore that we seem to be largely in agreement.

[al101uk] 02/11/2023 10:23

Actually I misread the answer, wasn't going to post direct quotes, but for the sake of clearing up exactly what was said and in what context, here it is:

Admin costs last year were around $800K, there was an analyst note that estimated those costs would rise to £2.5 million once production got underway. Is this really the case and if so what would those additional costs consist of?

Admin costs at the plc level are not expected to change materially, but with the expansion of the group in SA there are now more costs being incurred. There may be some impact of previously capitalised costs now being expensed.

Which on reflection sounds more like and explanation of $2.5 million than a moderation or it could just be a non-answer... given the other responses, who knows.

[rec0very stock] 02/11/2023 09:33

It depends on how you define "central". I would see these as being what the note called London Admin, which I would not expect to increase much. The note then had a load of costs which were per tonne mined - mining, transport and smelting and then lumped together all the other costs as SA Admin, these could include all sorts of things like HR, maintenance and security, which have to be paid for regardless of whether any ore is being processed. These costs would not have existed before they started, but are very real now. Ultimately is does not matter what the costs are called. What matters is the rate at which they burn through the available cash. And the bottom line remains that the company is and will continue to burn cash.

[al101uk] 01/11/2023 20:41

They have and I've asked some follow up questions.Not a great deal to share about any changes to my assumptions at the moment.

First mail was answered within a couple of hours, second has been over 24.

I guess I can say that I'm happy with my assumption that central costs won't be anywhere near £2.5 million, maybe a bit more than previously, but not a multiple of. I'm happy using a million a for now.

[ladeside] 01/11/2023 20:12

Hopefully they'll respond Al, one way or the other.

[aceuk] 01/11/2023 11:19

Modern Mining!

[rec0very stock] 31/10/2023 10:17

If the company made available the information in a timely manner that it is supposed to under AIM rules there would be far less supposition (they need to do it by RNS and not unregulated presentations or on twitter etc).

Maybe the new management arrangements will improve this, but it won't change the cash burn situation. However far fewer people would be prepared to invest if they had all the information they should. Instead they look at the size of the resource and assume it must be valuable. Supposition is therefore artificially benefiting the company's cash raising efforts and therefore it is not in the company's interest to adhere to the rules and it never has. They just make it up as they go along, in a manner designed to make those who want to see things positively happy with how things are going, until the next fund raise is needed.

[al101uk] 30/10/2023 17:07

Ladeside, you're right, there is a lot of supposition (mines not all negative). I've sent a mail to Ironveld to ask for guidance... we'll see if we can reduce it somewhat :-)

[ladeside] 30/10/2023 15:44

Lots of supposition (all negative of course) but the fact remains that people itk are willing to pour money in to the company, so how does that compute ?

As for "mates rates", I think you'll find that the current share price is 0.25 to purchase, so these guys have just forked out at 0.28 and the warrants are being issued at 0.29 which means it's highly unlikely that they even come into play for anything below 0.40.

Personally I see it as a major positive that we can raise cash so easily and it should be enough to see us through to being in full production which will be when the company comes on the radar of the big boys who can then exploit the mine asset in quick time.

JW taking over from GC is also a major plus which will undoubtedly see an increase in interest both at retail and corporate level and as such I'm more than happy with how things are going.....

[al101uk] 30/10/2023 11:41

RS,

Yep, that's what I have, $16.6 million revenue from 20K of combined smelted product.

Additional $1 million off DMS, so $17.66666 million all in.

Operational costs some in at $440 per tonne mined, so 440*40K, which gives costs at $17.6 million.

An operating profit of $66k

That needs to be adjusted for:

The new deals with partners on costs.
Savings achieved via the new power infrastructure.
or alternatively
Increased costs in supplying power to the smelter.

And for DDR, JW's salary :-)

All opinion.

I didn't see a breakdown of central costs, I can't see where $1.5 million of additional central costs can appear from in the SA operation?

Having said that, there was a similar situation at Amerisur, where I had to ask the company directly where all the additional money was going. It turned out that they seperated out site maintenance from ongoing operational costs even though the maintenance was an ongoing cost. They did this, imo, so they could look profitable at an operating level. So no judgement made here. It's a wait and see.

Looking at my calcs, the debt was $4.2 million, with $7.4 million being the total repayable over 10 years, so dividing by 10 seems fair enough. Obviously payments increase if the debt is deferred and the term remains fixed.

[rec0very stock] 30/10/2023 09:02

Al,

If HPI sales are only $750 per tonne (remember only 50% of ore mined and transported ends up as HPI) then it is losing money on every tonne mined based on those figures - the mates rates note assume a sales price for HPI of $900.

The $2.5m admin costs are made up of London costs and SA costs. It is the SA admin costs which have gone up significantly as the operation has started.

The bottom line is exactly as I have said ie the company is and will continue to burn cash, the relatively small dollop from this latest placing won't last long. So, unless this hoped for debt from the people introduced by Grosvenor comes in, it will be rinse and repeat placings in the new year.

As far as a sale is concerned, we went through that a few years ago and all prospective buyers walked away having done DD. Presumably because they saw it would not generate sufficient cash. What has happened since has only confirmed it cannot generate sufficient cash.

[al101uk] 28/10/2023 13:44

DDR,

I wasn't talking about the direct financial impact, just on the basis of who I'd rather have pushing Ironveld in the right direction.

I'm not saying that Kazera are any better or worse since GC leaving, but they did immediately gain the ability to get deals done. The pattern of companies with GC at the healm would appear to be unending delay.

I think actual central costs were $750K last year, so you could argue I've costed JW in ;-)

[dead duck resources] 28/10/2023 13:30

Good post although if we're talking cashflow the directorial change may have slightly increased the risk. The outgoing role was 'non-exec' with a bare-boned £45k salary so an exec chair on the payroll as part of this placing deal means a higher admin burden and cash outflow at a time they should be looking to reduce corporate costs.

Taking a closer look at the placing, we are told some existing shareholders also took stock at that price which could just be Align converting fees for marketing activity.

JW was probably after £450k at 0.2p and that might actually be the 'real' price paid
considering he'll now be taking a large pay packet. For example,

£324,000 @0.20p (162,000,000 shares)
£126,000 advance repayable monthly via payroll
reported as
£450,000 @0.278p (162,000,000 shares) 'Fundraising at a premium'

[al101uk] 28/10/2023 13:06

You might be wondering how I can say that they could reach breakeven. You have to assume the following:

Debt Deferred.
Central Costs remain around flat, rather than rising to $2.5 million maybe stay at $1 million.
Smelting costs down through the use of new energy partner.
Share adaquate operational costs with partners for any remainder.

If partners contribute only 5% to the operational costs that could see Ironveld at breakeven.

The debt needs to be paid over 10 years, so the clock would be ticking, but I think this would be a cash conservation move with the intention to sell, not to create a meaningful business.

If that strategy fails they're gonna need a lot more money and the multiplier will be the time spent getting there.

[al101uk] 28/10/2023 12:52

I don't have the source to hand, but the current numbers I have are:

Mining Costs: $65 per tonne
Transport: $40 per tonne

I think they came from a presentation rather than an RNS.

I have the last quoted smelting costs at $335 per tonne, but that hasn't been updated since the analyst note.

Revenue I have $750 per tonne for HPI and $83 for the other two combined. I've also allocated $1 million for the DMS Magnetite.

I have admin costs at $2.5 million (again, not updated).

The debt comes in at $7.4 million over ten years, with no idea how that's structured I just divided by 10 to get $740K per year.

I make that out to be profitable at the operational level, but a $3.2 million shortfall after central costs and debt. Which is the issue I have here when they talk about being "profitable", I don't think they are talking about a profit attributable to shareholders.

Like I said though, I think the game is to show profitability at the operating level and then sell the business. A company with the capital required to fund this project properly could make shareholders who buy at this level very happy while still getting a bargain themselves.

Plan B would be to finance the HPI to HPIP themselves and potentially reach actual profitability, but financing isn't exactly becoming easier over time.

I don't understand the $2.5 million of central costs, I think it's too high, but it's the only number I have.

I think debt repayments should probably be higher, but could possibly be deffered beyond 2024. There are operational costs that will be shared to some extent and smelter costs may have reduced (or increased) depending on their energy solution... so much has changed, but we have no updated numbers so this is what I'm left with.

Extremely high risk, slightly lower now JW has taken over as Chair.

And as far as I can tell they still haven't sold a meaningful amount of their own product.

[rec0very stock] 27/10/2023 23:58

I must have missed the RNS with those updated numbers, could you provide a link. The key figure of what they sold the HPI for and what purity they achieved definitely was not in the sales RNS - both are really key bits of info which should have been included iaw AIM rule 10.

[al101uk] 27/10/2023 18:38

The company has provided updated numbers for both mining and transport, overall a little down on previous numbers. The problem is the detail around smelting. They are obviously trying to offset costs by using partners, but to what extent they have/will succeed is still up in the air.If they can cut central costs, which seemed high to me, and cover some of the operational costs by having partners pay a percentage, they might get to break even.Then we are back to hpip capex in order to reach some real profitability if they cannot get to a sale from that point. That's what I think the hope is, where they end up is anyone's guess.

[dead duck resources] 27/10/2023 13:24

They were more upfront than usual in yesterday's announcement;

Placing to assist with the ongoing working capital requirements 

[al101uk] 27/10/2023 11:52

I've looked and the only thing I can assocaite it with is the analyst report that was produced back in the day. But that report was produced before the debt terms were finalised, so I think it was probably just an assumption.

I think, for a company like Ironveld, the terms of the debt should be published in more detail.

[al101uk] 26/10/2023 17:07

RS,

"...debt repayments on the smelter starting in 2024"

I thought that was the case, but couldn't find any reference to it, do you remember where this was published?

[ladeside] 26/10/2023 14:54

You're only "right" or "wrong" when you sell up and I haven't, as for you, by your own admission you were stung here and hold shares around 2p or above, it's a pittance but the bitterness you hold towards the company continues to burn bright in your soul and as a result you waste hours of your time coming on here with your pearls of wisdom which quite frankly nobody is interested in.

Be so good and jog on old boy, if for nothing else, for your own mental health welfare....

[rec0very stock] 26/10/2023 13:11

"Utter mince Recovery and you know it. Go away back to whatever rock you crawled from."

I have lost count of the number of times you have said that and I have been proved right and you wrong.

The company continues to burn cash, this latest injection will not last long. Yet another Going concern emphasis of matter in the results with another placing in the new year is my prediction. See you in December to say I told you so yet again.

[dead duck resources] 26/10/2023 11:48

Not sure why Ironveld needs an executive chairman rather than a non-exec chair (as one would expect in appointing a shareholder to the role). The answer imho is Iron doesn't need it but Giles was only taking £50k a year. When it came to negotiating the placing price 'at a premium', Wardle's deal to get cashback via salary requires more than £50k.

The CEO is taking £175k, what will Wardle's pay packet be in the new exec role, £125k?
If it's exec in name only, we can offset the difference between the non-exec chair and exec chair pay packets (c.£75k/year) to calculate the true price paid for these shares.