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when it becomes required is not difficult for a co with a producing mine and established custom.
The options are a long list. A few I can think of instantly:
*Borrow from finance houses
*Borrow from customers
*Borrow from directors
*Forward sell offtake product to present/new customers
*Royalty with customer or third party
*Mezzanine finance
*JV mine with customer/third party miner
*JV using another asset
*dispose of asset/s
* part sell mine
*issue general equity
Or a cash need may not materialise
*negotiate with lender new timescale for debt expiry
*negotiate new debt deal with lender
*bring lender into tripartite deal re one of above
*issue shares to lender.
Or the co may have reserved enough cash by the debt due date. There is nothing to say they cannot get to that position...bar rhetoric here.
At some point I expect two coincident RNSs re production figures and resolving the Atlas debt. MMs will set the price accordingly before anyone can trade. If it's good the price will be set high....and stay high. Not so and it will not be a buy.
It's an op for risk takers.
Meanwhile it's a nice relaxing summer.
GL.
GaiasK - 'The options are a long list. A few I can think of instantly'
the question that raises instantly - If there are that many options, why haven't VAST been able to complete any of them?
Well, apart from the last one obviously....
GaiasK: thanks for the list of relevant ideas. Some items to think about.
Maybe someone should send to AP
GaiasK: some items on your list look viable to me, some do not. Some raise questions.
Just on your first list:
*Borrow from finance houses
This raises a question: they've now been unable to borrow from two banks over a long time. Why would a finance house be different?
*Borrow from customers
Their customer is a middleman, Mercuria. Mercuria stopped doing finance as a matter of internal policy after getting badly stung elsewhere. IMO, this is a non-starter. (Separately, there is legacy debt to Mercuria but that doesn't affect this question.)
*Borrow from directors
Raises a question: $6.1m... Really?
*Forward sell offtake product to present/new customers
Insofar as this is Mercuria again, this looks like a non-starter because, as I mentioned, they moved away from pre-financing. Are you anticipating Vast closing a parallel deal by January 2022? That looks to me like a huge longshot.
*Royalty with customer or third party
Question: aside, again, from Mercuria, how do you envisage this working?
*Mezzanine finance
That's currently Atlas, in effect. So swap Atlas for Atlas-lite? Woo-hoo. Probably could be done but only really kicks the can. Perhaps kicking the can is enough. Is that your thinking?
*JV mine with customer/third party miner
Takes a long time to close a deal, and no peep of a hint of such a plan. I think they want it all and, if they change tack, it won't be in time.
*JV using another asset
Same issue as above above putting a JV together, but less likely as no other asset is generating revenue.
*dispose of asset/s
Takes time, and no indications yet. Would have to be going on in secret, with a GM proposal for disposal landing out of the blue. It's possible. But which asset? Manaila? Has a JORC but demonstrably unprofitable without major investment. Faneata Tailing? Laugh out loud. Diamonds? There is no JV to sell. A medley of prospecting rights? Hmm.
* part sell mine
To whom? And on what basis?
*issue general equity
Shore Capital no doubt have a client list. By far the easiest and quickest option to put together. But as noted above, to be clear, not only option.
Winners IMO probably:
1. issue equity.
2. mezzanine finance: Atlas-lite to kick the can.
***
Might try to get to your other points tomorrow or soon.
Anyway, returning to GaiasK's helpful list...
In terms of getting cash, there were two options that looked perfectly viable to me (the rest being much tougher going IMO, and some of it wishful thinking):
1. issue equity;
2. mezzanine finance - Atlas-lite to kick the can.
***
GK then follows on: "Or a cash need may not materialise".
So to look at the reasons:
*negotiate with lender new timescale for debt expiry
Yes, I'd agree that's possible. At the mercy of Atlas, so terms will remain comparable to now at best.
*negotiate new debt deal with lender
We're essentially back to mezzanine finance with this one.
*bring lender into tripartite deal re one of above
This alludes, I think, to all those JV ideas that I highly doubt could happen in time, plus tripartite deals add complexity. So this one I very much doubt.
*issue shares to lender.
That's Atlas for now, and their existing right of conversion.
So what this part of GK's view comes down to is:
1. Agree with Atlas to defer principal;
2. Atlas decides to convert;
3. Get new mezzanine finance.
***
Third type of outcome GK postulates: "Or the co may have reserved enough cash by the debt due date. There is nothing to say they cannot get to that position...bar rhetoric here."
This part is incomprehensible to me. It's not "rhetoric"; it's arithmetic. The company itself does not project having anything like enough cash on time to pay off Atlas and stay afloat. So IMO, this part of GK's thinking is way off track. Happy to debate.
***
In summary, likeliest outcomes IMO:
1. issue equity (probably Shore Capital client list);
2. Atlas decides to convert (they have done a bit before)
3. Agree with Atlas to defer principal (they will retain conversion option, but conversion suits them better on a rising SP, so deferral could be attractive to them);
4. new mezzanine finance - Atlas-lite to kick the can: entirely possible. Vast doesn't struggle too much to get "Wonga" and is unlikely to struggle now.
***
Will Vast go broke? I highly doubt it.
Will it be a fun ride for people buying stock on the secondary market? I highly doubt it.
Could I be completely wrong and find the sun shining down on Vast at the very next RNS? Sure. Over to Vast.
Just IMO.
For someone uninvested, you sure do make some solid and reasoned posts.
More so than most of the “invested”, week in, week out!
Sandy, personally think you might be correct as the four hour chart is looking distinctly like an ABC, so more South to come IMHO
Perhaps the drilling rig was stuck on the Ever Given
;-(
Morning.
By last Wed I was thinking it is now getting late to resolve the Atlas CLN, hence the suggested list hopefuly showing there were many routes to make a new finance construct that will reduce the pressure from the shortening time to the deadline.
Of the list these four:
*issue general equity
*negotiate with lender new timescale for debt expiry
*negotiate new debt deal with lender
*issue shares to lender
with the later being warrants at ~2.5x the placing price have secured a five month (not a great deal of time) postponment but also significant: no conversions. This with what looks like some decent progress in turning an abandoned semi ruin(?) into a fully functioning (and so ahead producing) mine should now stabilise the sp.
I expect a proper sp rise will have to await the production and sales figures and that they show tha the new June '22 debt call will be capable of being settled from accumulated cash or that the figures and projections are good enough to secure long term and cheaper debt.
The expansion plans and then Manaila will entail large upfront Capex.
Satisfied with today's 'three buses in a row' .......... despite being some 15% down so far on this position.
The 'can' has been quite well stamped on prior to recycling before being kicked a reasonable distance "down the road".....to quote.
Good luck holders.
Gaias: yes, pretty much the items on your list that I agreed were credible.
Before getting *toooo* excited, though, do take a look at what their corporate overhead (including legals and insurance) are like.
And then there is the matter of actually needing to see that operational delivery happen.
We can look forward to the October report.
Sandy - do you know vast's production commitment from now to Mar-22? How much vast planned to produce and how much cash it plans to generate? Thanks
Fantasy: Vast has provided a figure for net operating cashflow to 30 April 2022, which is $4.9m.
I'm not sure about March.
Thanks Sandy.. well - lets see if they are on track to hit those numbers...
So forecast annual operating costs for BP around $12M to $12.5M. Plus corporate overhead.
Strange that as production is forecast to increase, the opex doesn't, even if wages were stable, processing consumables/utilities would have to increase pro rata?
Pecten: yes, the BPPM operating costs are, in effect, the net revenue minus the net cashflow. Zone of a million a month is about right. I imagine they gain from some efficiencies.
'Excited'? Haha Sandy. Yes I just remember getting excited about a share ........... about 40 years ago!
It's the day job. This one of ten presently, though this situation decently more interesting than others, so worth the odd post here and there.
From position build start a two year view on this speculative turn around situation. It had been on the list for some ten years. but in my mind only became worth research this year.
Today's advisories mark a significant move toward a more stable and sustainable co and opperation, but stil some way to go - AISI.
There ........excitment............ err, not ;-))
ATB.
Gaias: good for you. Something about the can being "quite well stamped on" (etc) had made me imagine that you were just a teeny tiny bit excited. But I'm glad that you're entirely unexcited :-)