Hello Noor, After performing some housekeeping of my HC account this morning I saw your post(s). Thanks for the kind words.
I'm guessing you have already seen my reply to KD in which I fleshed-out some of my thinking around the scenario involving a closed raising window and potential asset sales. It's the highest probability scenario for me atm -- hence the post.
I have also run some others. For example an imminent $4-$6M CR done at, say, 0.5c (i.e. half a cent!) -- assuming a raising is even possible atm (unlikely, imo). I don't think it takes much to imagine what that would do to the registry dilution-wise if that pathway was available/chosen for the next round of funding. And what the upward revised SOI would do the near/mid/longer-term SP in terms future lifting required to move the needle. And that's before one considers future funding rounds, because without any further meaningful overhead slashing the above example would only raise enough to fund, say, ~four to six-ish months.
The two single biggest financial pluses for POS currently are: 1) not being current in production (i.e. burning through significantly larger cash amounts monthly) and; 2) not having any debt (i.e. a nervous lender pulling the strings).
The single biggest financial minus for POS currently is that it will v.shortly need more cash in order to kick the can down the road and keep the lights on... while still not generating revenue.
The question punters need to ask themselves is how the company is going to fund itself to hopefully come out the other end?
Near-term cash raisings? No. Unavailable, imo, but even if that avenue was a possibility the damage it would do to the registry at this v.low SP (under very poor sentiment conditions) makes it an untenable/unsustainable option.
Asset sales? Possibly. That depends on who's prepared to bid on what and how much, or whether potential buyers hold-off to pick over the carcass. And if part of the farm gets sold how much time does that fund company overheads until the next asset sale? This approach only buys time whilst hollowing-out the company in the process if overheads aren't properly addressed. If the company gets hollowed-out, what are you left with when the worm eventually turns?
Corporate restructure involving recapitalisation? A somewhat nuclear option for existing SHs. Most likely not even an option right now, but it might emerge as one in, say, twelve months' (more?) time if/when sentiment turns. This involves restructuring the registry via a share consolidation and raising more cash from a new generation of punters. This is kryptonite for current SHs. Not in any way because of the math/mechanics around the consol itself per se, but because history shows that post-consol SP performance will, more likely than not, continue to deteriorate sans any meaningful improvement in the underlying business.
So, here we are. The tide has receeded at a time in which the cash coffers were running dangerously low. ~$70M net cash burned (i.e. net of the AU$25M debt repayment, which was a good move) during the 3½ yrs ending 30 Sep, 2023.
This sector $hit$torm is gonna hurt a lot of people. Only the fittest will survive, but not unscathed.
POS Price at posting:
0.8¢ Sentiment: None Disclosure: Not Held
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