Yes interesting indeed. Some points I noted after a quick read:
- VRC had tipped in $8+ mil into VGT and recently the loan was converted into shares. Don't remember voting on that.
- Signing of more offtakes once DEM finance secured... we were told that one.
- Anticipated equity raisings starting with $6.2mil in FY2020. Interestingly this is based on the assumption of $15mil DEM and $30mil DSE. We know there is an option to increase DEM to $30mil. If that is successful it would useful to know if they anticipate reducing DSE notes (DSE rate is 14.5% vs DEM 9.5%), or perhaps using this debt instead of equity funding.
- Strategic/cornerstone investors will be approached for equity investment as well as retail
- EBITDA positive from production commencement onwards.
- Stage 2 DFS to pretty much start immediately ($3mil of raising set aside for it). Seem very keen to get it up and running
- Anticipate supplying 16% of global graphite demand by 2023 when supply is forecast to be in deficit
- Their forecast financials appear wrong (in a good way). Interest is 6 monthly in arrears which would mean maximum of 1 interest payment in FY2020, whereas that have fully year interest payment. i.e. decrease FY2020 cash outflows by 2.9mil/ increase net cash flow by $2.9mil. Could mean reduction in any equity raisings needed.
Also as the Tanzanian government get a 16% free carried interest it doesn't really matter the shares on issue. If $30mil + $30mil was raised perhaps VGT could do a share buyback. Essentially VRC get the $8mil+ it tipped in back and there would be no need/ less need for CR's going forward. Only impediment would be if notes funding specifically can't be used for this, however I note some $650k is set aside for working capital.
Thoughts/ opinions welcome...
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