General Discussion AGY, page-22107

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ellroy80

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02/04/24

17:21

Post #: 73153275
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Originally posted by Sdaji: ↑

At the current rate of cash burn there will be insufficient funds to keep the lights beyond about the quarter after next. It is now near enough that we can pretty safely say that we are not going to see the plant suddenly start pumping out a large amount of product and for sales to be bringing in significant revenue before that time comes. Currently the total inventory of product, if sold successfully at current market prices, would provide enough funds to keep the lights on for a few extra weeks or so.

Companies are basically never stupid enough to wait until the last minute before cash runs out before going through with a CR as this results in severe harm and dilution and sometimes runs the risk of insolvency or defaulting on payments causing various types of significant harm if the CR doesn't go through smoothly. The later they leave it the more the market wakes up to the upcoming necessity causing a price drop in anticipation meaning the CR must be done at a lower price. Generally if a CR is going to be required the company tries to surprise the market with the trading halt to avoid a preemptive selloff (though the resulting selloff is unavoidable).

All this together means it's likely that the next piece of significant news we get from AGY is likely to be a CR trading halt. Given the current price of around 13c, the constant delays and disappointments and complete lack of revenue, the CR price would presumably be below 10c if they did it now and the price would then sink to significantly below that price. Go look at other CRs, this is typical for a 'keeping the lights on' CR, and even in a 'raising funds for an exciting new project' scenario CR the price would be sub 10c at a typical CR discount, especially given it is to produce a third plant after the first two have so far failed to get to even around 5% of nameplate even after years of delays - the more speculative the project the greater the discount.

At this point it is a very long way beyond the point where anyone could think there is any chance of funding a 10,000TPA plant from organic revenue, so raising external funds for an expansion is a guarantee. We are all but at the point where we can guarantee a 'keeping the lights' CR is inevitable, but even if you don't think it's certain, if you actually go through the numbers you'd have to admit it's at least a pretty safe bet, and I doubt you could find anyone who would argue when I say that the CR would definitely drop the share price.

Putting all this together it's puzzling to see what you would want to be holding at the moment. I dumped some of my shares last year but was waiting for an exit before the CR for a few months and was very pleased to get the price I did last month.

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Thanks for your reply.

I agree with your first two paragraphs. Makes sense.

Why do you assume that the next significant piece of news is likely to be a CR trading halt? Why would the signings of the EIA approval and offtake/strategic partner investment not occur sooner?

I agree that raising external funds for the 10ktpa expansion is a guarantee. However, you sound like you think those funds will be raised via a CR. Why do you assume this? Why could the expansion not be fully funded by the strategic partner, as was stated by the board at the previous AGM?

If they have to do a CR, they would surely wait until the EIA has been finalised (which does actually appear to be imminent) and the offtake/strategic partner agreement signed? These two ann's would be likely to significantly boost the share price, and one would prefer to raise into an elevated price?

AGY Price at posting: 13.0¢ Sentiment: None Disclosure: Held
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Last 13.0¢		Change 0.000(0.00%)		Mkt cap ! $182.5M

Open	High	Low	Value	Volume
13.0¢	13.5¢	13.0¢	$47.8K	365.0K

Buyers (Bids)

No.	Vol.	Price($)
22	1067026	13.0¢

Sellers (Offers)

Price($)	Vol.	No.
13.5¢	519054	14

View Market Depth

No.	Vol.	Price($)
22	1067026	0.130
28	1060029	0.125
41	1174704	0.120
15	1490000	0.115
11	760954	0.110

Price($)	Vol.	No.
0.135	519054	14
0.140	1805764	10
0.145	1333146	10
0.150	1001297	20
0.155	419550	6

Last trade - 16.10pm 28/05/2024 (20 minute delay)


Last 13.0¢		Change 0.000 ( 1.81 %)
Open	High	Low	Volume
13.3¢	13.5¢	13.0¢	508872
Last updated 15.59pm 28/05/2024 ?

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General Discussion AGY, page-22107

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