Is cash a concern?

19th May '09 by MrT

7 comments 2887 reads

Micro-cap clean technologies developer operating in Britain, the United States and the Cayman Islands
Focused on "seek[ing out promising, early stage clean technologies with global opportunities at university or small boutique start-ups, and provides the necessary capital, management, and technical skills to bring them to market successfully".
As an example, it's developing technology to make coal “cleaner” by extracting chemicals such as sulphur and nitrous dioxide before it is burned for fuel
AIM admission document: http://www.nvirocleantech-ir.co.uk/archive/admission_doc.pdf

Portfolio includes:

Vertus Technologies: Creating near-zero emissions for existing coal-fired power plants
Microrelease: Recycling wood products, eliminating landfill costs and space MDF medium density fiber recycling
Laseair: Laser based air purification for germs, dust and spores
Casect Lab-On-A-Chip: Portable plasma emission-based chemical detection system

However, based on Friday's RNS (http://www.stockopedia.com/news/announcement/NVR/090515nvr005648.htm), it seems to be running a bit tight on cash, having announced a change in approach to revenue generation at the Cincinnati Bulk Terminals ("CBT") site....

Its directors have agreed to defer 30% of fees and it has cut staff since the start of the year, reducing operating costs by about 44 percent, and added that more efforts to cut costs were under way.

Cash as at 30 April was GBP5.3m so not too bad but it was 6.6m in March (http://www.stockopedia.com/news/announcement/NVR/090309nvr5513o.htm). Not sure what the ongoing burn rate is... It's also actively pursuing discussions with potential strategic partners so that may change things.

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MrT

19th May '09

The gist of the March RNS was:

Due to the extraordinary current economic conditions worldwide, as well as certain factors temporarily affecting only local market conditions (described below), the Company is now planning to change its approach to near-term revenue generation. The Company intends to re-deploy certain of its proprietary Reductive Thermal Processing technology ('Vertus RTP') equipment from its Cincinnati site to other sites with potential strategic partners, who it is intended would bear the cost of installation and share revenues. In addition, the Company will use some of its existing capital equipment and a change in processing, to manufacture tailored blends of coal-based fuels and coal and biomass blends to provide clean fuels products to the Cincinnati market until market conditions return to historic norms and the Vertus RTP technology can be economically deployed in Cincinnati once again.

loglorry

I bought a slug of these at much lower prices where they were trading at a big discount to cash. It is a bit of a binary bet really on the chances of them being able to get their technology produdcing cash before they run out of spondulicks.

After buying them I had my doubts to be honest because I feld they might just burn through cash. I tried to contact management to find out what the burn rate was. If burn rate is £1m/month that is pretty high. I'd like to think it was a lot lower than that and they would have 12months of money in the tank.

I think I might my re-double my efforts to speak to management. It would be nice to see how close they are to getting a deal done and how fast they are buring cash. I'll see if they will speak to me.

Log

20th May '09

Ok, keep me posted. Keen to know more about the burn rate as I like the sound of the technology, especially given the momentum that Obama is giving to cleantech in the States.

Yep burn rate compared with likely deal news is key really as unless they get some really solid commitments from customers there is little chance they can raise more money unless the market improves significantly.

One thing to note about the clean coal application (if you didn't already know) is that it works particularly well with "dirty" coal i.e. coal high in impurities. The problem they had which has led to the companies jepardy is that their price of said coal fell dramatically as world demand fell. Less demand meant the cleaner coal supplies were enough I guess. it seems to be akin to oil sands type tech which is only viable when crude prices are very high. C'est la vie!

I've put a call in today but they didn't come back to me yet.

2nd Jun '09

Just an update here - I've managed to get in touch with the company and send of a list of questions. The main question was really how long at current burn rate can they survive without new money and how long before sales come in. I had to call them to talk to someone that said they would forward on my questions. So far no reply after a week of waiting. I've chased them up again today. Pretty poor response really. The shares had a flurry towards the close today however.

3rd Jun '09

Finaly, I've had word back from Chris Every the MD. Quite a long email which I can send to anyone intersted if they message me. Not a lot of content in the email that wasn't in the statement as you would expect. They seem to have irons in the fire and have cut burn rate. They acknowledge the fact that an equity placing at this point would be highly dilutative.

23rd Jun '09

NVR up quite sharply today around 22%. I'm not sure what the cause as no RNS has been issued. I suspect they have made headway with a partner agreement to generate some cash but it is hard to say! I actually sold down half my position at the previous spike since I was up 100% on it. If they have done a decent deal to reduce cash burn espcially if it is revenue producing then I think we'll see the shares get back to about 15p.

Is cash a concern?

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MrT

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