From the perspective of a long-time shareholder who was lucky enough to sell out before the share value basejump and having watched the aftermath of the last 10:1 consolidation, this new 10:1 announcement from the re-shuffled VRBFF crew is not suprising, and could represent a heap of concern for those still holding on for a glimmer of hope. It shines a light on some major issues, especially when it comes to dilution, fundamentals, shareholder value, and their unknown place in the vanadium market.
1. Dilution and Shareholder Value
Here we go again with another 10:1 consolidation. This ain’t the first rodeo for Vanadiumcorps in recent years, and it seems like dj vu for those who’ve been around long the last few years. The last time this happened, the share float roughly tripled not long after the rollback, and what did that lead to? Massive dilution of shareholder value with minimal progress on their mining claims or VEPT technology and many unknowns with activities in Europe, and claimed production of vanadium electrolyte. If the same thing plays out this time, losing 10x value followed by another round of heavy dilution, long-term holders are in for an even rougher ride. Folks who’ve been around for the first consolidation saw their equity dwindle. If new financing brings a 3x dilution again, that story's could gonna repeat itself.
Just to paint a picture for y’all:
Pre-consolidation float: 83.18 million shares.
Post-consolidation float: 8.31 million shares.
Hypothetical dilution: If they triple the float again with more financing, we’re looking at around 24.93 million shares.
That would be a slap in the face for holding shareholders who’ve already seen over a 90% reduction in their value. Their ownership could shrink to almost nothing if there is no support, and if there remains next to no impetus left in the company. As Oilinvestor pointed out in his post, the math ain't pretty.
2. No Substantial Progress
The real head-scratcher here is that, since the last consolidation, VRBFF hasn’t moved the needle much at all:
Where’s the progress on the mining front? There hasn’t been any significant update on their projects, like the IronT and Lac Dor. With rising costs just to maintain their claim rights and the constant need for work to maintain ownership, will they be able to hold on to them? The silence is deafening and the bucking bronco countdown clock keeps ticking.
What happened to VEPT and the electrochem partnership? Back in 2017, that had shareholders hopeful, thinking VRBFF was gonna make a name for itself in the vanadium world. Now, nothing but crickets. This is bewildering
No buyers for their product. How are they even making this vanadium product? Where’s it coming from, and where’s it going? There’s no clarity, no demand, and no game plan for scaling up.
Tough market. Bigger players with large bank rolls have locked down most market share. Without some serious competitive advantage, like US vanadium and others. Vanadiumcorps’ chances of carving out a solid position seem slim to none. Its a quick yahoo search folks, and easy for most, VRBFF desperately needs a news rlease like this one from 2022. https://invinity.com/us-vanadium-and-invinity-sign-mou-to-form-us-joint-venture/
Is there anyone else in the american market that can and will do a deal with them that would have a meaningful impact? I would be interested to know who. Does anyone have an opinion on this?
3. Motivation for New Investors or Averaging Down - The glass half full
So, what’s gonna convince someone to jump into this? Or make existing investors want to average down? They’ll need some basic stuff:
Clarity on Product Development. Investors want the lowdown on how this product’s made, what the supply chain looks like, and if there’s anyone knocking on the door to buy it. Otherwise, it's all just high-risk speculation.
Revenue or Contracts. I think most people would agree, to get the taps of new money flowing, a concrete sales agreement or partnership. If electrolyte production is the main hat to hang onto for VRBFF, with no buyers or confirmed interest, its a high stakes gamble IMHO.
Competitive Positioning. How is this vanadium pumpkin planning to outshine bigger, well-funded companies? Without a clear edge in cost or technology, it’s a tough sell, and their news, communications and website is missing the fundamental information to provide confidence and transparency in what can possibly provide clear value in the future.
4. Some risks in the market - Where is the bottom?
Liquidity and Weak Market Support: With 736,000 shares offered at $0.02 this afternoon and barely any bids, the volume is so low making it difficult to trade your shares at all. That’s bad news for anyone trying to get out, and could be sumemd up as a warning sign for how little confidence there is in the stock. As timing for the second recent 10:1 remains undisclosed, any new or old shareholder must also speculate when this next axe will fall, which could also be shaking market confidence.
Market Cap Erosion: Without new revenue, a deal of some sort or fresh financial backing, this consolidation could simply delaying the inevitable. Unless some major news drops, like partnerships or a sales surge, further erosion in the market cap could be in the weather forecast.
5. Conclusion
This consolidation is not a great Holloween treat, and does little to calm the nerves of long-standing shareholders who’ve already taken hit after hit. The risks of continued dilution and value erosion are still hanging over like a dark cloud. For prospective investors and those thinking of averaging down, the key lies in seeing actual, tangible progress in sales, competitive positioning, and partnerships. Until then, this recent news feels more like a red flag than a reason to get excited.
I am interested in others thoughts, particually from those carved pumpkins who find it difficult to speak.
GLTA, VITF