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#AST: Board changes and new strategy for Ascent as Hutchinson looks at new projects
EXCLUSIVE: Petro Matad announce fully funded 4 well Mongolia campaign


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Member Since: Tue, 21st Mar 2017

Number of Share Chat Posts (all time): 312
Number of Share Chat Posts (last 30 days): 33

Last Posted: Today 12:59


Post Distribution over the last 30 days




Today 12:59

Sorry honeybee. Its you are missing knowledge about how these projects are financed. No one (including GCM) gets a 'free' carry or free stake. The whole of the capex has to be met from debt plus equity - and equity is provided by the shareholders in proportion to their 'share' of the project. GCM may well have 80% now, given that it has spent most of the relatively small costs to date. But for the full financing (not known until financial close probably at least 2-3 years from now) it will either have to stump up 80% of the full (c$1.5bn equity proportion of capex - impossible for GCM of course) or its share will be diluted down by that of the majority financiers. I suggest you do some research. There'e plenty on the web about power project financing. And plenty of recent news about financing for eg ORCP and NCCL. In all cases, the sponsor company (ie GCM) has to raise funds to pay for its share of the equity. The only 'free' share it gets is credit for its historic spending on the project.
Something to be wary of are the tiers of intermediate companies involved, the key one being the Special Purpose Vehicle set up to manage the funding and the construction. It is totally different t o the listed GCM and often confused with it - especially by journos reporting on 'shares' of the project , I have been writing about and producing research (and doing all the maths) on such projects for institutions for many years, so don't think I have missed many points ! Thank You.
Sat 13:10

reggie - If you think that, you have no comprehension of what is involved here. Buy outs and farm outs don't happen with coat to power projects for reasons you would know if you knew anything about how they are financed. Its the same with all the ctp projects on AIM. Newbie investors don't understand that the 'projects' are separate from the companies 'owning' them (more accurately, 'sponsoring' them.) It is not unknown for the sponsors (like GCM) to go bust, while the 'project' continues. Again, you would know why if you knew anything about the sector. Look at he share price histories of ORCP, Kibo, EDL, and NCCL. They have reacted over the years to the hair-raising ups and downs of the attempts to finance their project, and naive pi's have learned to their cost that the sorts of 'values' put on GCM's shares here, are dangerous fantasies. Only NCCL is close to success. GCM has many years to go,
Sat 12:59

John001 What a sad fellow you must be. No interest in facts. You're the sort LSE should be banning.
Sat 11:24

I'm afraid this would be totally misleading whether for newbies or anyone else. At the time, in 2005, then Asia Energy was going for a massive coal export project, with no thought of a power plant. The commodity boom (which collapsed in 2011) was also starting - all making for a completely irrelevant valuation. GCM now is completely different. The power project will be10 times the cost of the 2005 mining project, and profitability will be limited by the need to keep a power tariff competitive. Forget the past.
Thu 21:10

Whyast1695 - Quite ! From GCM's and its shareholders' points of view there will be absolutely no difference from any project financed solely by a bank or by equity shareholders. Its merely that the govt will stand behind whatever loans are provided. They won't stand behind the equity shareholders, because that's what equity (ie GCM and the myriad others who will be needed) is. They take the risk. So I'm not quite sure what point you are making.
Thu 20:10

You will note, manwithyour wifi, that all my recommendations (mostly to sell) over the last four years here and elsewhere have proved correct and saved many punters loads of dosh. I post where I see absurd share price targets, whether low or high, in shares that few punters seem to properly understand and which some ramp to fantastical levels. So my posts are not for the likes of you, but for the intelligent.
Thu 19:54

Gold - If you don't understand what 'financing' implies for the shareholders in projects like this, you shouldn't be invested.
Thu 19:51

Many years of investing behind you Latino, and you still don't understand the pitfalls of investing in project dependent companies ? I bet you don't even know what project financing is ?
Thu 19:48

Crystalball - you need a new one. The people who understand have sold and given you your answer. Read my other posts.
Thu 17:20

OfficeM - Do you have a problem? I post where I see a share price out of line with reality. Sorry if its not your reality.
Thu 09:24

I promised to post my reasons - but didn't get round to it. But I see others seem to have been doing the same calcs as me. So I've posted mine where thy can't be deleted.
Wed 08:07

Presumably getting hold of the shares in good time to trade them - means news might be soon.
Tue 22:00

Mr Slong. Since I've been doing these sorts of calcs for the institutions for more than 40 yrs - and getting them right - you're strictures are rather silly. You seem to have no conception of what the fund raisings are used for - which is to pay Kibo's bills and pay for its share of projects. Do try and work out what they will amount to over the next five years - and what earnings and - more importantly - cash flow they will (or won't) earn for kibo. If you can do the maths which seems unllkely, you might get a shock.
13 Jan '19

O&W tidd - You don't think investors are going to pay up at the moment do you, for what is a fantasy speculation a long way ahead ? You say yourselves the Dec presentation is all we can go on, and the calcs are based on it. The co isn't going to say any differently and won't be agreeing with my forecast of at least 1.5bn shares in issue by first meaningful income so there's no point asking them. Have you ever known a company to admit what a sensible, cautious, investor should be anticipating ? I stick with my first impression. The 'jam' is too far ahead and so are the shares.
13 Jan '19

Re 18%. That's what I roughly estimate is the proportion of the 100m equity (35% of total project cost) that INFAs past and FEED spending will 'buy'. If it has more than that, the other funders' returns on their investment will be lower than the project return, so they will in effect have to agree to give some of their expected 'profit' to INFA. Its not likely, and never happens with eg power plants. (Don't confuse with 'free carries' given to farm-in partners on exploration projects. They make sense there because scope increasing a resource. There's no such scope in this case). If there is some form of extra 'reward' to INFA, it can't be very much - so 18% is a conservative estimate. My full calcs based on the cash flow chart (more accurate than any NPV base) will be you know where.
12 Jan '19

The cash flow profile gives you the best guide to a likely share price - once you've settled the % project ownership. Outside investors (being discussed now) will take the majority. I estimtate INFA will have 18% (based on industry practice) That means 11.6p x 18% = 2p based on that NPV - except that share prices never achieve an NPV based price for perfectly logical reasons - and is not before full revenues in 2026. (All based on situation as at shareholder presentation)
12 Jan '19

I'm interested in all these project related stories and have followed (and written about) them for many years - thank you very much. They are all magnets for those misunderstand how their financing works (or doesn't work) for investors.
12 Jan '19

govt to govt merely means guarantees. Financing will still be via govt supported 'companies' (like Power China) and they will put up the funds and take stakes. Makes no difference to the 'sponsor's position. They're not going to be 'given' anything. See ORCP's news releases.
12 Jan '19

Beware these sorts of stocks. Many hurdles and lots of cash raises before anything happens. Its impossible at this stage to know how much value will rub off on GCM, given that partners will be putting up nearly all the c$6bn needed. Take heed of Kibo's EDL's and ORCP's histories. The only reliable near term coal-to-power stock at present is NCCL.
12 Jan '19

Heffalump -I'm not touching IFA at this stage. Its too high, and I'm merely cautioning that there'e a very long time to go before any income. I'll tell you when I trade - if I do. My money's in more reliable medium term stocks ! Wouldn't have made much after costs anyway !


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