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London South East Natural Resources Briefing webcast: #Emmerson #Alba #Condor Gold #Gold analysis
Angus Energy in talks to buy 'transformational' gas asset in North England


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Member Since: Fri, 10th Nov 2017

Number of Share Chat Posts (all time): 232
Number of Share Chat Posts (last 30 days): 12

Last Posted: Today 15:21


Post Distribution over the last 30 days




Today 15:21

There's a certain irony with today's RNS issued in respect to its AGM. Instead of the usual bland “Duly passed” comment in reference to the company's resolutions, HGM gives a breakdown of the votes. Basically, it applies the UK Corporate Governance Code. Not rocket science but really useful for investors. Sure, if a company follows the Quoted Companies Alliance guidelines, it will report the number of votes against a resolution if the total is greater than 20% of the votes cast. But that does not pick up on an underlying resentment or simmering problems. It just seems ironic that a Russian company should assist in the move towards shareholder democracy and greater transparency. The RNS is attached.

https://www.stockopedia.com/share-prices/highland-gold-mining-LON:HGM/news/highland-gold-mining-results-of-annual-general-meeting-urn:newsml:reuters.com:20190523:nRSW0072Aa/
Today 12:19

Just an observation, but the OBA pipeline was completed in October 2016 and it's only now taking its first third-party consignments of oil. It may not be comparing apples with apples but President Energy bought the Puesto Prado and Las Bases concessions in Argentina in November 2018 and they came with extensive pipelines. It's already using the pipelines acquired to transport third-party gas. The amounts involved are, currently, very small. It estimates that it will create another value-added revenue of US$200,000 pa. But the point I am really making is that it's actually getting on with it. One key issue that I had with Amerisur was the lack of action at the drill bit. At times it appeared more like a property company acquiring real estate. Sure, different jurisdictions and environments but, at the end of the day, it's an oil company and will be valued on production and reserves and that is largely a function of action on the ground.
Wed 11:51

The read across for President is unclear. However, this article illustrates the difficulties faced by the big shale operators in Vaca Muerta. Most are heavily dependent on state subsidies. And the levels of those subsidies appears to be called into question

As a profitable and growing mid-sized conventional oil and gas operation, it does seem to put President in a favourable light. The Argentine Government has set itself a target of doubling oil production by 2023, largely coming from shale. If that growth is not going to come from shale then I would suggest that it will need to come from conventional plays.

https://www.petroleum-economist.com/articles/upstream/exploration-production/2019/economic-crisis-threatens-to-stall-vaca-muerta
15 May '19

The strong volume underpinning the recent share price rise is very noticeable. The price is rising but so is the average volume of stock traded. It may be the result of the timeline laid out by the company in its RNS issued on 25th March. A link is attached. Basically, its work programme should kick in by the end of May. That's to say, within weeks we should know just how far the company is progressing. Any delays or problems then the price could quite easily go into reverse. But the market seems to be signalling that its plans are on track.

https://polaris.brighterir.com/public/president_energy/news/rns/story/x2qkqlx
14 May '19

Quite a rare occurrence. A Director of an AIM-listed company going to the market and buying a substantial amount of the company's stock. Forget about nil-cost options or LTIPs. Simply buying the stock at the prevailing price. Also, it might be worth noting that Angus Winther is a very experienced investor. This includes a five-year stint at Evercore as a Senior Advisor. However one views it, he is certainly putting his money where his mouth is.
8 May '19

The company did not publish the results of the voting on the resolutions proposed at the last AGM. Instead, it used that awful phrase “Duly passed” in its RNS announcement of 9th May 2018. Does anyone have the numbers of votes cast for and against each resolution? This might give some indication of the level of shareholder dissatisfaction. Especially in regard to remuneration. And am I right in believing that the company will not reveal a breakdown of the votes cast at the forthcoming AGM?
5 May '19

The read across from this might be that investors expect delivery. Directors' remuneration is not the key issue. It's total shareholder returns. And, in that respect, public companies linked to GC have, for a very long time, failed to benefit shareholders. I would suggest that a successful outcome at Kazera would take a lot of pressure off his shoulders. A link to the article is attached:

https://www.thetimes.co.uk/edition/business/shareholders-take-aim-at-amerisur-boss-giles-clarke-q2fnvkqw7
30 Apr '19

This article may be only a snapshot but it does seem to give an idea of the problems that the BOD have faced over many years. Basically, it operates in a dangerous and volatile area.

As I have mentioned before, my doubts about Amerisur are not related to what's beneath the ground but surround the issues above it. And that's where reality meets geology. The article presents a difficult and fluid operating environment.

In fairness, many resource companies are based in not dissimilar areas. But it may go some way to explain why the company has never really achieved its potential for shareholders. Simply "Getting on with it" may not be as simple or straightforward as some investors believe it to be.

https://colombiareports.com/indigenous-injured-as-clashes-with-police-flare-up-in-southern-colombia/
29 Apr '19

Normally, I make no comment on day-to-day market movements. But today the price rise is not only strong but, as I write, it's on a volume that is around the third highest daily turnover in five years.

As I pointed out earlier, the company's plans can be clearly seen from the attached RNS that was issued on 25th March 2019. Whether it will achieve its objectives only time will tell. But, unlike many AIM-listed companies, it has provided metrics by which it can be judged. Its goals are set out for investors to monitor.

https://polaris.brighterir.com/public/president_energy/news/rns_widget_homepage/story/x2qkqlx
26 Apr '19

Say whatever you wish but the company has put its cards on the table and provided a clear measure by which it can be judged. This it did by publishing its work programme for 2019/2020 via an RNS dated 25th March 2019. Close to the top of the list was the following:

“By end of May, the renovation and commissioning of the oil treatment plant in Puesto Prado. The commencement of deliveries of oil from the field direct to local refineries will give enhanced margins (current production 150 bopd from this area) “

Long-term investors plainly have a reason for impatience but I would suggest that the RNS presents a substantial list of objectives that are simple to understand and make sense. Each a piece in a bigger jigsaw. And the first major piece should be delivered by the end of May.

Should it become apparent that the company is unable to achieve its goals then I will look to exit my investment. But, in the meantime, I am more than happy with the management just getting on with the job. Frankly, I don't need to know the minutiae. The plans have been clearly set out so let's see whether they are going to be achieved.

Incidentally, something that I did like about the above RNS was that the company's targets are quantified, timed and specific. They also appear to be achievable.
24 Apr '19

This piece from Bloomberg builds on an earlier post that I made in regard to the London Metal Exchange. It points to the use of blockchain technology to ensure that 3TG (Tantalum, Tin, Tungsten and Gold) can be traced to their sources.

Obviously, there is much work to be done but there does seem to be a will to ensure that supply chains can be successfully audited. And I would suggest that that is good news for Kazera.

What would be really interesting is if a major company on either side of the pond came under investigation for using conflict minerals on a large scale. The financial implications would be enormous. It would put Kazera in a very strong position.

https://www.bloomberg.com/news/articles/2019-04-24/using-blockchain-to-help-fight-conflict-minerals
23 Apr '19

This short article in the FT may be worth further investigation. Although it makes no direct reference to Tantalum, it does point to a commodity trading future where verification of the source is paramount. Bearing in mind the quantity of Tantalum mined in areas such as the DRC and Rwanda, it may well have broader implications.

The changes outlined will not come into force until 2022 but it does seem to demonstrate the direction of travel.

https://www.ft.com/content/1ac20e8a-61f7-11e9-b285-3acd5d43599e
18 Apr '19

According to a Tweet issued by Trinity, Cenkos has recently reiterated its buy recommendation for Trinity with a target price of 40p. But for some reason, this is not showing on London South East's Broker Ratings.
18 Apr '19

Before going any further, I should point out that SPT, in my opinion, is detrimental to Trinidad's oil business. That said, the article below (Posted on the Trinity Exploration section) seems to indicate that Heritage is very much open for business. It appears to be looking for partnerships of various types so that it can develop the country's oil assets. The point that I am really making is this. Why should a company of the size of CERP with an ability to rapidly alter its production levels (And so its exposure to SPT) be so keen on foreign expansion? There appear to be substantial opportunities within its current acreage and also with the prospect of doing deals with Heritage.

In the Proactive interview, Leo Koot seems to indicate that expansion into another country is imminent. According to CERP's recent update, it made offers for "Interesting opportunities" in four other countries. If its production levels and cash flow were many times greater than is currently the case, I just might understand the logic. But operating in at least one other jurisdiction will be expensive. Unless the operations are generating cash almost immediately, this could be a very financially draining exercise.

http://www.guardian.co.tt/news/heritage-has-been-operationally-profitable-6.2.824225.4c9a53103d
16 Apr '19

This article is definitely worth reading. The CEO of Heritage makes it very clear that it's open for business. Moreover, it seems to indicate that it's keen to move forward and develop its offshore assets. Basically, Heritage appears to be good news for the country's oil industry.

Of course, talk is cheap but it gives the impression that Heritage is an action-oriented organisation.
15 Apr '19

It goes without saying that any brokers' tips need to be treated with caution. However, I noticed that Numis has just come out with a buy recommendation for Highland Gold and has put in a target price of 250p. Purely out of curiosity, I plotted some (Not all) of its recommendations in relation to Highland Gold on to a Highland Gold share graph. The pattern is not linear but it has been broadly right. Numis has been broadly correct in terms of the share price trajectory from October 2014.
11 Apr '19

This short article from Bloomberg illustrates the dire straits that South Africa's Gold mining industry finds itself in. But the real point I am making is that Pan African is one of the few bright prospects in the sector. It has concluded long-term wage agreements with its workers and has restructured its business. It even has sizeable development opportunities within its current acreage. But I am unsure whether it's getting its message out - it may be silenced by the deluge of bad news.

https://www.bloomberg.com/news/articles/2019-04-11/south-african-gold-output-has-longest-losing-streak-since-2009?srnd=markets-vp
10 Apr '19

Although the company is cutting its final dividend by 20% to 8p, its total dividend for the year is down a more modest 12%. That said, the company was quite emphatic in this morning's conference call that it's committed to distributing 30%-50% of its free cash flow to shareholders via dividends. Considering the commodity price headwinds that it faced in H2 2019, I have no problem with the cut. And strangely I have no problem with the market reaction. Why? Well, I view it as a well-run business that exhibits many of the characteristics of a REIT. But it's based on commodities rather than real estate.

Strong margins, a commitment to reducing its debt and on target to meet its guidance figures. It appears to deal successfully with issues under its control. That obviously excludes exchange rates and commodity prices.

Its operations appear efficiently run which leaves little scope for substantial organic growth. Growth by acquisition seems the only realistic strategy. But the company has demonstrated its ability to grow through acquisition with SASA. The only downside with that approach is that investors may need to be prepared for the company to take on more debt for a suitable acquisition. And that probably means more risk. But the impression that I get is that this is a management that is looking for a complimentary low-cost producer or an asset that can be developed that uses its current skill set. Basically, it seems to take a risk-averse and professional approach to growth.
9 Apr '19

My understanding is that scrapping the SPT would be politically difficult. However, without much fanfare, the Government might be able to tweak the system. A technical change in the way the tax is implemented would not be very newsworthy. However, for a company such as Trinity set to spend major amounts on capex, a change in the system could be immensely advantageous.
9 Apr '19

Does anyone have the log in details for this afternoon's conference call?


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