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Fernan, AP has been acting CEO since 7/2020.
"Since AP has been in charge, placings have been done with purpose and at a much higher price than the one previous."
Adonis has been a significant shareholder from the beggining of the company.
It hasn´t prevented CHAR to go from 144 million shares oustanding at the end of 2011, to almost 1b shares after the recent placing.
I know that the business model has changed, from "high risk exploration" to the current one. But, if you think that AP is shy of keeping diluting himself to advance a project, think twice.
If you think we're going to end up with 5b shares you either can't do math or you have little to no faith in the path the company is taking.
Since AP has been in charge, placings have been done with purpose and at a much higher price than the one previous.
If we have another placing at 50p and another at 75p, who cares when it's getting us closer to pumping and selling the massive gas reserves that we own.
To get to 5b shares under the current trajectory, we probably end up with $2-3 billion in capital raised. Which would be way more than needed.
If we were to drill a 3rd well and discover another 600bcf of gas and the SP rises to 75p+ and we place another 100 million shares into the market for $95 million in additional funding, would you really be disappointed?
Yes I agree there certainly is a high risk of dilution. This is obvious to me. The new gas venture will likely consist of at least one well so that may be say min. $20mln. We don't know what that is yet, hopefully it's a third well at Anchois. The green energy projects will likely be entirely funded by cashflow once gas is flowing, in the meantime Chariot wants 30/70 equity/debt financing for those projects. Project Nour is massive but the plan is to get a consortium of bigger companies to do the hard lifting on the capital side.
Ignoring Anchois, how much money do you think Chariot will need to raise in three years? Or five? Do you think they need to raise £850mln? And do you think the share price won't appreciate the closer we get to production from Anchois? Do you believe all of this funding will be done as equity raises? I ask these questions because these are the premises for the assumption of future amounts of shares outstanding. Of course there are many variables and unknowns, but it's still best to consider these kinds of questions when we're speculating on dilution. None of us have the definitive answers to these questions of course, but I tend to believe strongly that reaching a whopping 5b shares outstanding would be rather unlikely.
Nop, I´m a long term holder in CHAR.
I like Anchois and the Lixus license. But I think we shareholders are at risk of our future return from Anchois being diluted, because of the need to fund other projects with poorer eonomics.
Does that mean your selling up and waiting for a more opportune moment to re-enter?.....
"To add, once again I don't see how we can end up with 5b shares. That's about £850 million pounds worth of equity issued at the current share price. Kind of ludicrous when you do the math, which is why you should always just do the math and ignore the emotions"
1. Management is talking about a "new gas venture" that we dont know how much is going to cost us. Is it a producing asset? Or an exploration venture?? We simply dont know.
2. We already have a pipeline of renewable projects, for hundreds of MW, for which we still have to fund our equity interest.
3. And finally, we have the green hidrogen project, that, again, we dont know how much is going to cost us.
For these reasons, I still think there is a risk of big dilution going forward.
Hi Amateur. The discovery has already been made at Anchois-2 months ago and you can observe the chart to see how the market has reacted so far. We will get more data as the CPR comes out and I believe the market will be pleased. That aside, in two to three years (more likely the latter because things take time) cashflow will begin from Anchois. I believe the share price will appreciate the closer we get to first gas, and the more production ramps up there. And if the market doesn't put a bigger number on the shares then Chariot can also pay dividends or do buybacks. Fair value will be reached eventually one way or another, but patience is required as Chariot isn't producing anything yet.
What's the share price a year or two from now on is anybody's guess though. Depends from a lot of variables. Of course there is the risk that the share price goes down, but I'm in this for the longer haul. I'm just going to sit tight and add to my pile of shares when I see weakness.
Hi Fernan, Bigguboi, when an exploration company makes its discovery the share price tends to increase rapidly over 1-2 years and then the share price drops quickly as investors take money out waiting for production to start. Greatland Gold is a great example. Do you think there is a risk of this happening with Chariot?
To add, once again I don't see how we can end up with 5b shares. That's about £850 million pounds worth of equity issued at the current share price. Kind of ludicrous when you do the math, which is why you should always just do the math and ignore the emotions.
I actually agree with you when you say it'll take longer than three years for the full value to be realized at Anchois. In fact it will likely take a decade for that to happen because we simply have only scratched the surface there. There may be over 5Tcf or even 10Tcf to be found but we simply do not know yet. However, in three years' time Chariot will develop two or three wells and begin producing gas. This will cause the market to realize the value of the company, i.e. share price and market capitalization will increase. This means that any equity that might have to be issued is actually much less because the equity is just worth more -- which when taking into account the sheer cashflow that comes from production would be less necessary anyways.
Just pull out the calculator and do the math man. You'll sleep your nights better trust me.
Fair point, however should the licence exceed our's and the companies expectations then it will be a miracle, if not the 8th wonder of the world for our asset to remain (75%) in our hands, let alone being able to get to first gas.
aimo & dyor
I don´t see the full value of our gas project will be realized in just 2-3 years.
What I expect is that, after getting to the production stage (3 years from now), operating cash flows should be reinverted in exploring the remaining prospects in the Lixus and Risanna licenses (see my previous posts on what I think should be the best strategy to develop the project)
Then, in order to know the full potential of the licenses, we will have to wait 6-7 years at a minimum.
As a I said again, I don´t want CHAR to have 5b shares by that time.
We get it Fernan, you don't like dilution. You've made that clear already. But consider the following: they didn't hand out any warrants and they brokered & immediately settled this financing at essentially market price. The dilution was smartly done. AP doesn't want to dilute himself more than is necessary obviously. Chariot will shepard shareholder value and we will be rewarded for patience. Frankly I think it's a bit ridiculous that you actually expect us to 5x the shares outstanding within three years. Even my most conservative & negative assumption would only be maybe 2-3b shares, and when I do the math guess what I still see Chariot as a multibagger.
Hey Fernan, agree but my remembering Adonis has 85,243,102 shares, raising more cash will not be the done too lightly? He did of course not pay 18p for all of those. Nonetheless it will be VERY interesting to see if he takes his full % allowance at this 18p offer.
If he does/or does not, either way could be an interesting indicator on how he see the future funding requirements going? So watch this space.
Let's hope these renewable project developments do not need significant cash injections until Chariot has some production income generated cash?
I also think taking out loans for project development and using the gas as a security is the way to go...
If there is another Q&A opportunity at the next GM then we must try and pin them down on such queries.
Char have been pretty good on the RNS plans but very quiet on how it's going to be financed. So it's down to us to question when/if we get the opportunity.
It's not just us that need the information it's ii, but large investors get a seat at the table, we of course do not.
Anchois could indeed be a profitable project...but if we end with 5b shares outstanding, in order to fund "new ventures", renewables projects, etc, etc, the return for each individual shareholder won´t be as great as it would be.
Time will tell
dated April 29 2022 but it does show how important Anchois could be to both countries if its potential materialises as forecast..Chariot's shareholders should come away with full pockets