London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East and have access to Premium Chat. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Charlatans this way???? GLA
I am not so sure this time around there will be a rush to get things done.
The government is currently not we knew when a singular party took office. There are significant influences from both parties currently in senior ministry roles.
My concern is that as we know when elections loom the larger corporates align for political position, which if DP and MPP members debate this may mean it gets dragged down into the weeds for a period.
Persistent please enlightened us with your knowledge of Mongolian politics and how you see the various factions, parties, current leadership and other influencing factors playing out what may happen. I would be intrigued!!!
I believe between Oilfated and myself we have probably touching on 25 years experience of Mongolian politics at very close quarters. Hope that gives you a nice warm glowy feeling buddy.
It’s what I do for a living Persistent.
Spanish is now posing as the great political geo-strategist and expert in the inner-workings of Mongolian politics.Clearly more aware than any on the BOD of Matad or MB who is a mere geologist lacking such sophistication.Pretentious nonsense of course.The Exploitation Liscense ia a matter of regulatory approval.MB said that it would be approved in Q1 2020. Probably understands political risk as does BOD somewhat better than some self-appointed armchair expect eager to impress the uninformed eager to be led to the promised land.
Good points all - but once again the Ivanhoe model beckons. They could not develop Oyu Tolgoi by themselves and eventually bought in Rio Tinto in a deal that benefited all, including the government & Ivanhoe shareholders. That happened after the full potential of OT was revealed by Ivanhoe and an awful lot of shareholder placements funds. The share price reached $21 during all of that period (from $1 at discovery) notwithstanding the major dilution entailed in raising that money. So much for Captain Stirling's boogy man arguments. I, for one would welcome a placement done properly, although I believe we have other ways to find development funds, and in all likelihood will do so.
GKhan - despite the low starting point there will be plenty of chances for shareholders to make multiples on their investment during a takeover or JV. It does all depend on management from here on, rather than geology as Spainish says. I wonder if Friedland would take us on as a pet project?
Spainish - You have been in Mongolia long enough to know that there will be a rush by government to get approvals done over the next 4 months. And done properly so that the next guy in the seat cannot undo them. The paralysis you correctly predict only sets in closer to the election, and afterwards when the new people find their seats and get working.
I can find no mention of oil in the definition of "strategic deposits" and hence the danger of a Government grab of 34%. In any event, Petro Matad hold the resource under a PSC, a different animal than a mineral license, and as such the govt already owns 50% of the oil production and the right to buy the other 50% at market price.
Those production terms, royalties and taxes etc are already contained in the PSC. The exploitation license is merely a piece of extra paper regulating the mechanics of drilling, extraction and production as well as covering environmental impacts.
Finally, it is not as if Petro Matad are the first to find oil in Mongolia. The (so far) much larger fields to the north have already been through the licensing and production processes, as has the smaller ones at Zuunbayan. Mongolia has accommodated petroleum exploitation licenses for over twenty years.
Never a dull moment
What concerns me and no one has yet identified here, is that there is an election in June 2020.
People that have lived and run business in Mongolia will only be to aware that Mongolian politics means it’s unlikely that much will get done as both major parties focus on their election manifestos, until June of 2020.
What again some of us know even after an election it’s normally six more months before business as usual returns once a new government and cabinet has been formed.
With an election in June, Naadam in July, unless the question of the Matad licenses is finalized prior to June it’s unlikely politics will reconvene until September at the earliest.
With power sharing a likely outcome in terms of the next election between the MPP and DP, what may appear a simple process, I fear will get bogged down, certainly become a focus of political attention, and take significant time as political powers position oil in Mongolia as a key driver for the country which may place Matad as a small pawn on a rather large political chess board.
In terms of Chinese investment, it’s an option, but not GoMs immediate focus. You also have to consider if GoM classify any asset of Matads as strategic, they could well look to retain a 34% stake holding in the business.
This will not be a simple process.
GKahn, your post at 11:48am today was really interesting - good point rise and could happen any time now.
If they announce a T/O we will missed the major rise and potential of the Company.
Petro China can offer (let's say 50p) and how much our assets will worth in 2 years from now with production?
The License Exploration will be the key to unlock many opportunities out there from the Big Oil Companies.
I do agree that a takeover battle for Petro Matad would certainly result in a major premium to today’s PM share price. The problem is that the starting point, i.e. today’s SP is very depressed, and the company does not have a quality shareholder base aside from Petrovis which holds about 25% - down from more than 50% as a result of dilution. Surely, the government would like to see a stronger player unlock the oil potential, particularly as it wants feedstock for the new refinery; moreover, Petrovis is interested in the refinery offtake. Food for thought?
A Canadian diamond in the Rough
You and I probably know the story of OT and Robert better than most here. Your summary is about spot on.
OT was found on the last couple of drills when Ivanhoe were just about out of cash, and luck. However OT was found and is what it is today.
I am more interested again in the journey as again you have identified which is to take an explorer into the world of a recognized oil producer. As again you quite rightly pointed out Robert had out reach to investors who knew what he touched would likely turn to gold, pardon the pun.
It’s the translation from what Matad is now which is an explorer with a small commercial find, into what Ivanhoe and Robert turned OT, which is a business that contributes 75% of Mongolias current GDP, and will be the third largest producing copper and gold mine in the world in three year’s time, with world class grades and a world class ore body.
The road map is already there in terms of what can be done in Mongolia.
lives :-) (Verbose as usual, I ran out of letters.....)
GKhan - your comparison with Ivanhoe and Robert Friedland and the discovery of Oyu Togoi is essentially correct. However it deserves the retelling of some of the detail and highlighting other similarities to Petro Matad and petroleum in Mongolia.
Ivanhoe were exploring on a limited budget in Mongolia for some years, with limited success before they gained Oyu Tolgoi licenses. Even then, they were down to the last two drillholes before the major discovery was made. In 2001, when they made that breakthrough, they had very little money left in their treasury. Some $40m at the end of 2000, with a couple of operating mines and other programmes around the world.
In 2001, the discovery year, they spent only $3.8m in Mongolia.
On the back of the discovery later in 2001, Ivanhoe raised $73m to further explore Oyu Tolgoi. This was done in many small placements over time, at about C$1 per share. They did not have $750m in the bank at the discovery time. Ivanhoe was far, far from being a major. They even called themselves "an exploration company, not a mining company".
But you are right - what they did have was a internationally successful manager/entrepreneur who had a stellar track record of value-adding for his shareholders and as a result many institutional and professional followers. Ivanhoe also had a solid share registry of major institutions who would follow Friedland into hell if necessary.
So the first part of the exploration story that is Ivanhoe does compare favorably with Petro Matad.
After years of trying, technical success has come to a small resource exploration company with comparatively little in the bank.
After that, yours and Spainish's observations are somewhat valid. For all of Mike Buck's admirable points, he is no Robert Friedland (few are). I believe that incremental development, over time, is possible the way they are going. They do have the backing of Mongolians and the Mongolian Government, something Friedland had to battle in addition to financing. But as you pointed out they do not have a solid share registry.
Little known fact - in 2007, Ivanhoe had by then spent US$1.2Bn exploring Oyu Tolgoi, through Friedland's supernatural money-drawing powers. At that same time, Petro China had spent the same amount developing their Block XIX fields (just north of Heron).
So Buck and the Board of Directors have the job ahead of them, one way or the other. But others have done it.
A final thought - One of Friedland's traits (outlined in the excellent book about him "The Big Sting"" was his delight in what he terms "commercial tension". He loved the game of takeovers, particularly when they turn competitive. Don't you think that a takeover battle for Petro Matad might just be what the doctor ordered? While we may never see the full value of Petro Matad materialize in current shareholders hands, a takeover battle could provide a major premium on today's prices.
Plus get Ojay and Captain Stirling out of our liv
Great post! Much appreciated.
With regard to your comment "Petro Matad will be particularly vulnerable to an opportunistic take-over" (which I mentioned about 2 weeks ago, i.e. after the Heron oil find) Capt. Stanley replied "take-over of what?".
I give up trying to discuss or argue with people who (for whichever reason) believe they either know better in every situation or prefer to pursue a non-LTH agenda.
I have read the interchange with Spainish. Evidently, he has worked with or for substantial companies, but there is no indication that he has any board of advisory experience with publicly listed companies and fundraising particularly for small companies such as are AIM listed.
Oyu Tolgoi is an interesting story and Robert Friedland is a very successful promoter in the resources sector. However, Friedland arrived in Mongolia with a substantial amount of cash in the order of US$750 million to pursue opportunities. Petro Matad on the other hand has been essentially short of funds for the last nine years and currently has only about $3 million. Some difference!
Spainish made a valid point that to successfully develop the massive oil potential in Mongolia, it will take a well-funded company with management depth of expertise and experience.
However I have a concern: when the exploitation licence for Heron has been approved, I believe that Petro Matad will be particularly vulnerable to an opportunistic take-over; and current shareholders may thus miss out on the substantial upside in the potential future valuation.
Come on girls,
Put those hand bags away. Things about to motor ahead soon. Enjoy the ride. These type of tit for tat comments are typical when we hit bottom.
All good things take time. We all here for making a good return. Some of you are lucky to be able to buy around 4p, compared to other holders.
Although, I'd sleep on Ojays couch if I had to choose.
I'd fall asleep pretty quick
Yes I like that idea- and it certainly could happen in 2020
And 20p is not unreasonable to expect during 2020
You pays your money - and takes your choice
I have never worked for a company as small as a Matad previously so no idea where you reached out for that comment.
You really have no clue buddy.
There are a couple of us on this board that do actually know each other as we worked and lived in Mongolia for many years. We all have the same opinion of you.
Unless you can actually post anything remotely resembling anything of any importance probably stop messaging.
manfrom: Sorry to bore you. Just filter if you feel the need to do so.
First of all: Spainish is not on PM's board - although he may possibly like to be.
As a secretary to the board of a listed company nobody needs to tell me what goes and what not.
I just don't like and accept the excuse "I can't respond for legal reasons".
This tit for tat is now rather boring. It would be easier for all of us if you just exchanged email addresses.
Ojay it’s good to stay friendly and remain open to listening to each other’s views.
We will after all be sharing a drink at Manro’s £1 party someday.
I was not being derogatory in terms of invading your question, I just cannot answer it for legal reasons.
Sorry to have rained on your parade. The "silly game" has obviously resulted in an evasive manoevre. As you like.
Sorry Ojay no time to play your silly games.
You would know if you sit on boards or advise senior people your continued confidentiality terms do not permit one to do such things, especially on a public board.
See it as you like and thx for your interpretation of "my role" on this board. Looks very much like you've got a grudge against me. I can deal with that as this is not a popularity contest.
Again: Please elaborate on how much value you (yourself) believe to bring "at Board room level" as opposed to the "Geo's".