Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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The recent SP certainly has been completely disconnected from the asset value. Based on Stocko's numbers book value is currently 57p/share. Even with a 50% discount applied that's still significantly higher than where we have been for many months. With the planned move into shale you'd certainly expect the long term book value per share to increase, even after factoring in dilution. If the company succeeds in this then within 3 to 5 years I'd expect a divi of at least 5% of book price PS, hopefully a fair bit more.
No word from my SIPP and fund and share account providers either. Will post anything here if I receive it. Thanks for the info Bismarck.
Some final thoughts more generally on the situation here.
I see the delisting as a sign of progress towards expanding production and significant uplift in company profitability. The very low share price was acting as an unhelpful reference point for raising further equity. A farm in from industry and possibly investment from a private equity specialist in this sector along with debt will finance initial expansion until free cashflow can finance the rest.
There is certainly dilution for existing equity holders to come but we pretty much knew this anyway. By getting rid of a public market share price that is completely disconnected from the underlying value of the asset, the dilution should be less. Rationale being that any new equity is priced on the economics of the underlying asset, which an industry investor will be well placed to assess.
So as I see it geec will drill a couple of shale gas test wells soon after delisting and if found to be economic will begin to negotiate funding for expansion of drilling across the field.
I think that we have to assume significant dilution for existing shareholders. However if we assume £300m of new equity and £200m of new debt then that should be enough new money to get to self funded growth capex. £300m of new equity issued after successfully proving commercial shale gas could be priced at 50p a share meaning 600m new shares. If we assume that the company is worth at least what is invested then £500m to £600m is a conservative value once wells are largely drilled and operational. But this gets us to £1 per share. Factor in a 50% discount for otc trade to sell and that’s 50p a share. Right now I’d take that and count myself lucky.
Of course there are lots of variables here and these assumptions are not worst case by any means - but they’re on the more conservative side.
Good to remember that this is a voluntary delisting. The company is profitable and its end markets are a structural growth situation. We’ll get diluted and we’ll have little visibility on what’s happening and it’s still going to take years to come through.
Just thoughts from me. Everyone here will have different constraints and requirements but I plan to hang on and see if some better value comes back to shareholders than what you can get in the market at the moment.
Good luck to all. It’s a very disappointing development but some reasons still for a bit of optimism.
I've not heard back from either of my SIPP platforms yet but so far I've found the following -
https://www.thisismoney.co.uk/money/investing/article-10648215/What-happens-delisted-shares.html
"Investment platform AJ Bell confirmed it will send a message to shareholders if a company is delisted.
'This message will have a brief summary of what has happened and a link to the full statement from the company so customers are up to date with any proceedings. When we receive more information from the delisted firm, we pass this straight onto the customer, including any voting options that might be available.
'The shares will remain in the customer's portfolio online with a nil value until the delisted company comes to a final decision.'
And from Interactive Investor -
https://www.ii.co.uk/help/trading/useful-information/defunct-shares
"When a company ceases to function, its shares are delisted from the exchange they were traded on. We will notify you if any of your shares are delisted via a corporate action notification.
If the company issues share certificates because of the delisting, we will endeavour to reregister these in your name. If share certificates are not issued, or reregistration is not possible, the unlisted shares will stay on your online account."
Presumably they would be re-registered in my name as the company would not be defunct. Without a share certificate I guess it would be impossible to resell them in the future?
My thoughts are that this is an almighty kick in the teeth. I'm particularly frustrated because I've topped up recently.
"The Company has decided to request the voluntary Cancellation of Listing as the volume of trading of the GDRs on the LSE is negligible and does not justify the costs related to such listing and trading."
That may be true, but had the company made more of an effort in investor relations perhaps there might have been some interest in the security? I think this is part of a different strategy.
I feel loathed to sell at the current price so would favour hanging onto the shares because I don't think the fundamentals of the business model have changed. However it may be quite complex for me to keep hold of them as they are held in SIPP accounts. I've emailed both platforms concerned to ask what my options are, other than to sell at the current depressed price.
Clearly a very unfriendly development for privat e shareholders in geec. I’m personally taking a moment reflect on what’s happening here and what my (very limited) options are.
This was already a very illiquid stock to trade, as highlighted by management, but OTC trading looms and so will be even more liquid.
I think there is a small chance there is a relisting on another exchange. Reason for this is that geec have big investment plans and access to public markets will be an important route to getting finance for their growth.
The delisting here in this instance is not due to company failing! In fact as mentioned in previous posts the company is well positioned in growing gas markets with rising gas prices and demand.
Outlook for company as they deliver on growth plans in the next years should mean that investors can negotiate in OTC markets a higher value than you can get for your shares now.
Worth considering that in time significant dividend could come through for shareholders as free cashflow builds from increasing sales and falling capex. Granted this will be several years away.
Geec may even be bought out in time by Essar or ONGC, which would equate to an industry determined fair market value and result in a potentially good return for investors here. Again though- long term outcome with very little liquidity in the meantime and far from certain that this will happen.
Shareholders will retain the holdings in the company though but will likely see dilution as geec seeks funding for growth. However, again without public market listing they are limited to farm in and debt. Debt alone won’t raise enough and so it’s a farm in or no funding. Remember that the company need $2bn of capex to maximise value of opportunity.
Early conclusion from me is that is a cynical move by management to grab the lions share of remaining shares at ultra knock down prices just ahead of what management can see is a period of significant value creation. For that reason I’m going to hang on with my investment and take my chances in private markets, potential for dividends and take out and a possible relisting in time. I’ve been invested for many years and will now have to stick this out for a good number more years. Believe though that I will get much more back in the long run by holding out rather than selling into this highly distorted market.
Those selling ahead of this rns in size almost certainly knew this was likely coming and so will be bringing to attention of FCA.
Feeling sick though like other investors here and have no remaining respect for management and their greed! Determined to get value from my investment though.
I've sold "at any cost" this morning following the delisting announcement. Any cost was 5p. Gutting end to this journey but recent experience with Metal Tiger delisting and continuing on the ASX is that sooner is better.
Given there was zero marketing or effort to promote GEEC other than an effusive SP Angel article whose advise I now know to take with a salt mine of salt, it's not surprising there was "negigible activity".
As far as I'm concerned this is a blatant grab by greedy Directors who I'm sure are hoovering up shares at 5p etc with glee knowing they have bright days ahead. They could have offered a tender offer or other means if they had any concern for GDR holders.
If you hold GEEC in a broker with great international presence (i.e. India) then you should be ok. Knowing to only go near CDIs and GDRs if you are with certain brokers is one of those subtle "gotcha" and can get getcha and that got me.
Good luck all remaining and I dare say the share itself should do well - but I would question the integrity of the management so as they say in latin - caveat investor!
On todays rns?
Nice purchase Bismarck! Struggling to find spare cash and have a big position already but I’m keen to get a few more in at these levels.
Hadn’t seen the sells given LSE hadn’t disclosed them and too lazy to check the official stock exchange.
Geec haven’t drilled any more wells for years so the number is still 156 with 144 more to drill in the original 300 drill plan. However , these 144 will incorporate the shale drilling also if proven up as economic to extract.
Company have also now indicated that there are more opportunities to expand the field and drill more wells beyond the original 300.
Was searching for an update on how many CBM wells they now have and came across this
Rating upgraded to 'CRISIL BBB+/ Stable'
https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/GreatEasternEnergyCorporationLimited_August%2030,%202022_RR_297936.html
Correction, I bought 43K not 47K today
I can see the 75.5K and 16K trades @ 12.1p
I sold a little elsewhere today and topped up 47K @ 12.7p to bring my average down below 20p now
I guess someone or some people need to sell when there is no interest from buyers.
Even if GEEC cannot find a partner of some kind to fund large scale shale exploration/production they've still got plenty more CBM wells to drill have they not ?
From their website, not sure how up to date the well numbers are -
"GEECL's Raniganj (South) block licence area covers 210 sq. km (52,500 acres). We will drill 300 wells in the contracted area. A 5-well cluster pattern will be followed for drilling the wells. The wells are connected by an internal MDPE pipeline network going into our Gas Gathering Station and then feeding the gas into our dedicated external steel pipeline network.
Area of 210 sq. km.
10.62 TCF of Original-Gas-in-Place
156 wells drilled
A further 144 wells planned to be drilled
56 deviated wells have been successfully drilled
Dedicated pipeline of 77.62 km running through the heart of the Asansol-Durgapur industrial belt"
Also just wondering if it is a coincidence that at around the time we know that the company will be thinking about funding expansion of drilling activities and ramping production, the shares suffer from some persistent selling.
Another large block of stock about to be booked out and reported later today/after close? Could do with an update from the company to confirm no change in outlook but suspect we don’t get anything maybe even until July FY results. Whoever is selling will no doubt keep selling regardless.
Investment thesis still intact in my view so will have to check down the back of the sofa for any spare cash to put to work in geec.
I think you’ve got your answer there Bismarck witht that 15.01hrs trade. It’s a big lump of stock given how little trade there is usually in GEEC. No bad news that I can see so just suspect that it’s more likely someone has run out of patience. It’s what makes a market so for those who think that the investment thesis is still intact, then it’s even cheaper to get in thanks to that seller.
Worth remembering the recent lows of around 8p at the height of the covid induced lock downs and possibility of a vaccine only just emerging. Things were grim then and the outlook was very uncertain. We now have:
Indian economic growth firing again
Higher expectations for longer term gas prices
More evidence of commitment to increase gas share of Indian energy mix and more favourable regulatory landscape of gas exploration and production
Restart of the construction of pipeline to Kolkata
A company that has remained cashflow positive throughout
And as highlighted in your earlier message Bismarck a very compelling valuation that seems to discount a lot of bad news already.
I’m
Still very confident that the shares are significantly mispriced and that with a few more months - maybe 12 to 24 tops - we will have news of increased reserves, offtake agreement with pipeline owner GAIL, financing for substantial roll out of new wells in place and production ramping steeply! As always though just my thoughts so don’t anyone take it as investment advice
Does anyone know the reason for the recent weakness in SP?
As far as I'm aware there's been no negative news. It's all pretty low volume dealing at the moment so maybe just someone or a number of people wanting to exit while there is little interest from buyers. Maybe an opportunity to top up, it has to bottom out somewhere?
What's changed fundamentally since it peaked in the 40's Feb last year?
Even without shale this still looks incredibly undervalued to me.
According to Stocko -
Price to book value 0.26
2019 net profit $8.4M USD
2020 net profit $8.95M USD
Obviously we know what happened to gas demand in India after that.
Forecast NP of $8.2M for 2023 and $12.3M for 2024, although they don't publish forecast revenue or operating profit against those so I'm not sure how those numbers are derived and take them with a pinch of salt.
If they can get to $11-$12M USD NP within a couple of years that's a P/E of 2 at our present MCap!
Agreed Bismarck - big financing required and will take a lot of skill to not leak to much value to new investors. I think it’s very likely that the finance can be found over the course of the next few years. The cashflow from production will fund capex after a few years. It’s really just the first $300m or maybe a bit more needed over the next year or two for new wells. My money is on farm in with Essar or ONGC and a slab of debt. Little geec negotiating with those mega companies though for good farm in terms is a big question mark as you highlight. Only £18m mkt cap though so I’d assume that even in a very bad deal geec hangs on to many multiples of that.
Thanks for your input Troy
Shame the CEO's ambitions plans have done little to lift the SP thus far. As you say, a lot of patience is required
The plans are very ambitions indeed for a company of £20M market cap, I do hope they can pull it off -
"GEECL is also carrying out a shale gas exploration program at Raniganj, Modi said, adding that the initial plan envisaged drilling core wells to map out the geology.
"We'll do a few of those tests with 10 odd million dollars or so of spending to get an idea of what kind of prospects are out there," Modi said.
"After that, we will do a pilot well, drilling and then get into development. If that happens, as much as $2 billion go into it," he said."
Thanks for your message Jonhas. Good to hear and I still remain confident that patience will be rewarded with geec. When management own 2/3rds of the company, communication by the company with the remaining 1/3rd unfortunately is low priority. I’m sure all investors here find this frustrating and it can test patience. As you say though things look well set up for geec now for 2023 and I’m hopeful for news on shale drilling plans soon. No point in extracting the gas though until they can sell it all so pipeline completion to Kolkata is critical.
Hi TroytoTiber
I appreciate your updates on a generally neglected share. I bought back in early 2021 and the lack of news-flow has tested my patience at times. However the fundamentals and promise still look as good now as when I first bought. Fair to say my other oil/gas shares have generally performed better over the past year but I'm holding out for the pipeline and the clear articulation of the expansion plans.
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/021723-interview-india-to-surpass-2030-natural-gas-share-target-amid-firm-demand-says-geecl-ceo
Prashant Modi (CEO) has recently only gone to media to talk about the enormous opportunity for GEEC just before issuing an RNS to update on progress. The interview with S&P Global on 17th Feb not only sets out a very strong backdrop for gas in India, which we know already, but he also re-iterates the very large roll-out programme for GEEC in terms of wells to be drilled on the Raniganj site. Nothing new but wondering if we are about to get an update on the shale test well drilling programme. With an upper estimate of over 8trn cubic feet of gas in place within the shale these test wells could be highly significant for the company and its valuation.
Cautious investors wont invest on a big IF like this but for those prepared to take on more risk a positive outcome on these test wells will most likely make the teens share price a thing of the past. Just the view of a long-term holder whose patience is being tested so DYOR.
Some good contextual info here
https://www.hellenicshippingnews.com/indias-gas-consumption-target-faces-risks/
Helpful context to understanding the complex evolution of gas growth within India’s energy mix.
For geec though I think this piece is supportive with positive comments on the near term completion of the urja ganga pipeline and City gas distribution growth near to medium term looking good.
Clearly though the volatility of international gas prices has hampered demand growth in india, capacity utilisation of gas infrastructure and therefore further capital expenditure on required infrastructure to get gas to energy mix targets.
Very quiet indeed, and only 2 trades so far this month. Hard to believe this was 40p a year ago and I don't think anything's happened since to justify this. Let's hope for some exciting news soon to create some interest and lift the SP.
More in an attempt to break the long periods of silence that have become a familiar hallmark of GEEC management, have had a look for any new snippets that might indicate any changes to timeframes for selling gas to Kolkata.
GAIL, the Indian gas infrastructure company issued an update in august last year that gives a june 2023 completion timeline for the pipeline to Kolkata. https://www.livemint.com/companies/company-results/gail-q1-net-profit-up-91-at-rs-2-915-crore-11659626586752.html
Reading the transcript of the latest GAIL financial results and the response to a question about the pipeline and capex for H2 it seems that the majority of H2 capex will be the Haldia pipeline and particularly referenced the delayed bits (which to be fair is all of it).
So it still looks like this is the year for commissioning of the Haldia branch. I live in total hope and probably no rationality on this. It’s india after all and nothing anyone says there in business should ever be taken with anything other than huge dose of caution. https://gailonline.com/pdf/InvestorsZone/EarningsCallTranscript041122.pdf
They also targeted the shale gas test drilling before end of March 2023 so this should be imminent. 74 days until the end of March - you’d think they would know by now if they had booked in some teams to drill the wells. Maybe they just don’t want to tell us or maybe they haven’t got anything booked in!
I’ve said it many times before, if we get good news on both these issues then 2023 will be hugely important for the share price and perceived value of the business.
At the moment though market couldn’t care at all and virtually no good news is priced in. The upside is huge if the ‘if’s come in.
Happy new year and here’s to GEEC’s break through in 2023.
Hi Troyto, I can't argue with your logic on this. There is a slowly, slowly catchy monkey approach to GEEC's growth and while the pipeline will improve price and profitability the prohibitive cost of debt means even a $20m drill program seems ambitious. A farm in does solve the problem.