Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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. 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.
Savannah's Nigerian business continues to deliver strong and consistent operating performance; however, the interims were heavily impacted by the Naira harmonisation since mid-June. The Petronas South Sudan TO is progressing, although publication of the Admission Document and the resumption of trading has slipped into Q4. Our forecasts remain under review ahead of this publication. This is a very substantial transaction for Savannah, especially at US$90+/bbl oil prices, which will be transformational for the company, providing a platform to build a material business through further regional consolidation opportunities while extracting synergies with Savannah's existing operations.
- Solid operational performance offset by sharp currency swing. Savannah's interims to end-June
saw robust operational results from its Nigerian business tarnished by the Nara harmonisatior that has seen the currency tall 40% against the dollar since mid-June. Average gross daily production increased by 12% to 25.3 kboepd. Total Revenues and Adjusted EBITDA both increased by 8% to US$139m and US$108m, respectively. However, a US$54m unrealised FX translation loss due to the devaluation of the Naira saw the net loss from continuing operations widen to US$45m. The Naira devaluation also caused a US$66m dent in cash flow and was responsible for a 9% increase in net debt to US$443m, despite debt repayments of US$74m during the period. The one positive is increased liquidity in Naira FX markets should aid Savannah's refinancing.
- Guidance reiterated. Total Revenue and opex guidance for the year were reiterated at "greater than US$235m" and "up to US$75m", respectively, although capex guidance has been cut from
"up to US$60m" to "up to US$30m" due to capex rephasing, unsurprisingly in Niger following the recent coup which has resulted in logistical challenges importing the necessary equipment
for its planned well test programme. A further update in relation to timing will be provided in 04
2023. A USS12m impairment was taken for the Chad assets that were nationalised - a pity, as these generated a US$60m pre-tax profit in the period.
- Renewables growing rapidly. The expansion into Renewable Energy is moving at pace with several new projects added to the development portfolio, which now totals 676 MW of projects across three countries, with the company pursuing a target of 1 GW+ of projects by mid-2024.
- Petronas acquisition. The TO of Petronas's oil assets in South Sudan is progressing, although the expected publication of an Admission Document (and the subsequent resumption of trading) has slipped to "on or before 15 December 2023". So far, these assets have not been impacted by the civil war in neighbouring Sudan, through which all of the oil is exported.
My take is as follows - I don’t think approvals is the only hold up here. Perhaps debt providers need some certainty before they finance our deal.
1) Accugas Debt re-financed. Prior to new debt package wasn’t an issue when we struck the SPA. As we had chad / Cameroon funds and revenue to rely on…………..
2) Also when we struck the SPA there wasn’t a civil war envisaged in Sudan which could threaten our ability to service the debt for the South Sudan assets.
I know that approval is a sticking point but I don’t think it’s the only reason that the admission document has not been released. Perhaps a couple of additional months of $90 plus will help drop the economic adjustment price of the asset and also time to re-finance the debt as well………
My take is we could potential use some bridging finance in the short term before we agree a long term debt package for South Sudan assets and Maddox have provided us bridging finance in the past
'gurus' still predicting 100p relist price? you know who you are!!!!!
TiL - I value and respect your research and posts - but who in their right mind would provide bridging finance to us in our current situation?
H1 production is down vs 2022 average
We are producing 25k and have an army of very highly paid employees
Debt has gone up by $40m
We’ve clearly struggled to refinance for more than 2 years
We are embroiled in a litany of legal cases
We are not guaranteed to win any of the ICC cases
Even if we do they will take 12-18 months minimum
If we win how quick will we see any financial awards
Situation in Niger getting worse as time goes by
We’ve spent $40m on M&A
Clearly SS Gov looking at other options
Nigeria are trying to take us for an additional $20m
We will hit guidance but the forecast numbers are a joke
Do we have a strong relationship with any African Government
II’s been in for 9 years at 56p and I guess circa 36p average now
What is their investment timeframe from here
We are in a right old mess mate and this is going need a lot of luck and a lot of hard work to turn around
That report this morning was appalling and I am a very unhappy holder. We have chased too many big deals too quickly before we had our own house in order.
Like I say, God forbid anything should go wrong in Nigeria and it could quite possibly do so.
Then what…
Rockyride - I am not disputing it i was just putting it out there for debate. I fully conquer there is a lot of work that needs to be done. If I was AK as a minimum KPI he should be able to re-finance the accugas dent no questions whats so ever if not he needs to explicitly say why ?
then he needs to continue with additional gas contract that utilise full processed capacity up to 200 mmscfd and so additional third party gas as well......
TiL - if you were a new potential customer for Accugas to transport your gas and you read todays report, would you pay all the connection costs to the pipeline and sign a contract with Savannah? Or would you bide a bit of time to see how the next few months work out?
On another note, how on earth can we possibly count the $44.9m for the 10% sale of Cotco as received?
From the SAVE website investment case at the start of 2021 we have through to 2037 - 'Contracted Cumulative Revenues' of around $4.3 billion based on the Take or Pay basis of the 3 customers which are Lafarge (Unicem), Ibom Pwr & Calabar.
-----------------------------------------
F/yr results in June - "At end 2022 we had over US$3.8bn of future contracted revenues with contracts having average weighted remaining life of 15 years" ie to Calabar, Akwa-Ibom and Unicem.
We are looking to refinance from the 5 year term (now down to about 2.5 remaining) but about $350m figure i think - its about 10% of the contracted revenues.
How much additional revenue (not long term fixed) is able to come through from the additional contracts beyond the 3 cornerstone ones ?
Mulak still too small but DCQ up to 2.5 mmcf/d variable but im not including this figure.
Post period end contracts (both renewed extensions & new)
CHGC up to 10 mmcf/d.
Notore up to 20 mmcf/d (though July -September 2023 ran at 26.3 mmcf/d).
FIPL - (Afam, Eleme & Trans Amadi pwr/stations) up to 65 mmcf/d.
Supplying 80% of the gas for those extended contracts = 68 mmcf/d and if you add that to the fixed contracts it just exceeds 200 mmcf/d on a TOP basis. Now not all of that gas isn't always taken, but invoiced and it has to be available but it's why i think we are at our limitations on contracts until the compression project is completed next year.
In addition -
SPDC also extended - i can't find the original mention or rns of this ?
New agreement with SHELLs SNG started August last month - size not stated.
We have a contract to buy in up to 20 mmcf/d from Amocon and i think we've been using 18 mmcf/d so given the area AMOCON is in - is this what we are supplying to the Shell contracts (SPDC & SNG) ???.
In real terms we are still reducing the net debt as said in my previous post (taking into account COTCo interest) but i'm getting to the stage of really just thinking it would be better paying off the existing finance debt asap in the original timeframe for Nigeria. (Perhaps this may have been considered in the projections from the oil acquistions and put on hold but Chad ran into problems barely 8 months ago).
Instead of financing costs and debt for Accugas/Nigeria -it would turn in to an immediate additional $100m+ net positive per year on top of growing revenues at a time of limited capex once the compression facilities are completed next year. That's cash that could pay down oil assets when combined with their cash generative power at $65/b+ or instead pay a very significant dividend.
Zeng, you should email AK on that.
I’m with RR, not terribly happy, rather worried.