Firering Strategic Minerals: From explorer to producer. Watch the video here.
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PART 1
Back from a stunning City break in Valencia now and pleased to have received a very comprehensive reply from Sally this morning. Personally I can’t fault the reply at all and am extremely grateful for such a detailed reply for which i have replied with my sincere thanks. I won’t analyse or comment on the words below but It would great to hear the views of the folk on here who know SAVE well - you know who you are LOL:-
1) Debt
We have known about this issue since the completion of the 7E RTO. We have also been working on it for in excess of two years with several 'expected dates' for closure missed. How on earth have we ended up in this situation whereby failure to renegotiate or refinance our current debt will seriously jeopardise the going concern of the whole company?
Why was this not completed to stabilise, underpin and safeguard the company before we embarked on our very risky M&A activities?
As you say this issue is not new, having been disclosed in our accounts since 2021. The refinancing of the debt acquired upon the Nigeria acquisition has taken longer than originally anticipated. However, as noted in our recent Half Year 2023 results announcement, we anticipate putting in place the Naira-denominated transitional facility during Q4 2023, with a term sheet already agreed with the lenders for this facility. We also do not consider that the current financing in any way jeopardises the financial stability of the company – we continue to adopt the going concern method of accounting and the audit opinion from BDO is not modified in this respect.
2) M&A
Having had a team of people conducting due diligence on over 20 potential opportunities in multiple countries, why did we decide to go in to 2 (Chad & South Sudan) of the most corrupt, dangerous and untrustworthy jurisdictions in Africa? With only Accugas underpinning the company, why did we not take on lower risk profile M&A opportunities before taking on these very cheap, very high risk deals?
What is going on with the South Sudan deal? After all the recent press speculation, why have SAVE not updated the market? If this press speculation had occurred while we were trading, the share price would have tumbled and I'm sure you'd have had to issue something. Why is this different while we are suspended?
As noted in our recent Half Year 2023 results announcement, we continue to advance the various workstreams required to complete the acquisition of PETRONAS International Corporation Limited’s energy business in South Sudan (the “PETRONAS Acquisition”) and intend to publish an AIM Admission Document in respect of the PETRONAS Acquisition on or before 15 December 2023. Whilst we do not comment on press speculation, we would note that both ourselves and PETRONAS are continuing to engage fully with the Government of South Sudan and are all working together in country as we continue to progress the transaction to its expected completion.
PART 2
We conduct thorough due diligence on all of our proposed acquisitions, whilst recognising that we operate in often challenging emerging market jurisdictions. We have a robust risk management framework in place to ensure that clear procedures for risk identification, assessment, measurement, mitigation, monitoring and reporting are aligned with Savannah’s strategic aims and the Board’s risk appetite – see pages 92-101 of our 2022 Annual Report for more details on our Risk Management.
How many cases do we have with the ICC, what is their current status and do any of them have hearing dates listed?
In relation to the nationalisation of our interests in Chad, we have three arbitrations seated with the ICC in Paris, and one seated with the ICC In London. These have been brought by our subsidiaries Savannah Chad Inc (“SCI”) and Savannah Midstream Investments Limited (“SMIL”). We will provide further updates as appropriate in relation to the progress of the various cases. However, these are currently at a relatively early stage in the process.
Are SAVE still looking to undertake new M&A in as I would like to see us sort out our core business before we take on any more risky, very expensive M&A activity? I'd like to see debt sorted, compression completed and new customers added in Nigeria before we take on any other deals. Personally I think we should work on a consolidation plan for a period of time.
As noted above, we expect to have the Naira transitional facility in place in Q4 2023. As noted in our Half Year 2023 results announcement, we are making good progress on the US$45 million compression project in Nigeria. Following the front-end engineering and the associated order of long lead items, detailed design work has commenced and is on track to be completed in Q4 2023, while startup is planned for mid-2024. We also added new customers in Nigeria and have seen continued momentum in H2 2023, with contract extensions secured with three customers, amounting to a total of up to 85 MMscfpd. Such is the strength of demand for gas in Nigeria that we were also pleased to reach an agreement with Amalgamated Oil Company Nigeria Limited (“AMOCON”) in the first half of this year, to purchase up to 20 MMscfpd of gas from them over the course of the next ten years. As mentioned in our CEO’s Letter to Shareholders in Savannah’s 2022 Annual Report, we continue to review M&A opportunities and will pursue those which we believe would be accretive for shareholders.
PART 3
3) PR
We are being given very minimal information with regards current activity and current / future strategy. We only hear from Andrew when he feels compelled to do so. Can I ask that you put together a Webcast / presentation to be delivered to PI's with a'live' Q&A and not pre-submitted questions? On this note can I also ask that Andrew speaks a bit slower and more clearly as when he's in Africa, I really struggle to understand what he says. I note that we were promised an informal night (meet the BOD) for PI's with nibbles etc which has not yet materialised. Could I please request that you put something on for us sometime in Q4?
We plan to give a detailed strategic update for all investors around the publication of our Admission Document in Q4 2023. We note your comment on the informal evening and will revert once an appropriate date has been considered.
Kind regards,
Sally
Really appreciate this info RR.
Fingers crossed for Naira facility (sounds positive) and South Sudan completion.
Cheers Rocky, so Naira debt restructure could happen anytime now excellent.
Thanks RR. Nothing much that I could add and just waiting out the timeline of the next 8 weeks. Hopefully news before then.
Thanks RR, as ever appreciate these updates.
'we would note that both ourselves and PETRONAS are continuing to engage fully with the Government of South Sudan and are all working together in country as we continue to progress the transaction to its expected completion.'
I guess they wouldn't be saying anything too different either way but the phrase 'expected completion' does suggest that it could be positive for us after all.
K - hi and good to see you here again. I like many other look for the clues on the way words are put together - but it is really hard to get 2 + 2 = 4. But from the long set of replies I posted, here are my quick take aways.
1 could be longer than I hoped for before we get to the 3 + 1 ICC rulings
2 at long last debt restructure does seem a lot closer (sigh of relief)
3 this is my main one by far. There is a sentence:- “ We plan to give a detailed strategic update for all investors around the publication of our Admission Document in Q4 2023.” I am not on about the 1st part of the sentence re strategic update! I am on about the “around the publication of our AD in Q4 2023”. I am hoping that they really do believe this will happen. Maybe it was just genuinely missed word but this bit did not have the word “expected publication”!!!
Anyway like Z says - just a big waiting game now. Maybe we will get debt RNS soon and maybe a few AI papers if they find out a few new snippets. Strange the Caltech stuff came and left like a hurricane with nothing being heard of it since. Strange old set up this African oil business stuff - but hey ho it is what it is. We could come back sub 20p or over a quid!!!
Rocky - just to reiterate, thanks very much for the update. You greatly contribute to keeping us all sane on here. The comment about the African energy arena being a roller coaster ride couldn't be truer - and being a true "save"r I often ask myself would I have it any other way? I have a theory that all save s'holders are thrill seekers as there is never a dull moment with so many dramatic ups and downs . atb
Thanks, Rocky. Very kind of you to share this.
I feel that Sally, understandably, has to toe the line here. That said, it's clear that the deal still has a pulse given her comments.
One other thing: I don't believe that the interims repeated that reference to another hydrocarbon deal closing by year-end. I may be reading too much into matters, but perhaps other deals may have fallen away.
I'm hoping that fellow poster JDC might find out the current state of Naira liquidity (in size) when mingling at the Africa Energy session in Cape Town. We'd love your insight, JD. In between glasses of Stellenbosch, of course.
Best wishes from Belgrade.
Thx for posting. Nice to gain some clarity about debt situation.
Slightly concerned about Kiir visit to Russia. I've read Russian translation of their statements on energy and potential funding of refinery. Of course Caltech announcement ...and then it's withdrawal and SSudan closer alignment with a sanctioned country must be a fluke or mere coincidence. Also multiple sackings in recent weeks in Kiir's government. Weirdly I still want the deal to close but it's a massive and risky step. 8 weeks and counting....
Enjoy reading the posts (silent) these last few years and this forum has some of the most astute observations. I have plenty of skin in this game.
cj
CYB - I will keep my ear to the ground. I overheard AK is still in Sth Sudan and is not currently in Sth Africa (yet?) - not clear if that's planned/unplanned, make of it what you will.
Many thanks also to Rocky for sharing the excellent IR post.
Many thanks Rocky; and thanks for comments JDC.
Public info seems to indicate optimism around Nigeria & friends in the know say Naira / $ exchanges becoming a little more orderly if still a waiting game - both of which one imagines is constructive to refi, or in absence thereof allows for repayment month by month (with some months delay in swapping currencies) to see debt reduce.
Share JDC’s concern around Moscow protagonist(s) but hope Petronas stay true to their SPA agreement.
Nothing much to add - watching & waiting.
Thank you, JD; appreciated.