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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Missed the call in but thanks all for the overview. Looks like we will be waiting a while until we see some sort of recovery tho.
Actually I think it is 0.77mcf/day gross sales. I have come up with a better equation that makes more sense.
[((Pmcf-Omcf) x Nmcf) x Wi)] x 365 = Nppy
Pmcf (Price per mcf) = US$10.5
Omcf (OPEX per mcf) = US$1
Nmcf (Number of mcf's sold per day gross) = ?
Wi (Working Interest) = 0.75
Nppy (Net profit per year) = US$2,000,000
We can input the values we know and rearrange the equation for Nmcf as follows;
[((10.5 - 1) x Nmcf) x 0.75)] x 365 = 2,000,000
[((10.5 - 1) x Nmcf) x 0.75)] = 2,000,000 / 365
(10.5 - 1) x Nmcf = (2,000,000 / 365) / 0.75
9.5 x Nmcf = (2,000,000 / 365) / 0.75
Nmcf = ((2,000,000 / 365) / 0.75) / 9.5
Nmcf = 769mcf/day gross sales (0.77mmcf/day)
In order to generate approximately US$2m free cash flow in Morocco from their current customer's new autoparts factory I calculate SDX must be looking to sell them roughly 0.6-0.8mmcf/d.
US$2,000,000 / ((10.5 - 1) x 0.75) = ~281,000mcf per year
This is the number of mcf's sold per year at US$10.5/mcf after OPEX of US$1/mcf and after accounting for the Government take of 25% that SDX would need to sell to generate US$2,000,000 of free cashflow net to them.
281,000mcf/year is 770mcf/day (on a 365 operating days per year).
0.77mmcf/day increase in sales net to SDX. Or just over 1mmcf/day gross.
I think lol. Anyone care to check my maths?
Another thing from the call was that if Hanut and Mosen come in successfully and produce to expectation then SDX would net after tax and after CAPEX free cash flow of approximately US$160m over 10 years. I believe that was without partner participation in the wells. Presumably 55% of that figure if IPR join in. Success may also mean they increase production by say 20mmscf/d but that would cost approximately US$10m to upgrade the CPF.
That is fair enough. So it looks like demand in Morocco is fairly fixed and at the moment at least (until perhaps they make some play opening discoveries) they won't be able to increase production and sales by other means. That sort of flies in the face of the previous investor call when I asked them if they were investigating other methods to produce and sell more. While they said they wouldn't look at bottling the gas they were looking at other potential routes to market. So don't really understand what exactly they are planning if anything at all.
From the call today before I had to drop off they are adding more sales by the end of this year once and existing automotive customer of theirs (some Chinese auto parts maker) is finishing a second factory soon and it will add approximately US$2m in free cashflow per annum once finished. This same customer may also add a third factory in 18 months or so. Not confirmed.
After that I had to drop and my recording software didn't record the call. Doh.
My understanding of call answer to this precise question was that they need more reserves just to keep existing customers supplied/happy as some have 5-10 year deals, so they are not "drilling just to add reserves"... but obviously they aren't going to turn away new customers!
Yes they are finding much more gas in Morocco than they can sell. It will take them ages to sell it all. Why are they continuing to drill for it when they can't sell it??? Do they have a plan?
The last customer in Morocco signed up February/March 2019, since then absolutely nothing in the way of new customers.
MR hinted that they had something in mind, well it is time we found out what.
If he can't produce more customers in Morocco cut back on exploration and save cash.
Unfortunately will be tied up in meetings so wont be able to dial in. I just want to know what is happening in Morocco.. Understand we are nearly back to full capacity but what about new customers? No doubt this question will be asked.
So what are people planning to ask SDX on the call? Would be good to know so we don't all have the same questions so we can really grill them.