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.
250p a week or two after the market digested the full scope of the MPNU acquisition, would be my personal take; +300p late 2025.
Valuation post run-up: https://i.imgur.com/O9ENA7p.png
If MPNU is consolidated at end 2024, I'm guessing (very much finger in the air) that the further payment to Exxon will be around $400m, so net debt will circa $800, therefore at today's share price SEPL's EV will be approximately $2.1bn. Free cash flow of the combined entity should be at least $500m, I hope, something we won't know until the prospectus is published. What I find interesting, given there are few attractive large capex projects on the horizon, is the prodigious cash generation and how it will be used. It all likelihood, given what we know, a portion of this cash generation will be directed to dividend to shareholders, whilst the bulk will used to accelerate amortisation of debt.
For instance, if 20% is channelled to dividends, i.e. $100m, that equates to additional 12p dividend in the pocket or 7% additional yield at today's share price. The remaining annual FCF of $400m would be sufficient to erase SEPL's debt entirely within just two years.
Move forward two years to end 2026: SEPL has a debt free balance sheet and >$400m of annual FCF net of dividends, to do what with? If it were to be entirely paid out to shareholders, it would equate to a further 48p in the pocket, or another 28% yield at today's share price.
That would be on top of the 13% yield beforehand (the current yield + assumed extra $100m), so a 41% yield combined at today's share price.
Therein lies the upside, IF or WHEN the MPNU deal is signed-off.
I think that's the key point. IF it gets signed off. It makes you wonder what terms the regulators are looking for given Lokpibiri has said it could be signed imminently from his perpective.
More delays!! Any potential new investors must be rubbing their hands together at the thought of putting money into this country.....NOT!
Maybe a better strategy here would be to cancel this deal and start investing in other jurisdictions that are investor friendly. Just a thought!! It's no wonder the majors want out!
I share your frustration but don't lose sight of the fact that all signs tell us this deal will be signed-off, so it is just a matter of time, also that this merger is truly transformational and Rome wasn't built in a day, and that SEPL is native/indigenous to Nigeria which makes a huge difference in how they are able to navigate the local challenges.
I should also repeat the point I made a while back, that the LNG for export potential of MPNU is very large indeed, which would be the longer term growth story, putting aside the prodigious cash generation and dividend potential in the medium term.
I understand your frustration in regards to today's RNS that the deal has been extended. One should note, however, it's exactly 1 year since the last extension; one could reasonably assume it has been setup for one year at a time. With that in mind, I'd say it's a minor positive that Exxon extends the deal without any changes whatsoever. I also believe, as argued a couple of posts below, that the deal is really really close. (I'm obviously biased, bless).
Thanks for your numbers ST. Looks good!
The Nigerian government want/need this deal to happen as do Mobil and SEPL.
The Oil minister publicly stated it WILL happen and soon.
Tick Tock
It appears a few folk have misunderstood the rns today , provides an opportunity for those who can...
Seplat Energy announces that it has extended with Mobil Development Nigeria Inc. and Mobil Exploration Nigeria Inc. ("ExxonMobil") the Share Sale and Purchase Agreement ("SSPA") for the acquisition of ExxonMobil's share capital of Mobil Producing Nigeria Unlimited ("MPNU") (the "Transaction"), IN ORDER TO PRESERVE the Transaction pending the resolution of certain legal proceedings and receipt of applicable regulatory approvals.
There has been NO MATERIAL CHANGE in terms of the announcements dated 25 February 2022 and 24 May 2023. The headline consideration, effective date and the contingent payment structure remain unchanged.
Seplat Energy continues to engage key stakeholders and remains committed to completing the Transaction as soon as possible.
Don't panic, the move down today has been on sales of £6,000 :))
This stock is very illiquid. Small buys or sells can have high impact in the short term.
BTW, the next dividend ex-date is in 7 days :)
Indeed, the key words in the rns are --'' IN ORDER TO PRESERVE the Transaction pending the resolution of certain legal proceedings and receipt of applicable regulatory approvals. .....There has been NO MATERIAL CHANGE in terms ....''
It’s as simple as if they weren’t expecting the transaction to come to fruition then why bother to extend it.
Getting paid handsomely whilst we wait!
Trek