Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
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One further thing that became clear finally last night - the reason for the FEED study revision delays. There's no money for this. SOU are caught in a horrible place and having got far too close to CalValley I suspect they know it. SOU have no money to pay for the FEED update, without which there's no bank funding. Without CalVal there's no bank funding. Better hope GL and GD have a back up plan for all this. having listened to a few calls, yesterdays was by far the worst i've ever heard in tone and content.
And here's *my* summary of a few selected points:
I think Graham has to put a brave face on things but I he understands that Calvalley has become a serious risk as the conclusion of the deal drags on. It couldn't really be otherwise. I agree with him there's no reason for Calvalley to string SOU along. However, there was an odd-sounding statement that "the delay is getting a fully binding agreement that both sides are able to sign". We can't expect all plain sailing, but is there some sort of serious tension there? He and GD were at pains to point out that it's their job to ensure that there's a plan B. That's no guarantee that there *IS* one. Same with plan B for the LNG storage. The best laid plans can go awry -- the current delays are proof of that.
There were a lot of the usual platitudes: everyone is working hard, it's not going as fast as hoped, all elements of Phases 1 and 2 are complicated and interrelated. It may all be true but it's not very reassuring.
I thought GD's answer on how the bond was going to be paid was a bit evasive. We have to "look at revenues from Phase 1 and 2 together". But Phase 2 is very unlikely to be bringing in money when the bond falls due. We have to take his word that it'll be sorted out by a "corporate debt strategy". Overall there's a lot of stuff that has to be taken on trust. Everything will be fine until it isn't.
Anyone pinning their hopes on successful new drilling is being very optimistic. There's no evidence that SOU will have the money for it under their own steam before 2028 or later. And no sign of anyone rushing to farm into Sidi or anywhere else despite years of "talks".
Here is ChatGPT's summary of Graham's presentation and the Q&A:
1. Year-end results disclosed
2. Recent progress at Tendrara
3. Approximately 65 people on site
4. Safety measures in place
5. Two layers of tank construction complete
6. 11 layers in total planned
7. Jacking system in place
8. Well rig activities pending
9. Special metalogy for completion tubing
10. Safety and control system installation ongoing
11. Equipment awaiting rig arrival
12. Phase two work focused on office-based activities
13. Bank debt negotiations ongoing
14. Equity partner search in progress
15. Gas sales agreement modifications underway
16. Questions addressed in investor meetings
17. Recording and Q&A available post-event
18. Company directors unable to trade during closed periods
19. Cash flow management a priority
20. Placing to raise funds not confirmed
21. Share price improvement desired
22. Gas delivery targeted before year-end
23. Confidence in meeting development targets
24. Supply delays addressed
25. Temporary storage options explored
26. Customer readiness assured
27. Funding and debt obligations managed
28. Potential alternatives considered
29. Moroccan state support acknowledged
30. Funding adequacy for production assured
31. Project complexities causing delays
32. Partnering deal delay addressed
33. Corporate debt restructuring strategies explored
34. Director trading restrictions explained
35. Calvalley deal negotiations status clarified
36. Interest in City license discussed
37. Phase one cash flow projection discussed
38. Feed process not yet initiated
39. Calvalley deal closure timeline uncertain
40. Continued efforts to finalize deal with Calvalley
Video is here: https://www.youtube.com/watch?v=kJhxgBBjHP4
I fed the video to ChatGPT to summarise. Here is Gary's piece:
Gary Dempster presents an overview of the company's year-end results, emphasizing the strategic evolution since 2020. He discusses the company's shift from an exploration-based model to a monetization strategy, focusing on developing discovered resources in Morocco. Dempster outlines the challenges faced during this transition, including restructuring corporate debt and resolving a legacy tax issue in Morocco, which affected investor confidence.
Despite these challenges, the company has made progress in securing funding for its projects. Vendor financing and debt financing have been obtained for phase one of the project, with negotiations ongoing for phase two. Dempster underscores the time-consuming nature of these endeavors due to complex transactions and interrelationships with various stakeholders.
Despite being in an investment phase with no revenue generation, the company has maintained capital discipline, significantly reducing corporate expenses over the past few years. This disciplined approach aims to optimize working capital until revenue generation begins from the phase one project and subsequent phases.
Key financial metrics for 2023 include a pre-tax loss of £7.2 million, primarily attributed to the ongoing investment phase. Administrative costs have decreased compared to the previous year, reflecting the company's efforts to streamline operations while maintaining project development activities.
Additionally, Dempster provides details on the company's financial structure, including its market capitalization, cash position, existing debt obligations, and financing facilities. Notably, the company has managed to secure funding through various instruments, including a convertible loan facility.
In summary, Dempster emphasizes the company's strategic focus on project monetization, despite the challenges encountered along the way. The presentation provides shareholders with a comprehensive overview of the company's financial performance, strategic direction, and efforts to unlock long-term value.