Member Info for AGEOS

The recent RNS [4924X] announcing a delay in filing Annual Audited Financial Results from yesterday's due date until on or before October 15th, is as anticipated. It merely delays the release of Accounts, Management Discussion & Analysis (MD&A) and Annual Information Form (AIF), relating to the year ended May 31st 2020. Regulations require that both the MD&A and AIF do not disclose market sensitive information not previously released, so nothing significant is anticipated from this documentation.

The RNS also states “The Company confirms there have been no undisclosed material business developments since filing of its third quarter Financial Statements and MD&A in April 2020, except as otherwise disclosed in this press release or previous press releases since that date”

Those who are familiar with the “Exploration Agreement with Venture Option” 07.09.2018, between Orosur and Newmont, will know that this requires several 'material business developments' [detailed in my 24.07.2020 and previous posts] to be completed by Orosur before Newmont can proceed with its own contractual obligations relating to further exploration in the ANZA area. Since the “Pending Applications for Concessions” as defined in RECITAL B of the Agreement are paramount amongst these 'material business developments', we can conclude that these applications remain “Pending” and furthermore that up to the date of the RNS release there were no applications for drilling permits relating to those parts of ANZA for which Concessions already exist.

Those investors who may, like me, have been following OMI's activities since at least October 2018, will perhaps agree that it is unfortunate the company has failed to provide any guidance on progress towards obtaining the Concessions, relating to half of the ANZA area, and which are essential for the Agreement to proceed. I have posted copiously on the procedural, administrative and environmental [Tropical Dry Forest] issues relating to the Mining Concession situation in Antioquia, in the absence of any such guidance from the company, but so far have refrained from referring to information relating directly to the ongoing application procedure. That constraint ends with the following post relating to the ICQ-080035X, 6219 hectare, La Cejita target area, the largest of the “Pending Applications for Concessions”.
AGEOS.

In the interest of clarity, the quote detailed by 'pawnsacrifice' today at 10.33 relating to the proportion of revenues anticipated from African interests by March 2021, is from page 2 of the RAEX report at the following link, and not from today's BCRA report as some may conclude.

https://raexpert.eu/reports/Press_release_Zenith_Energy_Ltd_27.05.2020.pdf

To my knowledge this 27.05.2020 RAEX report has not previously been referenced except in my post of 16.06.2020 re “Production forecasts” in which I use the revenue proportions quoted, to calculate % production from the anticipated African interests, albeit highly speculative of course.
AGEOS

Today's rating is the third, each from a different agency as below. As 'pawnsacrifice' correctly states, that from RAEX was downgraded earlier this year to “B-”.{Rating-Agentur Expert RA ("RAEX") has assigned Zenith a downgraded "B-" with Developing Outlook debt issuer credit rating in view of the recent volatility in oil prices as a result of the COVID-19 pandemic, as well as the pending completion of Zenith's publicly announced acquisitions. Ref RNS 9th June 2020]

Zenith Energy Ltd. ("Zenith" or the "Company") (LSE:ZEN; OSE:ZENA-ME), the listed international oil & gas production company, is pleased to announce that BCRA Credit Rating Agency AD ("BCRA") has assigned Zenith a "B-" with Stable Outlook long-term debt issuer credit rating. Ref RNS 26th Aug 2020

Zenith Energy Ltd., ("Zenith" or the "Company"), (LSE: ZEN; TSX.V: ZEE; OSE: ZENA-ME), the international oil & gas production company, is pleased to announce that Rating-Agentur Expert RA ("RAEX") has assigned Zenith a "B+" with Stable Outlook debt issuer credit rating. Ref RNA 20th Nov 2019

Zenith Energy Ltd., ("Zenith" or the "Company"), (LSE: ZEN; TSX.V: ZEE; OSE: ZENA-ME), the international oil & gas production company operating onshore in Azerbaijan, is pleased to announce that ARC Ratings, SA.  ("ARC Ratings") has confirmed its final public "B+" issuer medium and long-term credit rating, with Positive outlook, assigned to the Company. Ref RNS 10th Oct 2019
 AGEOS

Fiah re “overdue results” try reading ZEN RNS releases before posting. You look less of a fool that way.

“In accordance with the Financial Conduct Authority's guidance published on March 26, 2020 regarding the extension of reporting full year results for listed companies subject to Chapter 4 of the Disclosure Guidance and Transparency Rules from 4 months to 6 months, the Company will publish its audited results for the year to March 31, 2020 on or before September 30, 2020. “ ref RNS 30th June 2020.
AGEOS
 

GM Determine facts before drawing conclusions.
Ezhik is correct.
The TR-1 Notification clearly indicates in section 2 no 'X' in respect of “An acquisition or disposal of financial instruments”.
The change in section 7 re voting rights merely indicates a reduction in % of the shares held [46.5m] due to an increase in the total shares in issue.
No shares have been sold.

Those who have read my previous posts [10.03.2019, 29.05.2020 etc] detailing Newmont's interest in Outcrop Gold's [formerly Miranda Gold] Lyra Project, which incorporates most of the area between Buritica and ANZA west of the Cauca river, will be aware of its potential significance as part of the Middle Cauca Mineralogical trend including 25km of the Tonusco Fault system.

Newmont signed an Exploration Agreement with Miranda Gold on July 31st 2018, coincidental with the OMI ANZA deal, entailing $3.6m expenditure during a four year Phase 1 and $7m, also over four years during Phase 2, for a 70% interest in a joint venture. Successful conversion of Applications for Concessions was part of this Agreement.

Newmont have now terminated this Agreement, the reference for which is on SEDAR [www.sedar.com] lodged under Outcrop Gold Corp MD&A {Management Discussion & Analysis] Report, 30.07.2020 PDF page 4 re Middle Cauca Belt: Lyra Project , last line reads “In Q2 2020, Newmont terminated the agreement and withdrew from the project.”
AGEOS.

The Cassiopeia, 07.08.2020 interview with AC was of particular interest in that the ZEN subsidiary, Zena Drilling was mentioned for the first time in the context of future activities in Africa and specifically with regard to Tilapia and the Congo. It was whilst referring to the “unfortunate experiences of AAOGC ” and the “poor performance of the drilling contractor, SMP “, that AC specifically mentioned the “advantages of an in-house contractor, Zena Drilling”{my paraphrase; not an exact quote]. He reinforced that sentiment, referring again to Zena Drilling during his summary.

For those unaware, Zena Drilling is a wholly owned subsidiary, registered in the UAE, with office and depot in Baku, Azerbaijan. Assets include a twice-upgraded A80 workover rig, an A-100-ton truck-mounted 375HP workover rig, a BD-260-ton Robotics [Italy] drilling rig with 4600m [since upgraded] drill-depth capacity [purchase cost = £2m] and c£1m worth of spares and ancillary equipment [£650K Robotics]. It also has a lease/purchase agreement in place with Olieum Services for a BQ500 2000HP Robotics automated hydraulic drilling rig with 6300m drill depth capacity. This agreement has an initial 6 month 'no leasing-cost grace period' plus operating crew.
Zena Drilling also appears to have retained at least 7 staff through the present crisis and its current operating costs are presumably met from the $1.2m which was due from SOCAR to Zenith Aran, ZEN's operator subsidiary in Azerbaijan, earlier this year.

As detailed in several previous posts, ZEN has retained its interest in the Azerbaijan Exploration Area for which its agreement with SOCAR requires, as part of the Minimum Exploration Work Programme, initiation of “a c5000m or 50m below top Cretaceous” exploration well before October 2021. ZEN would not have retained this part of the REDPSA without the intention of fulfilling the minimum work program. For that they need the BD-260 rig, which was upgraded to achieve the extra drill depth required, so as previously posted, I anticipate that rig will remain in Azerbaijan.

AC's Cassiopeia interview thus appears to imply an extension of Zena Drilling involvement into Africa and most probably Congo, with deployment of the BQ500, or an equivalent, especially if the previously agreed terms with Olieum are transferable. Tilapia, together with one or more of the MKB fields plus other potential acquisitions arising from the departure of two oil-majors, would certainly demand sufficient exploration and developmental drilling to justify such an enhancement of Zena Drilling activities, so it will be interesting to see how this develops.
AGEOS.

With today's RNS confirming a 90 day extension to the LOI with a consortium of institutional investors, this implies a considered future market valuation by those investors.
This is of course wholly conditional on completion of the Tunisian Acquisition and acquisition of the two production licenses, speculated as being in Gabon but with Angola or Cameroon as outside possibilities.

The LOI investment terms of US$2 million at 2.5p per share equates to 61.2m shares calculated at today's exchange rate of $0.76 = £1.

Assuming no further share placings between yesterday's 90m and the time of LOI implementation, the total shares in issue would be 1003m [942m + 61.2m] which, assuming a comparable adjustment in SP to 2.5p would equate to a market capitalisation of £25m.

This valuation would be based on a presumed cumulative production of c1500 bopd from all assets as stated in today's RNS and it will be the future 'market' which will determine if this valuation is considered appropriate or not. With Brent currently at $45 and rising, the prospects appear very encouraging.
AGEOS

GaryM thanks for the link to the upstream article.

Note third paragraph: “ Tilapia is currently pumping just 30 barrels per day so Zenith plans “to complete the producer well by deepening it” after licence renewal is confirmed, according to chief executive Andrea Cattaneo. “

The “producer well” refers to well TLP-101ST [ref CP Report Oct 2016 page 74] a 2km long side-track from the land-based TLP-101V discovery well; the side-track production being from the R2 Pointe Indienne sandstone.

AC's reference to “deepening it” presumably refers to 101V which when drilled in 2006 as a vertical, encountered oil in the Pointe Indienne R1, R2 and R3 sandstones, and in the deeper Mengo sandstone. The Mengo intersect was assessed in the CPR as “a gross oil-bearing interval from 1848-1886m with 13-20m net pay...and average porosity of 10%. It was quantified as a Contingent Resource at best estimate, of 3.9MMstb oil and liquids.

In assessing the Tilapia Mengo as probably being a single fault-bound reservoir, the CPR also compared it to the MKB (Mengo, Kundji, Bindi) fields, which I suggested might include the 'second target acquisition' ie Kundji (10.07.2020 post), and proposed similar developmental methods to those used successfully at MKB.

It therefore appears that ZEN's initial plan for Tilapia may be to re-enter TLP-101V, to reassess and possibly stimulate the Mengo, and then drill to intersect and test the Upper and Middle Djeno at a TD of c2900m. TLP-101V, is after all adjacent to AAOG's ill-fated TLP-103C well targeting the Mengo and Djeno via a 200m step-out, so perhaps ZEN's technical team have decided they can accomplish the 103C objectives effectively from 101V.
AGEOS

Since posting on 03.06.2020, the positive news regarding the election of Anabal Gaviriia as the new pro-mining Governor of Antioquia, those following these events will be aware that he was immediately suspended by the President following indictment for alleged illegalities committed during his previous governorship. A caretaker Governor was then appointed, appearing to throw doubt on any resolution of the backlog of mining concession applications, three of which relate to the ANZA project, which has been accumulating since 2015.

It appears that drilling and environmental permits were being granted up to August 2019 at least, in those areas with existing Concessions, as for example in the Guintar-Niverengo region of ANZA acquired by Royal Road Minerals and on which I posted details on 28.05.2020. Mineros S.A. who share the GNM Exploration Agreement with Royal Road also acquired various environmental permits during 2019 for some of its alluvial gold projects, but nothing since. It would appear therefore that if Newmont/Orosur had wanted to undertake further drilling at APTA, and Charrascala, or initiate scout drilling at Guaimarala, or indeed anywhere else within those areas for which they have Concessions (except for areas subject to the TDF protection order), they should have been able to acquire the necessary permits at any time since the 2018 Agreement was signed. That they have not done so is further evidence in support of the conclusion that it is the outstanding Concession Applications which is delaying further exploration initiatives.

This limited level of exploration activity at ANZA is reflected in the accounts which since the signing of the Agreement in September 2018 appears to show only $74,000 directly attributable to Colombia ($29,000 of the total $71,000 for the 9 months from 29.05.2019 to 29.02.2020) plus $45,000 prior to that. An additional $42,000 attributed to 'Exploration Corporate' (part of the $71,000 above) is conceivably Newmont Colombia expenditure. All other “Exploration expenditure” is attributed to Chile ($1,796,000), or Uruguay ($54,000). This Colombia exploration expenditure may relate in part to the airborne geotech surveys which I detailed on 18.10.2018.

With only $74,000 ($116,000 if the 'Exploration Corporate' $42,000 is included) of the $1 million paid by Newmont up to 29.02.2020 and a cash balance of $463,000 on that date, it appears that Orosur is relying on the Newmont cash to support a significant proportion of its 'Corporate and Administrative Expenses', totalling $1,061,000 for the 9 months up to 29.02.2020. How C & A expenses will continue to be financed after receipt of the fourth and last $0.5m cash payment from Newmont on 09.09. 2020 remains to be seen. Payments after that date are defined as being in the form of “Qualifying Expenditure” only, as I detailed on 24.07.2020.
AGEOS.

ZENGAS thanks for your reminder of the AEI Gabon report. This was posted in full by 'GaryMegson' on the 18th June, thus revealing the target fields.
I posted details of the fields in response [click on AGEOS and scroll back to the 18th] so we now await further developments.
Any further reports from AEI are always welcome.

Pawnsacrifice: our 22.5% Tunisia production is currently c150 boepd if maintained at last years level. Congo Tilapia production is c30 bopd.

Re tha Coro Italian asset, it would have cost ZEN 6.7m shares to complete the acquisition since Part 1 of the agreement “required an initial payment of £402,000 payable in common shares ….at a price of £0.060. Part 2, requiring payment of “up to £3.5m in shares” would not have come into force as it required meeting a production target of c590 boepd over a period of four successive months, a target unachieved by a considerable margin.
It is the failure to increase production to an economically acceptable level which is the main reason for termination of the SPA.
AGEOS

Pawnsacrifice you are correct in asserting that the US$5.3m is legally recoverable by ZEN from SNPC and remains so irrespective of the licence attribution. The debt is effectively between the two legal entities of SNPC as debtor and AAOG Congo SAU as creditor although it may have been via the accounts of the wholly owned subsidiary and operator, Petro Kouilou S A. ZEN's acquisition of AAOG Congo SAU includes all that is legally applicable to the latter and to its subsidiary.
Any claim that the debt became void at the expiry of the Tilapia licence on July 18th is nonsense. .
AGEOS

Thanks ZENGAS.

As I speculated on 18.07.2020 no great surprise and if ZEN fail to get the Tilapia licence then maybe one of the MKB fields or part of Kayo Sud as detailed in my post of 10.07.2020, will be compensation.
AGEOS

continuation:
The Newmont Presentation is also a reminder of the global extent and magnitude of its interests within which its continued involvement in Colombia will be managed. No one contributing to this BB has ever raised the issue of increasing anti-mining sentiment in parts of Colombia, even though it has effectively put an end to AngloGold Ashanti's 28MozAu La Colosa Mine, and has just responded to Anglo's long-planned Quebradona Mine, which I highlighted on 03.06.2020, with the protest suspension of a major ecotourism project. Medelin is the focus of an emerging ecotourism industry based in part on the rich biodiversity of the Tropical Dry Forest, the conservation-designation of which impinges on part of the ANZA project acreage and which I have referred to in several posts. Proposals for new mining ventures, in Antioquia at least, appear to have to contend with increasing local opposition despite the apparently more favourable policies of the new Governor which I referred to on 03.06.2020. Buritica may appear to have been an exception but has apparently only been possible because it has entailed expansion of a pre-existing mine. Whilst these and other issues were doubtless considered by Newmont prior to entering into the 2018 ANZA/Orosur Agreement they may well assume greater importance when the enhanced involvement of year 3 and beyond come into focus in September. It will be interesting to see if the new CEO is forthcoming on any of these outstanding issues.
AGEOS.

With regard to the May 2020 Newmont Presentation at the Bernstein Conference, alluded to by Investor81 and cited by bhargav yesterday, the interpretation of the page 27 reference to Anza/Orosur as being an 'Exploration Joint Venture' (EJV) as opposed to a 'Strategic Equity Investment' (SEI) is incorrect. ANZA is clearly an SEI whereas the Outcrop Gold Corp, LYRA project is the EJV.

The distinction is evident in use of the term 'Equity'. Newmont have an 'Equity' interest in Orosur but not in Gold Corp. If you require further evidence then research the two adjacent Newmont interests on the page 27 map. Evrim Resources, shown as an SEI, is a Mexican gold project in which Newmont acquired equity via a private placement in 2018, whilst Esperance shown as a EJV, is a French Guiana gold project in which Newmont have a joint exploration and development agreement (similar to that with Gold Corp) with CME the operator.

The page 27 Presentation shows current investments so it is io be expected that Orosur ANZA is included. ANZA is however just one of 32 SEI's worldwide and the only one in Colombia (not forgetting LYRA as a EJV) thus emphasising the global context within which any future decisions regarding ANZA will be taken.

As I emphasised in Friday's post, the failure so far to obtain contractual Concessions for half of the ANZA acreage, will if not successfully concluded before September, oblige Newmont to reappraise their year 3 involvement as defined in their contract with Orosur. Newmont's expenditure to date and their equity interest in Orosur is of course some reassurance of continued involvement but their interest will be based on a geophysical and geochemical appraisal of the whole ANZA land package for which those three Pending Applications for Concessions are essential. Newmont are very unlikely to settle for just the existing Concessions even though they include the APTA discovery, the Charrascala drill intercepts and the Guaimarala SGA (Sediment Gold Anomaly). These are just small-scale, shallow, possible indicators of the kind of deeper and more extensive mineralised systems Newmont are looking for, targets which will be identified by DSG (Deep Sensing Geochemistry) and associated geophysical data and for which Concession access to the whole ANZA region will be paramount.

To be continued

continuation:
The Pending Applications for Concessions are defined in RECITAL B (Agreement page 1) and can be seen in map form on page 21 of the ANZA NI 43-101 Technical Report accessible via the Orosur website. Those areas for which current 'Contratos de Concessiones' exist can be drilled on award of the appropriate permits. However, as detailed in paragraph three of my 07.02.2019 post, section 8g page 16 of the Agreement defines a process for integration of all the Concessions to ensure synchronicity of mineral exploration. So with half the ANZA area subject to Pending Applications and the Antioquia office of ANM (Agencia National de Mineria) not having granted any Concessions since 2015 (ref Portex Report), this coming September appears to herald a significant strategic decision by Newmont regarding continued involvement in the ANZA project. Without Concessions for all the area to which the Agreement relates, the process of integration cannot proceed and Newmont cannot meet its year 3 (and 4) objectives regarding sub-surface exploration ie drilling, unless plans are revised and only those areas for which current Concessions exist are targeted. The geological data suggests such a revision is unlikely.

I refer those who understand the importance of the above, to the Newmont May 19th 2020 News Release, Operations Update, which in the paragraph beginning “For exploration and advanced projects...” states “Newmont is currently ramping up near-mine drilling programs and preparing to restart Greenfields activities as soon as local restrictions are lifted in French Guiana, Suriname, Ethiopia, Peru, Chile and Australia. The Exploration teams have been working remotely focused on improving orebody and district scale models as well as developing risk mitigation plans to restart activities under COVID-19 restrictions. Advanced project study work for Yanacocha Sulfides and Ahafo North continues remotely.” The absence of reference to Colombia, within a list of all other S American countries in which Newmont have an interest,, is hopefully an oversight. But if not, the implications would appear to be potentially significant.
AGEOS

Any newcomers investing here would be well advised to refer to the contractual “Exploration Agreement with Venture Option” effective 07.09.2018 between Minera Anza SA BVI, Orosur Mining Inc and Newmont Columbia S A S. and pay particular attention to those aspects detailed below.

If the Agreement is accessible via the Orosur website it must be well disguised as I cannot find it. However it can be downloaded from the Canadian statutory database of SEDAR www.sedar.com search database/company documents/ Orosur Mining Inc/date of filing Sept 1-30.2018 and scroll down to 'Material Document(s)' lodged on Sept 14th 2018 PDF 352K pp 1-45. NB The Material change report lodged simultaneously, relates to the associated 'Private Placement' of $2m with Newmont.

Although there is much in this Agreement which I have referenced in previous posts, those aspects which are currently of most relevance are those relating to Phase 1 of the Agreement.
Section 5(a) pages 9/10 confirms:
That the $0.5m cash payment due to Orosur, “on or before' 07.09.2020 is the last of the four such payments due as part of the four year Phase 1 period. There are no further cash payments due in Phase 1.
That “ By the third anniversary of the Effective Date”, ie during the year from 07.09.2020 to 07.09.2021 Newmont undertakes [but is not obliged] to incur $4m in 'Qualifying Expenditure'. Note, there are no stage payment dates as no cash payments are due. Qualifying Expenditure [QE] is defined on pages 6/7 as Exploration Work which includes ground and aerial surveys, drilling etc undertaken by employees or contractors of Newmont.

Section 5(b) In Lieu Payments.This details a number of qualifications to the above undertaking, including the important proviso that “Newmont shall have no obligation to pay the amount of any shortfall (ie $4m minus QE) if ….Newmont....[failed]....to gain access to all or any portion of the ...Pending Application Property...“
I have posted several times [ 03.06.2020; 27.05.2020. etc] emphasising that half of the ANZA area, including three of the prime gold targets, is subject to Pending Applications for 'Contratos de Concesiones' [Concessions for mineral exploration and exploitation] without which neither Orosur or Newmont can undertake any work other than that defined as “Reconnaissance Exploration Work” ( Agreement page 7) ie surface exploration and no drilling. In short: NO Concessions NO drilling.

To be continued

Hepseal – thanks for reminding me of AC's appended comments to the 7th July RNS, of which I was fully aware and which I recognise on face value contradicts my speculations However, I would expect AC to maintain his positive public stance on Tilapia even if New Age were in contention for the licence, as it would still remain a highly attractive proposition for ZEN to be involved as a partner, even with a minority interest. In fact a partnership with New Age could be very beneficial as they have proven expertise and $800m in cash.

I do however accept that AC's comments of the 7th July, rightly reinforced by those quoted by 'callit' [for which thanks also], do convey a clear impression of Tilapia being 'in the bag' with the JV a definite second acquisition.
Maybe I am allowing myself to be too influenced by all the independent reports of how opaque and unreliable the licensing process is in Brazzaville. However, according to a former minister, it can be inferred that the photo of AC and the President together is all the assurance required for a successful outcome and, if so, I'm sure AC will know that!!

Contrary to what appears to be the majority opinion here, it is possible that ZEN may not be awarded an extension to the Tilapia licence and it may be that the JVA for acquisition of a 'second asset' announced in the 07.07.2020 RNS is a compensatory deal agreed at the ZEN/Ministry of Hydrocarbons meeting held on 23.06.2020.

My reasoning is based in large part on recent advances in understanding of Congo offshore hydrocarbon plays and an assessment of possible rival interests in the Tilapia acreage, although the conclusion is admittedly highly speculative.

Those who are familiar with the Congo offshore license areas will know that Tilapia intrudes into the extensive Marine III Block which occupies almost all of the shallow water Congo coastal area.. Marine III is operated by New Age (African Global Energy) Ltd with a 75% interest, the remaining 25% being held by SNPC. Since 2010 New Age has been highly successful in locating and developing new offshore oil and gas fields, including Nene and Litchendjili, in deeper water adjacent to Marine III and in consequence will probably wield considerable influence in the further development of Congo offshore and near-shore hydrocarbon resources.

Since acquiring the Marine III licence, New Age has initiated a gravity survey to supplement the 3D seismic data and has identified several substantial structural targets adjacent to and directly adjoining Tilapia. Given the proximity of these potentially significant targets to the Tilapia acreage it is possible that New Age would consider it strategically important to have operational control over Tilapia also, and would have made that interest known to SNPC and the Ministry at least as early as last year.

If this is so it would explain, at least in part, the apparent withdrawal of cooperation by SNPC in its relations with AAOG during 2019 and the so far extended negotiations between ZEN and the Congo authorities up to the limit of the current PSC and JOA Tilapia contracts which ends today, on 18.07.2020. It would also be consistent with both the timing and unexpected nature of the JVA 'second asset' announcement.

As I outlined on 10.07.2020, the stated criteria of this 'second asset' suggest a potentially significant onshore field, which with a Mengo-reservoir oil recovery rating of 80%+ compares very favourably with the Oct 2016 CPR estimated recovery rating of 5-20% for oil and 60-80% gas from the Tilapia Djeno reservoir. If the 'second asset' is a compensatory alternative to Tilapia, ZEN would, from my understanding of the reservoir characteristics, be acquiring a lower risk asset with at least equal if not greater production potential than that of Tilapia.

I re-emphasise, this scenario is an entirely speculative possibility only and should not be interpreted as a prediction. Hopefully we will acquire an interest in both assets. We await developments.
AGEOS.