Member Info for Barrelsandbonds

Try this? If it says that the maximum has been reached, then it should give you a link to re-register.

https://teams.microsoft.com/l/meetup-join/19%3ameeting_YTQ2MmM1MTUtN2FjNC00MDA3LTgzZmYtYmNkM2E3ZDA0OWYx%40thread.v2/0?context=%7b%22Tid%22%3a%22ae2d9712-2867-41fb-aa3a-1014d8db193c%22%2c%22Oid%22%3a%22f226fa2f-01b3-4c3f-afef-b43c0e487450%22%2c%22prid%22%3a%222acde86d-1789-4af0-afff-015b94f642dc%22%2c%22isPublic%22%3atrue%7d

The point is that they will refinance in local currency. Logic is: contracts are in US$ but paid in naira, i.e. naira income will keep track of exchange rate depreciation. It is reasonable to see NGN inflation as closely linked to exchange rates. End result is that revenue keeps track of inflation.

Hence the central bank chasing inflation is less of an issue. As long as they don't go much higher than inflation then SAVE's income can totally keep up. Note for example that the sizeable naira balance that they currently have *should* be accumulating at base rate as well. If we then assume base rate = inflation then banks simply get the spread, which makes sense. Equally, if it's lower than realised inflation (it currently is) then the debt is eroded away naturally in real terms. That's SAVE's idea at least, I presume.

Not denying that international capital markets are tight at the moment, but SAVE wants to raise it from local players and in local currency while having US$-linked revenue. Slightly different situation. Note also that Accugas was IG-rated according to the annual report. So situation is not as dire as you suggest, although it is reasonable to assume negotiations are not super easy at the moment.

Tiger, why do you not consider this company without risk?

Looking at that bonanza drill hole R19-745-08 (RNS from 26/11/2019), the diagram seems to say that that hole was getting close to tracking the ore body (same dip etc) rather than cutting through it perpendicularly. That 75m at 9% was down-hole, whereas true width was less at 19.4m. Still looks like an exceptional result, but would you be able to give some more colour on those numbers? If the ore body is thin, is there a risk that total volume is not so large even if grade is high?

Cornish, thanks for sharing your knowledge, it is incredibly insightful for us other investors. The exploration potential is certainly part of the story, so would like to understand those results better and if they are indeed as wildly promising as they appear.

Cornish, how much does moving such a mill cost in your estimate? $10mio could go a long way, but might not be enough given the differences between p.11 and p.12 of the presentation (i.e. they need cash flow from operations to fund the remainder over time).

Either way, those forecasts are based on just $2.90/$3.00, so either the plans will be accelerated even more (especially with the extra $10mio) or yearly post capex cash flow will be higher.

Thanks Itsriskythat - that's useful to see confirmed and it's in line with the Company's statements re growth and distribution plans as they are currently.

Wanted to come back to one thing at the GM. Since you seemed to have recorded it (great!), do you remember a statement from AK about how much of FCF would actually be available to SAVE for investments/opportunities etc?

Reason is - the cash sweep feature of the Accugas facility will undoubtedly eat up some FCF. There could be other things too. At some point he said something like "rule of thumb is 20-25%" will be available (numbers could be different). Just wondering if you caught something to that extent and what was his exact statement? Cheers

Thanks for that Porschefund - really helpful to have an accountant on board. Was there anything else in the accounts that you liked/disliked/thought interesting?

In anticipation of results I had another close look at the admission document. Thought I'd put a couple of interesting bits up for discussion - not so much to say that these are the most critical things (that'll be the guidance on cash clearly), but just because such things can be a bit hidden in a 428 page document.

Wanted to see if any comments?

p.371, 13
"The Directors are of the opinion that, after having made due and careful enquiry, the working capital available to the Company and the Group will be sufficient for its present requirements, that is for at least the next 12 months from the date of Re-Admission.
[...] For purposes of this working capital statement, the Company has formed its view of a reasonable worst case scenario using the following COVID-19-specific assumptions, which the working capital statement is therefore dependent upon:
l) force majeure clauses under the downstream GSAs with the Calabar, Ibom Power and Unicem are not successfully invoked as a result of the COVID-19 situation; and
2) the price of Brent crude, which has been significantly impacted by the COVID-19 outbreak, does not fall below $23.70 per barrel for a sustained period. "

Comment: working capital seems OK (presumably contingent on at least some payments) & so far worst case scenario is not happening.

p.372 - 15
"The Enlarged Group has received notices from two of its gas offtakers, Unicem and Ibom Power, claiming force majeure on the basis of the COVID-19 pandemic. Neither counterparty has provided the requisite information to substantiate its claim and therefore, having taken initial legal advice from external counsel, the Enlarged Group is refusing to recognise these force majeure claims. "

Comment: I suppose no news is good news on this front...

p.368 - 9.2.1a
"On 4 April 2019, the Company appointed Jefferies International Limited as its Joint Corporate Broker. [...] Jefferies International Limited no longer acts as Joint Corporate Broker."

Comment: interesting, because consensus here was that Jefferies would be involved with farmout.

p.392 - 3.1.9
"Under the Accugas SHA, AIIM Accugas has a non-transferrable option to require Accugas TopCo to purchase all of AIIM Accugas’ shares in Accugas HoldCo on any date falling within 30 calendar days of 14 November 2023 (“Accugas Exit Option”)."

Comment: also interesting, although could be totally irrelevant come 2023. I wasn't aware of this option.

p.370 - 9.2.10c
"On 30 April 2020, the Company entered into a US$15 million finance agreement with Vision Energy LTD. The finance is available for use in connection with the Group’s general corporate and working capital purposes. A redemption fee of eight per cent. per annum accrues on any amounts of the finance drawn down from time to time on a straight line basis and is payable on the date any amount of the finance is repaid. "

Comment: another financing facility..