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On the production side of things, which is of course the big question for the Q1 update, the facts are as follows ;

Q4 Vametco Update RNS dated 30th Jan 2019.

Q4 production was 657 mtv with 71 mtv not sold during the quarter.

Three key quotes.

Q4 production - "Production was impacted by an unplanned maintenance and repairs programme in Q4 at the refractory and cooler girth sections of the plant."

"Vametco's 2018 production of 2,560mtV was impacted by a total of 37.5 days stoppages and unexpected operational challenges. An estimated 230 mtV of production was lost due to these unforeseen events. The total potential production for the year would therefore have been approximately 2,800 mtV."

"In October 2018 the Company, with the assistance of an independent external consultant, initiated a detailed diagnostic review of the Vametco plant performance. Following the completion of the review in December 2018, the Company commenced an operational Transformation Programme to enhance Vametco's performance."

What that all strongly indicates is that current production prior to implementation of the transformation programme, had the ability to deliver monthly production above 657 mtv (when shutdown free), with known quarterly production able to average circa 700 mtv, as a minimum.

However, the devil is always in the detail.

The Q4 update states ;

"An estimated 230 mtV of production was lost due to these unforeseen events"

In the Q2 update from 22nd Aug 2018 the company stated ;

"Vanadium production for Q2 2018 was 629 mtV in the form of Nitrovan®. . . . a decrease of approximately 13.9% relative to Q1 2018 (Q1 2018:731 mtV)"

"The production decrease was due to (a) planned kiln maintenance programme, (b) the installation and commissioning of the mill and crusher as part of Phase Two of the expansion, and (c) work stoppages as a result of unprotected industrial action."

What that clearly says is that the kiln maintenance programme at least was planned, although sense says the commissioning of mill and crusher were also planned.

Therefore, a good proportion of the stoppages that led to a 100mtv reduction in production in Q2 were not "undforeseen" and so were not counted as part of the lost 230mtv noted in the Q4 update.

What that lends itself to is a plant that has an end of 2018 pre transformation programme capacity of higher than 700 mtv, a theory that is backed up by the Q1 731mtv result, which was prior to phase 2 installation and stoppage free.

This is further supported by the revised guidance of 2,600-2,650mtv falling short by between 40-90mtv (Full year 2,560mtv). That would place Q4 at 700-750 mtv.

@Raz10 Good post and good morning everyone.

There are many opinions flying around in what is a charged environment here at the moment, an environment that is not healthy I would add.

Whatever the take on the events that we are witnessing and whatever reasons lie behind the latest fall in the SP, there are cold hard facts out there that do not change.

1. The average Eurpoean mid price for FeV for the BMN Q1 came in at roughly $79.80 per kg.

This is based on the fact that BMN state clearly in every update that ;

"The vanadium price is based on the FeV mid average price for the period, published by Metal Bulletin. Vametco realised price is based on the prior month's average price."

So the actual average price employed by BMN in their quarterly update is merely a guide to the position as it was witnessed during the physical quarter. The realised price has to be calculated by following the actual prices, which I have done for a several years now.

The realised price will on average be a little lower than that because that has been the general trend throughout the last 18 months or so, although there has been at least 1 quarter where it came in higher.

Employing my average achieved discount for 2018, we are should be looking at around $74-75 per kg.

2. The Eurpoean FeV mid price only moved below $70 per kg during week 2 of Q2, which was w/e 15.03.2019. That is just 5 weeks ago, and even then it only dropped to $68.50 per kg during that week.

It will highly likely remain slightly below $50 per kg this week but even then we are talking to date, just 6 weeks from the 20 weeks we have had of 2019 so far.

Note 20 weeks is 16 weeks of 2019 + the proceeding 4 weeks of 2019, which make up the "based on the prior month's average price" part of the start of Q1. I trust that is clear for everyone now.

What FeV prices do in the future is as yet unknown although there is evidence of price stability and perhaps even a small uplift in China already, be it minor. The evidence points to a recovery but that is opinion and not entirely based on fact.

In the meantime the facts point to a strong Q1 price, which is at least in line with the 2018 average and a YTD average (20 weeks from 52) of over $72 per kg.

That is the reality. So for investors to be punching $50 per kg into their calculator and multiplying it by last year's achieved total, is incorrect and creates the wrong outlook for BMN.

Always always DYOR

@Faramog With all due respect, if the BE plans had been fully unveiled last year then FM wouldn’t be talking about it in an interview in February this year. What he is referring to is not the plan but the details of the business model and why they are so excited about it, which I take to be ownership and profitability, which has substance and the market can measure.

We forget all too easily that whilst we know they have plans for an integrated model, we the market, know little of its ability to make money. The last few days have proven both through the SP falls and the commentary I have read, that there is very little value given to that model at this stage even though we know it is being implemented. The commencement of the unveiling at such a level will start to change that.

PS the same applies to the Lemur project, which at completed BFS stage for both power and mine, and financial closure on route, will also play its part given the NPV that the company has been touting.

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We will I am sure find out soon enough but one thing is for certain, BMN believe in the future market so there cannot have been a change of heart. They have achieved far greater cash flows than they would have planned for in 2018, so the capital is there. So it must now be about timing or that the investment is tied to Vametco and the recent issues there have perhaps delayed any announcement.

However, FM felt confident enough to talk about these plans being the story of 2019, so they are very much on for this year still.

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Hello Alastair.

I believe the deals and plans necessary to achieve the stated expansion are already in place. FM is not the type to talk about plans being unveiled in 2019 at a time when those plan are finalised. Its not good business sense to openly talk about these thinsg until sufficient dotted lines have been signed. So for me it is all about timing.

My second thought process on this is that Vametco is central to the plans to take production to 10,000 mtv, even if it cannot handle the entire expansion.

One key update that keeps rattling around in my brain is from the Q4 update ;

"The diagnostic assessment highlighted that additional targeted investment is required for the kiln, the leach and crushing circuits to reach Phase 3 capacity. The Company continues to explore several improvement initiatives to further increase production capacity to 5,000 mtV.

During 2019 Vametco will continue to progress environmental approvals for Phase 3 of the multi-phased expansion project. In addition, detailed design work and capital estimation will commence with a view to construction commencing in 2020."

That whole section of the update doesn't make sense unless further expansion is being planned for Vametco that is separate to the original phase 3 scope. On the one hand they are saying that the targeted capital investment requires planning and decision making prior to a construction start in 2020. Understood. However, then what are they exploring to "further" increase production to 5,000 mtv.

Then we have the comments made by Chika Edeh in her interview in November 2018 plus, the 2 interviews FM gave with Businesslive in S.A. where by the author documented a $100m investment in a new kiln at Vametco.

Given the assured stance that the company is taking, perhaps it is because the expansion is centred around the production facility that they already own.

This may well be the reason why the Vametco and Brits resources are so important. Why too the transformation programme is now key, because they need to get the facility operating at 3,400 mtv before asking greater demands of the facility.

BMN have for a long time stated in their presentation "Quality brownfield processing infrastructure in close
proximity to Bushveld deposits"

Well Brits is right next to a quality brownfield asset called Vametco.

In their 2017 Annual Report page 14 they the key line was ;

"Through its expansion initiatives at Vametco, as well as targeted brownfield opportunities, the Company is looking to expand its production to 5,000 mtV by the end of 2019 and to more than 10,000 mtV in the medium term."

I always thought this meant another acquisition but there is an argument to turn this around and say that further opportunities at Vametco, once costed and planned, could actually turn out to be these targeted brownfield opportunities, and with Brits there is plenty of space available to expand upon.

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The same pattern is now forming once more. The presentations and annual reports talk of 10,000 mtv and yet more brownfield acquisitions, just like they did in 2015 prior to Vametco.

Back then, just like now, investors had to do their own legwork and work out what that plan was and act upon it. A good few of us did and the rest is history.

It is the very same situation right now, and for whatever else FM and his team are accussed of, you can be absolutely sure that the deals are very real, that the BOD is likely working very hard to achieve it, and when it comes it will be inventive, clever, and will have the very best interests of all BMN shareholders in mind.

So when FM says the growth plans will be unveiled in 2019, it is because he has his target, he likely has his deal, and it is about timing and timing only, in what is a very long and detailed plan.

When BMN announced their deal with Yellow Dragon to acquire Vametco on 21st April 2016 but only take that 26.6%, they already knew how they would achieve the 74% that they eventually achieved in Sept 2018.

That is the sort of thinking that needs to be considered becasue that is what I am personally backing until i see a time when it isn't worth backing anymore, or my time is down with this investment world. Those that have been here a long time know this and beat the drum about it. Perhaps now those that haven't been quite so long, can at the very least appreciate it a little more now.

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The trouble with time is that it can make one forget what has come before. It can make facts seem fake or forgotten and old experiences take on a completely different stand point.

There will be a good many investors here that weren't around when Vametco was announced. Then there will be those that were here but for who the details have become a little hazy.

I am very fortunate to say that i was there and do remember some key details that are worth relaying once more today, given we find ourselves in a similar position once more.

On 21st April 2016 BMN suspended its shares prior to the announcement that the company was entering into an SPA to buy Vametco for circa $17.5m

The deal was structured such that BMN took only 26.6% and remained below the reverse takeover threshold, which would have triggered a suspension that would have lasted over a year and meant that the front capital raised to pay BMNs £1.8m share of the purchase price, plus capital raised to fulfill BMN financial needs until the asset was under ownership and producing cash flows, could not then be sod by those willing to lend but requiring to sell said shares in the market. A necessary evil at the time that brought triggered the gains seen in 2018.

The purchase required a regulatory process to be conducted including the competition commmission of S.A. and a notorious section 11 changes of ownership, plus of course the negotiations with Evraz. All of which could not be calculated prior to th suspension and thus would have made a raise prior to a long suspension all the more tricky and likely far more oppressive.

The SP at the time of suspension was 2.4p. By avoiding a reverse takeover the company fell foul of AIM and received a slap on the wrists and a fine, for which they were criticised by some investors who didn't know the true reasons why they did it in the first place.

Just like with protracted Lemur takevoer to secure near on £6m in cash and the Brits project (a project BMN made Lemur buy with their own cash), the BOD didn't have to work that hard. They had very little skin in the game so dilution was of little concern to their pockets, but they did it anyway.

Prior to the 21st April suspension the only indication that shareholders had that brownfield was on the cards, was the constant message that the company was looking at brownfield assets, communicated in presentations and annual reports. As for the SP, well it started 2016 at circa 3.1p and essentially fell right up to the suspension. So the suspension was a shock that nobody was expecting.

Why does this all matter? It matters because it helps demonstrates what this BOD are really about and what they are truly focused upon and are capable of achieiving.

That they have proven that they work hard for their shareholders even if they don't alway keep them up to date, and sometimes there is very goo reason for it.

@Orange88 And so rolls the sentiment of a share day by day, week by week.

There is a brownfield acquisition/plan sitting in the wings somewhere here and it is like a ticking time bomb, that could completely up end all theories about just how badly this management team is doing and how much they are letting their shareholders down with poor communication etc etc etc.

FM doesn't say very much much but he generally does what he says he is going to do.

In his interview of Feb 2019 he says about the communciated growth plans (expansion to 10,000 mtv) that ;

"how we are going to achieve that is the story of 2019"

Plus the company expects to "outline in a lot more detail the business model for BE, so the market can start to get a sense of why we have as excited as we have been about the energy storage opportunity"

"That is 2019"

He made those statements in February. That's post Vametco diagnostic report, reduced production, and delayed phase 3 expansion. It was also post Eskom announcing that the BESS Project tenders would be released mid year rather than march, as intended. Yet he still made those remarks.

Nothing has changed since then and the Vametco Q1 update is now just around the corner, so perhaps, just perhaps, that will signal the start of that communication, and we will see sentiment around here change once more.

https://www.youtube.com/watch?v=2R9wfyV6Z8s&feature=youtu.be

@Expert10201 I believe you are doing the size of the prize here a great disservice by setting the bar over the next 5 years so low at +40p

A 10,000 mtv fully integrated vanadium producer with access to the entire value chain that includes large scale energy storage mandates, will in my view be worth considerably more than £500m.

At 90% of name plate capacity (9,100 mtv per annum) BMN would only need to secure $11,800 per mtv in EBITDA to achieve the exact same full year results that 2018 saw ($107.5m).

With increased production comes lower opex costs, so I would think we are talking absolute maximum $30 per kg to achieve that result.

At that sort of level VRFBs are going to be in great demand but that doesn't actually matter because it is the level of demand that BMN can muste with their own VRFB projects that is all that truly matters. Thus $30 per kg looks very light and we are only talking about the value gained from BMN the miner. Not BMN the electrolyte producer, electrolyte leaser, VRFB developer etc etc.

With the current set of plans in place, 40p for me will be a long way from the reality.

I would encourage those interested in Chariot to review the recent CORO acquisition of 15% interest in the Duyung field near Singapore.

CORO have paid $4.8m for a 15% interest in a field that has current has (independantly certified) 2C gross resources of 276 BCF (41 BCF net to CORO).

Chariot have acquired Lixus with Repsol confirmed 100 BCF reserves (75 BCF net to CHAR) and independantly assessed 2C gross resources of 307BCF (230 BCF net CHAR) for zero cash outlay.

Slide 13 describes the value proposition for CORO shareholders. With their 15% of the 276BCF gross resources signalling $60m of NPV at 10% discount when prices of $9.25 per MMBtu are achieved, against ;

Development costs of $0.90 per MMBtu
Opex $1.25 per MMBtu
Average gas price $9.50 per MMBtu

Chariot employ SDX Energy supported gas prices for Morroco of on average $9.50 per Mcf

Note - The conversion is about 1 MMBTU = 0.973MCF so technically one could argue a higher price than those stated by CORO.

The CORO Duyung development at 276BCF and $0.90 per MMBtu would have a build cost of $250m but involves a 16km tie back to an existing gas pipeline rather than CHAR 40km tie back to on shore plant (still to be determined), and 4 well have been drilled against CHAR 1 with 1 further appraisal planned.

However, this level of capex begins to add considerable more weight to my circa $360m capex estimate included in my post of 12.04.2019.

The CORO Duyung development has a further 350BCF of low risk further upside, which is not included in the valuation.

CHAR are currently looking at further 116BCF of low risk upside but have CPRs for a combined 400BCF on the Anchois satellites and another 800BCF on the other block prospects.

So we are talking CORO 626BCF against CHAR 800BCF rising to possibly 1700BCF.

CORO at $60m NPV for 15%. So what sort of NPV can we expect for CHAR at 75% ownership of a bigger asset with no acquisition costs. Yes there will be greater capex becasue of the distance to shore but CHAR has up to 60% of equity in the license with which to play with before they even reach the CORO level of ownership, and one can make a very strong argument for the at the very least, the same level of NPV being achieved, but likely considerably higher given the size of the asset at Lixus and the likelihood that they can retain more of the asset upto first production.

But even at $60m NPV we are talking 12.6p per share valuation for the Lixus license, given we are still sitting at around current cash levels.

For every 5% more they retain of the asset we can add a further 4.2p onto that valuation.

Some investors have bemoaned that CHAR may "give away" a condierable amount of the Lixus license. Well I would gladly take 20% and a free carry through full appraisal because its a 4 bagger from these levels.

https://www.coroenergyplc.com/media/2149/coroenergy-ip-duyungpsc-2019q1.pdf

@Nickel_Investor Now that things have settled down a bit. I just wanted to offer a view on your comment there.

According to SP Angel the 2018 EBITDA of $107.5m equates to free cash flow of $94.5m of which BMN hold approximately $70m.

Q1 realised prices should come in at around about $74 per kg. If the plant is able to produce and sell the same as it did in Q4, then at 2018 EBITDA percentages conversion of 56%, Vametco will achieve EBITDA of $41,400 per ton, which would equate to $27.2m. SP Angel have a free cash flow conversion rate of 88%.

Thus Q1 would demonstrate circa $24m in further free cash flow of which BMN would hold circa $17.8m

That would give the Vametco asset upto $118.5m in free cash flow and BMN as an independant entity upto $87.8m with which to invest in their medium term plans.

Those plans are demonstrated as being in the region of $170m over 3 years and contain an electrolyte plant, an expansion to 10,000 mtv, a new Brits mine and a move into large scale energy storage mandates.

As of the end of Q1 2019 is minimu over half way towards its investment goal through available cash flows and circa 65% there when considering Vametco and Vametco BEE partner involvement.

Considering the impact that those plans will have on the BMN business,(bearing in mind that 10,000 mtv would add circa 3 more current operating level Vametcos), and the fact that it is being paid for out of cash flows, there is an argument to be had that there is considerable under valuation of the potential that BMN is demonstrating with its plans.

Unlike other potential new pure play vanadium producers, BMN doesn't need to raise cash to execute these plans nor a long build cycle to build said mines. Admittedly they need to show the market how and when these plans will happen, but with the electrolyte plant at least there is a clear path to an early 2020 start and a circa $10m capex cost.

However, it is now about the timing and communication of these events not will they happen or can they be paid for. The level of profitability of BMN in 2019 may now be in question but that question completely ignores just how much cash 2018/Q1 2019 has given BMN at a time when it is embarking on what is highly likely its most expensive capex investment to date.

When the time is right, that will all come out and then the thoughts may turn to why investors didn't take shares at 27p when they were available back in April 2019.

@Jaggers the RNS from 22nd Jan is very clear when it states ;

“Following these wells, a further two appraisal wells will be drilled within the Indico discovery from the Indico pad, with the objective of building production and refining resources and reserves estimates.”

I trust this helps.

@Stroga Yes I did see that so again another sign of assuredness in the mine design and plan but again well ahead of the time when that sort of information should have been known.

The 4th April 2018 RNS states ;

"Work for the purposes of updating the resource estimate in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ('NI 43-101') will commence in Q2 2018 and will be followed by mine design and mine planning activities."

The updated resource was released on 9th Oct 2018. It is this resource upgrade that was clearly being filmed in the video, with Dr Mueller on site talking it through with the geologists.

The discussion about the 2.5km ramp access to the mine also relayed a confidence that the mine design methodology was further advanced than the April update indicated. With mine infrastructure ready to be upgraded it points to a reduced capex and perhaps timescale to first production, with works on site stated in the film as commencing in 2019. Again interesting given the path to the Q2 feasability study was at that time already known.

All in all very interesting and there is evidence there that the Zinnwald FS may just be the catalyst to re-ignite a more solid re-rate ahead of the Sorona funding news.

@Stroga Firstly, thank you for posting what was a very interesting and insightful documentary about the Zinnwald project. I live in Germany and speak the language so was able to get a lot out of it.

It was interesting to see just how co-operative and supportive the major of Altenberg was and how much the local workforce would like to be once again involved in a local mine.

Given the video was published on 07.08.2018, I found it interesting that Herr Mueller was so confident about the project's ability to deliver profitability at the then current market price of lithium carbonate of 10,000 euros.

His words were along the lines of "they know the structure of their project costs and that the production costs are significantly below this market price"

He also stated that at the then 96,000 contained lithium resource, the project had 500,000 tons of extractable lithium carbonate. Perhaps he was being a tad presumptuous but if he wasn't then the pending feasability study for project is going to show a very profitible venture indeed, which for me is not in any way included in the current valuation.

Thank you once again.

@Drowningman I was sorry to read your post this morning and can only imagine how you must be feeling right now. It can be soul destroying to see such large figures wiped off your investment/pension account and undoubtedly has you questioning your decision making and confidence in your investment choices.

I cannot comment on your reasons for remaining invested here, only offer my own thoughts instead.

I am not about what BMN does in 2019. I am what they will achieve in 2020 and beyond. The current V price is clearly taking centre stage right now and is driving some investors to sell down their positions and that is understandable.

However, the current price of V (FeV) only truly comes into play as far as it affects the current profitability and the company's ability to generate enough cash flow to execute its plans for the medium term. Changes in profitability of course affect near term SP performance but it does not necessarily affect long term reasons for being here.

Q1 is a key update for several reasons but if it demonstrates sales of circa 650mtv (circa Q4 production), then at an average realised price of around $75 per kg (Q1 average FeV price $79.80), Vametco will deliver its partners around $28m in EBITDA. With the success of 2018 that will push BMN and its BEE partners well towards its overall communicated needs for the medium term.

Those plans are set to deliver a move to 10,000 mtv, an electrolyte plant, an electrolyte leasing model, large scale energy storage mandates, and cheaper lower costs ore from Brits.

It is that set of plans that will release the real value here, be it that it will take time. Perhaps 3 years in total. However, it is the fact that it is achievable, that the money is near as damn it there to do it, that they can achieve it through brownfield and not greenfield, that are the key fundamentals.

I have no idea what your plans are but if you decide to remain invested and believe in those planned actions coming to fruit, then you have every chance of seeing several multiples of your 40p entry price because with the cash secured, BMN has limited need to dilute, and the value that these developments will bring will drive a valuation and interest that will consume the current valuation that we see, even at lower prices of FeV.

It should not be forgotten that 10,000 mtv would make BMN the 2nd largest producer of vanadium in the world, and they can achieve it through organic and brownfield acquisitions, which nobody else right now can boast.

I wish you well through what is a tough and testing period in BMN's and its investors development but for me the really big rewards have to be earned. Times like this have to be suffered and conquered, and it is done by focusing in on what is key for the long term health of our investments and not what the world is telling you is true right now.

Apologies Bigsmoke, the last section got cut off there.

Let me throw it back at you. For all the negativity you currently wish to express, do you believe that the SP is fair value given the anticipated current production, current Brent pricing and the upcoming appraisal drills at Indico?

And I would deliberately park 3rd party oil offttakes and Platanillo workovers, because they are difficult to measure right now.

Let's not forget that the next Indico appraisal is likely to test the OWC level and thus push those reserves from Indico 1 higher. The market knows that and isn't stupid.

@bigsmoke Sorry but what sort of phrasing would you have me employ. I cannot say for certain that these things will come to pass so i have no right using language other than that which I have employed.

The CP0-5 appraisal wells at Indico are just that. They are low risk but not certain, hence my phrasing "highly likely."

"Could well see" is directly linked to that. It is not wishy washy it is respectful of the situation and the chances of success. So with all due respect reciprocated you are in my view being just a tad unfair.

As for the LTIP plan, it is not my greatest concern right now because we are talking about 1.5% dilution and it is being discussed at a time when the SP is at its low point and so the reaction is far naturally but inappropriately stronger from PIs.

As for the "Friday's OBA slipping again" line. What would you have me say? It is down 200 bopd and still flowing at +3,700 bopd per day. Am I to panic now?

With Indico at choked production of 4,932bopd (1,480 net) and Mariposa at a consistent 3,150 bopd (945 bopd net), we are still talking 6,125 bopd net production as of Friday 12th April. Do I believe that is the actual figure? No. But it is yet another indicator that production is above 6,000 bopd as my earlier post stated.

Hence my statement in my earlier post remains in tact when i said ;

"clear evidence that overall production is now above 6,000 bopd with further Platanillo workovers and the 2 appraisal drills at CP0-5 highly likely capable of adding significantly to that total."

One successful solid appraisal drill at CP0-5 in Q2 + some minor additional workover production at Platanillo and that figure should come true.

So nothing wishy washy, just a respectful use of language to back up an argument that is 'highly likely' the reality, which should not be allowed to be diminished by the current depressed SP.

Let me throw it back at you. For all the negativity you currently wish to epress, do you believe that the SP is fair value given the anticipated current production, current Brent an

Apologies, before I am jumped on the RSI is just above 30 (slip of the finger).

@Bigsmoke I disagree.

oom and gloom aside and the fact that I too believe that the drill programme for 2019 is under threat, there is clear evidence that overall production is now above 6,000 bopd with further Platanillo workovers and the 2 appraisal drills at CP0-5 highly likely capable of adding significantly to that total.

Q2 (further Indico choke back aside) could well see end of quarter production above 7,000 bopd. With Brent now at +$70 the excuses for the SP to be hovering at 13.5p with an RSI of circa 20, are fast running out.

Furthermore, we have the 100kboe not sold in Q4 2018, which is also skewing the figures somewhat and the better production levels (i.e. Q2) are kicking in when Brent is at its highest levels.

There are things I don't agree with and I would like improved but those questions do not come into play at 13.5p because it is a completely false position, which given the correct spark will adjust accordingly. In the meantime for me the current SP is being allowed to fester in investors minds and that is leading to an overreaction based on negative sentiment. That can all chnage in the flash of en eye.

The enclosed document below is a cost analysis for subsea infrastructure development. It has a lot of detail on the sort of considerations needed in establishing the capex costs for such a project as Chariot is proposing.

Pages 188-191 demonstrate a 2007 case study on a typical subsea development with manifolds and subtree assemblies like the one Repsol and Chariot has now outlined. Total capex is set at $169m

However, the study only allows for 15km of flowline costs and umbilical cords aren't long enough. Plus this project requires 4 subsea-trees, where as there are 3 in the case study (+$4.5m)

I have made these adjustments and the adjusted capex figure on that simple basis comes out at $315m.

If we apply inflation to this figure then we are at $385m.

However, the case study is for an installation in deep water at + 1,370m where as Anchois is in shallow water at 388m.

Plus costs for this type of work are reducing as the technology has matured over the last 12 years or so.

Therefore, i would feel safe reducing this figure by 15%.

That gives a total capex of circa $330m

To that we then need to add in 2 more wells to achieve the 4 well phase 1 development scheme. So another $28m although the development plan for Repsol does show that they could achieev production from 2 wells.

Total cost now sits at circa $358m

That would deliver a 90MMcf phase 1 development scheme of 16,000 bopd equivalent but at the current lower end $7/mcf netback, that would deliver $230m in netbacks for phase 1 and payback in circa 18 months, and plenty of cash to drive the second phase 2 90mmscf development.

I recognise that the calculations are not accurate but i am merely seeking to de-risk the play and establish achievability, and from what i can see the Morrocan as market is needy enough and has such excellent pricing, that such a development at Lixus is very much on and partners won't be hard to find.

http://ocw.snu.ac.kr/sites/default/files/NOTE/6.%20Subsea%20cost%20estimation.pdf