It is to my mind a very interesting and encouraging read, however I cannot see any discussion of the cash requirement.
On pages 8 & 9 the broker gives cash flow and balance sheet forecasts for 12 month periods ending in June. These show a cash outflow of US$1.9m per annum. Cash is stated as 0.9m at June 2020 and then the two succeeding years show net debt of $1.0m and $2.9m respectively. If these numbers are correct then that is the scale of financing the company requires. Also, if the run rate is even over months then they need to raise money before the end of this year.
Obviously the board know all this so the question is how will the funds be raised. There are three options as I see it. A placing, farm in or sake of the business based on prospective resources.
The figures I have used are all in the public domain, calculations and opinions thereon are my own and do not constitute advice, you should of course do your own research.
That is how I interpret the full paragraph that Aussie has quoted, yes. If you go back the 14/8 RNS you will see that it talks in terms of potentially reducing OilLR’s input to $5m, making that plus the loan the full $15m required for the drill.
Actually Jim the full quote is “... and, subject to the results of that NJOM-3 well, the facility might then be expanded to support the next three production wells ”
I interpret that as meaning if the first drill is successful then the loan might be extended to cover further drilling.
Yes I have implied that TRP may be able to borrow the $10m (NB I wrote £ instead of $ originally) in advance of drilling the well because that is what the company said in its RNS of 14 August:
“ In recent weeks the Company has been engaged in detailed discussions regarding a loan facility for the Njonji development at Thali. The proposed facility would provide up to US$10 million to the Operator for the NJOM-3 well currently in progress, and, subject to the results of that NJOM-3 well, the facility might then be expanded to support the next three production wells and platform planned for Njonji. The proposed facility would be secured by the proceeds from the PSC.“
Later in that RNS it refers to the possibility of reducing the investment by OilLR to $5m in accordance with the contract TRP has with them.
In other words the company is seeking to raise the $15m it needs to start drilling partly by loan and partly by farm in. If this is achieved then it follows that TRP’s share of the well is much less diluted than was envisaged previously. That is of advantage to all shareholders and in particular JA.
Anyway, I hope that very soon we will find out what it is to be!
As ever, opinions above are my own and not advice to others.
Not hard on you in person, hard on your attitude to certain other people Jim. They are entitled to their view even if some of us, including me sometimes, disagree.
I think you will see below at that I said at 18.27 “proven reserves”, this is the same term as you have used at 20.57. Earlier at 15.52 you referred to “production”. Which is why I made my post with the link. You know well what the difference is!
I was at the meeting in February so I know what JA said.
I disagree with you regarding TRP and GBP. The Cameroon project can certainly go ahead without reference to GBP, provided TRP raises the funds. I think it will do that and this is why I hold a substantial number of shares in the company.
In relation to Namibia, I agree that it would be to the advantage of both companies to work together, but this is a number two priority for TRP.
I have a reasonable holding in GBP as well, which is why I follow that board too. I see the issue for them being a fairly urgent need to resolve a funding crisis looming in the next six months or so (according to my interpretation of their published financials). They know and have stated that they need a financial partner of some sort in order to progress, obviously I hope that comes about as I have a stake in the outcome.
Best regards
Any opinions I have expressed above are my own and should not be relied upon by others without they do their own research.
You need to demonstrate proven reserves actually.
https://www.lexology.com/library/detail.aspx?g=71dae78e-9ab6-4307-96b0-53ea76c176ed
I am not sure what you are saying Highroller, but TRP does not have the funds to spud NJOM-3 on its own. It was at first looking to farm out 50% but, as announced in the recent RNS, JA is hopeful of borrowing £10m and therefore requiring only a further £5m from the farm out. Once the funding is in place I guess timing is down to any Cameroon Covid restrictions.
Hopefully the share price will move up on confirmation of funding!
I do not wish to take sides in this argument but I would contend that the law of supply and demand applies to stock markets. So if there was a significant unmet demand the price would rise. It has remained roughly static up the the close on Thursday and according to the trades data on this site about 306,000 shares have been bought in the week so far mostly in two trades. To me that does not indicate a pent up demand.
In addition very few shares have been sold, I read this as most holders are, like me, waiting to see what happens over the next few weeks. Most of us probably also have an eye to how long the company can sustain itself on the remaining cash.
We all know I think that many AIM market shares are a gamble, we assess the risk and place our bet. I remain hopeful that this one will come off but one can never be sure.
As you know Jim, Tower is focussed presently on Cameroon. If that all comes off and generates funds it seems to me entirely possible that they might drill their own Namibia well for that kind of payback, why would they not if they can generate the cash to do it.
JA is on record earlier this year as saying that for Tower Namibia is on the back burner.
First things first as they say!