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Thanks Miles and all good points re: the current hedging book.

In other news, I was just on the HBR website and picked up the following presentation. Has anyone seen this or is it brand new?

https://www.harbourenergy.com/media/m4khgayf/210817-investor-presentation-august-2021-f.pdf

I'm also very tempted.... my average is 101p so the current prices are really starting to lure me in. Would have to rebalance the portfolio to do it, but I think it'll be worth it long term.

Hi Jefff - to be honest I think China getting back to zero covid has been the main driver of the rebound this week. They are the biggest importer of crude by a long way, so this has helped to push prices back up from last weeks sell-off and given the markets some momentum. I do agree though that Pemex fire has helped to give prices a further lift.

Remember that HBR was trading at 430p in mid June when Brent prices were ~$73 and today they are $71, so I do think that Delta fears (i.e. the demand side of the equation) have been weighing on the SP over the summer.

I can't see the oil price getting above $80 given OPEC+ are bringing production back into the market on a monthly basis. I get the feeling the HBR management team are quite conservative with their risk management, so (as I mentioned earlier) I expect them to hedge a good portion of 2022 production above $65 to lock in strong profitability for the coming year.

Also looking forward to Tolmount finally coming online in a few months, as that should give the SP another lift.

GLA.

Looking like a low volume day while the market waits for the Jackson Hole summit tomorrow. Not expecting much to happen with the SP until after the event.

GLA.

Agreed - I was also expecting a bigger pullback after the 15% gain over Monday and Tuesday.

Very much looking forward to the update on Sept 23. I’m particularly keen to see what the current hedging strategy is for the business, as the futures market is looking quite healthy at the moment. I wouldn’t be unhappy if they locked in a good portion of next years production at $65+.

That would give us ample free cash to significantly deleverage and pay a decent dividend.

Exciting times ahead.

Strong close today. Bodes well for the week as I thought we might see a pullback before the bell.

A good summary Glengarth and wholly agree with your points, especially in relation to the speciality products such as spherical graphite. I'm extremely bullish on the business and it's my key long term play over the next few years. I'll be adding regularly as funds allow.

GLA.

Nice double bottom forming in the chart, with strong support at the 315p level. If we break the previous high of 372p with strong volume, then this should be off to 400p in short order.

Agreed it's very encouraging, as this is all about the modular build out of capacity in Madagascar and then eventually Mozambique.

The key highlights for me are the YOY revenue growth at +42% and the gross margin being increased to 57% (+9%). If you forecast the figures out you get the following:

12,000 tpa = revenues of £7.26m and gross profit of £4.14m
30,000 tpa = revenues of £18.15m and gross profit of £10.35m
84,000 tpa = revenues of £50.82m and gross profit of £28.97m

It's not clear at this stage what the operating expenses are for the company, but if you assume 20% for OPEX (which is quite high) and 19% for tax you get the following EPS numbers (assuming 91.5m shares post the Mozambique acquisition):

12,000 tpa = EPS of 0.029p
30,000 tpa = EPS of 0.073p
84,000 tpa = EPS of 0.205p

Add a conservative P/E of 20x to those figures are you get 0.58p, 146p and 410p, respectively. This rough analysis also does not take into account any revenues from TSG and the advanced products being developed. (i.e. the Al Gr Composite).

Basically, the SP is only going one way over the medium term and that is up.

GLA.

I was going to say the same thing earlier today. It’s a sea of green at the moment…

Fair enough Jinkar and let's see how things play out. Although I do think the Director deals were related to Disko post the announcement, rather than financing for Dundas. In any case, not much to do except wait for news!

GLA.

Hi Jinkar,

It was the way that Bo phrased his response to the question in the interview. I believe he said that there were still some outstanding criteria to work on and it was looking like they had a good “set up” with various banks and export credit agencies.

That suggests to me that the negotiations are not as advanced as we would all like them to be. Also, most of Europe is currently on holiday at the moment so not much will be happening until mid-September.

So two and a half months of further negotiations from mid-September to December feels about right to me.

While it might be a straightforward mining operation, the financing package will likely be quite complicated. This is due to Bluejay being unproven as a mine operator and therefore the banks will be quite cautious in their approach. This can drag out the negotiations as the lenders will keep adding conditions or seeking further clarifications on the project plan, capital expenditure, etc.

All my opinion obviously and I would love to see some news soon; however I do think the end of the year is more realistic. Maybe an early Christmas present for those invested…

GLA.

In terms of the financing for Dundas, the below video is worth a watch from 8:20.

https://youtu.be/0Gkyl5y_K0k

It’s clear that the discussions are still ongoing with various criteria needing to be met. Even though Dundas is a simple mining operation, Bluejay are unproven as operators and the funding partners will want to go through a rigorous process before issuing binding terms.

I wouldn’t expect any news on this until December at the earliest, if not the new year.

The Director’s know it’s oversold and extremely cheap, so they are buying in accordingly. It’s a good sign.

There's a lot of fear in the market at the moment, so it's worth remembering a few things which are specific to HBR:

1. The business has a FCF breakeven oil price of $35 per barrel. Even after this weeks price drop, we are printing money at current prices and reducing debt every month.
2. Even if prices fall further, we have a significant amount of production hedged at $58 which provides a floor in terms of earnings.
3. HBR is not a supermajor with huge levels of production to sell into the market. Current guidance suggests we will produce between 178-185k boe per day for 2021, which should easily be sold into the UK and Europe given Covid is largely endemic now with minimal restrictions or lockdowns.
4. We are currently hugely undervalued given the merger and creditor shares, etc. The lack of consolidated financials will also be weighing on the SP; however this will be rectified on Sept 23 and will give analysts some numbers to work with going forward.
5. The lack of a dividend means any future announcement on this topic will see the SP rocket.

In my view, HBR has the best short term potential out of any oil company on the LSE.

All IMO obviously and DYOR.

I’ve sold out after booking a 40% profit this week. The SP feels a bit weak now and the volume is dropping every day. Don’t get me wrong, there’s more to come here but I can see a gradual price drift downwards as we wait for more news. Volume has also started to reduce in the US which doesn’t bode well in the short term.

This is a very interesting long term play, but I do think new investors should wait for the pullback before jumping in.

Funding for Dundas is the key here which will unlock the major SP move.

Feels like the beginning of a healthy pullback after the rapid rise this week. At some point the stock runs out of buyers and people that bought earlier start taking profits off the table. This will need to happen if we are to push up into the 20's.

GLA.

Only natural for some to take profits after the gap this morning, although I suspect the Americans will keep bidding this to +20p over the next few days.

Battery metals, EV’s, Gates, Bezos. Widespread media coverage. Relatively low market cap. It’s got all the right ingredients for a sustained uptrend.

I've been bullish on Bluejay for some time now and this only reinforces my view. As most on this board are aware, the critical near term focus has to be getting Dundas into production and generating sustainable revenues. Once the mine is up and running, Bluejay should (hopefully) be in a position to self fund its pro-rata share of Disko Stage III after Dec 2024.

Hopefully the results at Disko are promising and Stage II is completed earlier; however giving Dundas time to generate cashflow can only be good for current shareholders, as this should eliminate the need for an equity raise to fund Disko Stage III.

Difficult to predict where the SP will land if both projects come off and Bluejay retains its 49% stake in Disko, but I wouldn't be surprised to see between 50-100p given the race for battery metals this decade.

Onwards and upwards from here and looking forward to the key RNS re: financing for Dundas.

GLA.

I've been thinking more about Phil Kirk's share purchase on Friday and how it provides quite a strong buy signal to the market, particularly in relation to the outstanding PMO creditor shares.

The board and management team know the business better than anyone else, so if Phil chooses to purchase 100,000 shares at 327p then he must believe that there is limited downside from that level. Otherwise, why not just wait for more creditors to sell and push the price down further?

While there is good news around today and the market is in a positive mood, I think many institutions would have been waiting for a signal such as Friday's to really push the button on this stock. I'm anticipating a strong performance this week as a result and hoping for £4 by mid-month.

It's also notable to see the rise today on the back of a -1.13% movement in Brent prices.

GLA.