Member Info for CrustyPete

Unlikely yes but no matter how unlikley, yet another reason to hold AEX over SCIR for Ntorya and Kiliwani. SCIR (under NR) made a great selection with He1 and would be in an even worse situation had they not done so but they are even running out of mileage on that now and need He1 to bounce significantly to increase the value of the remaining holding above the current £0.5m.

So you would rather have $35m in carry over an extended period, that has to be spent on a very specific project, with (at the time) no known completion date, no guarantee of the drill completing successfully or the govt delivering on the GSA 25 dev license etc than cash in hand?

Even ignoring the "risk" element, if you had cash in hand you could choose to spend it on anything you want, including, should you wish to, the named project above, but in the meantime there is the "time value" of the cash, the opportunity cost (how much would AEX have earned of that same $35m had been spent on KN1 remediation, or KNS development?) , accrued interest etc, etc....

Yes the ROI on $35 of carry may well over time compensate for the loss of immediate cash value, but equally there is no guarantee that AEX would ever live long enough to see that value. Remember the old adage "a bird in the hand.... etc".

If we had received the cash at the time of the farm out we could have used it for other projects BG - who knows, Kiliwani 1 might now be back on line :-)

That $35m of "carry" only has a value at, or close to, production; the difference being that SCIR's 25% is no guarantee of anything as it currently stands... :-(

Pretty much CP, yes but not even sure if it is worth $40m - after all Kiliwani and Nyuni have zero value on the balance sheet and, to be consisitent, $35m of "carry" is NOT worth $35m of cash.... ;0)

"If it is not worth a lot more than $20 million then I guess you are saying AEX are rapidly reaching an over valued position at £40 million today."

But investors are anticipating the upside CP of the Ntorya dev - the difference being that the upside for SCIR is still much more in doubt...

A lot more than $20m? Well maybe CP but so far we haven't seen it - if it is a lot more than $20m surely the buyers would be flocking to SCIR door with offers that SCIR BoD would bite their arm off for?! I would agree that with ever closer proximity to the CH1 drill the risk to any buyer continues to reduce but equally the costs of development get increasingly closer. Even if the "price" of the 25% has increased due to lower risk can SCIR afford to be choosy with time running down? Can shareholders afford the alternative? After all how much would the BoD need to raise to cover SCIR's 25% of all CH1 drill costs? With a MC of what, £4m and a discount on that, would it even be possible to raise the money through dilution....?

I hope you are right CP but I have always been sceptical and remain so.

Similar Jetty - I once had a quite sizeable holding in Scir (Solo) but long since decided to back AEX in the Ntorya and (if there still is one) Kiliwani plays. I considered there to be too much uncertainty with SCIR, not least the risk that they would not be able to hold until CH1 drill (wheeels turn slowly in Tanzania) and that they may have to concede their 25% due to an inability to fund their share of the dev; the alternative would be a hefty dilution. These two risks are still real and that is why there has been the contrast in the sp fortunes of AEX and SCIR over the last 12 - 18 months in my view.

Moreover I have long maintained that for SCIR to expect the pro rata equivalent of $40m for their 25% is grossly optimistic as $35m of "carry" does not equate to anything like $35m of cash and, even then, cash on the balance sheet is usually heavily discounted in terms of MC. In addition and as you allude to who are the buyers for that 25% likley to be? AEX could not find one other than ARA and now ARA holds all the cards....

I wouldn't choose to argue with you BG but to extrapolate from that to remediation beginning in May is... well, just a little far fetched. We have been told for a long time that we will need a JV partner - AEX are no longer capable, for a multitude of reasons.

Anyway, I will have ot let you get on with it for now - am on hols and just off out. Good luck BG. I hope the sp is a lot higher upon my return ;0)

Vicor Meldrew, no Haggis I dont think so; I think my somewhat more cautious position has been more than validated over the last 12 months in contradiction of the more hyperboliuc [prediction of some here who were suggesting such things as having received "phase 1" siesmic results before Christmas 2021.....

More over there are those that will remember that a) I have been a "BUY" since Xmas and that I have al along suggested that b) lth will see the results of our extreme patience at some point but would likely have to wait a lot longer than some, including you, have been suggesting.

Oh and for what it is worth haggis I do not think there is the remotest possibility that we will see a reworking of KN1 starting in May not unless we complete a JV in the meantime, and nothing in your "chronology" suggest that is likley to happen - unless you are either a fantasist or a ramper.

Only time will tell.

I would not argue with you on any of those points robins. We can but hope both on the timing and the content of any forthcoming news.... fingers crossed.

Anyone watching this closely enough would have a seen a "1 trade" just about every trading day for the past 12 months. So don't get your hopes up on that score.... ;0)

Will they release them in stages? Maybe and maybe not. They may not choose to broadcast the "phase 1" results but simply announce that the location of CH1 drill has been determined and that the drill contract has been formalised ; the actual results will be of minimal consequence, simply that they have the information they need from the seismics to finalise their decision. The full field seismic results will be the big prize and I suspect that they may be the only results that will justify a formal RNS announcement.

The drilling of CH1 in Q3 will not be contingent on the eventual and full field results but purely on the results of the "phase 1" seismic programmes used to determine the final drill location. This should be completed and results known well in advance of June.

And "no" that would not necessarily follow; they would have concentrated their original seismic programme on the "prime" targets, more peripheral targets will likely yield increasingly marginal results. More important are the lower (deeper) targets which could, theoretically, yield far more than a 50% increase for no increase in acreage.

Only time will tell.

So haggis if you seriously believe that the sp will double on the back of the seismic results what results are you anticipating will be needed to bring that about? a doubling of the GIIP estimates? And when are you expecting them to be delivered? What is "soon"?

I only ask so that we can gauge what will happen to the sp when we don't see results that you expect and in the timescales that you are predicting.....

I do not expect to see much of an sp increase whatsoever on seismic results and, moreover, I do not expect to see any results for a good while yet.

Ohhhh no!!

https://www.youtube.com/watch?v=w-l5FyA3pgo

:0)

One final point; yes I too believe that the WEN's MC is "undervalued" but, at risk of stating the obvious, it has been that way for years and I see absolutely no reason to think that it will change in the short / medium term; I think the fact that the BoD are buying back shares is purely recognition of that fact and is the only way that they can influence shareholder value.

Will AEX trade at anything less of a discount to NPV than WEN? I see no reason to think so.

gbfromgb. My only comments on your analysis would be

1) Your assumption that £17m of WEN's Market Cap can be attributed to the cash on WEN's balance sheet I think is overdone; typically the cash would be significantly discounted in that "calculation" which would actually increase the contribution of the "2P" reserves towards the valuation - I would suggest somewhere near £28m rather than £21m and as such you could increase the referred AEX valuation pro rata.

2) On the negative side I do think that the risk factor that you have applied of 50% is probably a little generous when you consider the political and operational risks and time factors involved in executing the drill, GSA, pipeline and 25 year Dev license.

That said, I do not think that your conclusion is far from the mark.

That said I do believe that we will see 2.5p or more before the CH1 spud date or, if not, certainly during the drill programme. I simply hope that there are no delays in the anticipated drill date because, if so, that 2.5p could still be some way off.

So far, so good, so here's hoping.

To become "2P" reserves rather than resources AEX and APT will need a GSA, a Pipeline and the 25 year dev license, none of which will be delivered by the CH1 drill - it may still be some time after that before all of these requirements are finally delivered.