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Brad, it was on a link that MM sent the other day.
https://www.journalducameroun.com/en/afdb-offers-botswana-line-of-credit-to-scale-up-investments/
"BDC is expected to on-lend to private sector players focusing on industrialization, including manufacturing, transport and service sectors that have significant development impact.
Repayment would be over 10 years, including a two-year grace period."
And before the ADVFN guys say there is no mention of CBM in the above, you ain't gonna have an industry with no power.
The way I see it there are two options for the BoD. First one is to finance via dilution of shares. But a. they said they didn't want to do that and b. the share price is so low the company is currently worth less than they want to borrow. Preferred option is that they borrow from the BDC. TG said that they wanted commercial flow rates as that would allow them to borrow at a lower rate, but that they had to go with what they have got - which means borrowing at a higher rate. If they borrow at a higher rate they still have 2 years grace and a further 8 years to pay off the debt. All that higher rate does is to reduce the final value of the company. My guess is that they have been waiting for the 'last safe moment' to borrow as they would not want to borrow before they had to. As they could then get commercial flow rates and we'd all realise they borrowed too early in order to give the share price a short-term boost. If/when funding is in place then they have nothing to worry about. They can build the power station, put up pylons and even drill more wells if they need to and wait for flow rates to rise. TL:DR the company is solvent.
In terms of the share price, we'll likely get a short term boost on funding, interim PPA and final PPA - we may get pullbacks after the initial rush like we did after the initial tender award. Long term boost and climb will be based on flow rates as that gives analysts a way to value the company.
So, funding keeps Tlou solvent.
Flow rates gives the company a value.
A value allows larger organisations to invest.
Share price goes up.
Or something like that.
Thanks for the update MinorMiner. From the interview I got the impression that they had held off from funding as the rate they would get would be at a higher interest rate then they would get if they had commercial flow rates. He did state that funding from BDC was not dependent upon flow rates - just the funding rate was. He then mentioned about going with what they have got.
So regarding funding, if it were me I'd ask for initial funding, say $10m at the higher rate, and then ideally pick up the next $20m at a lower rate assuming flow rates were commercial by then. Looks like a PPA or at least interim PPA is coming very soon and if they unlock the funding then that's as good as we can hope for right now. Funded, agreement to sell and working on wiring up to the grid as they continue to dewater. Maybe with an additional well or two.
It would be nice to have a positive market reaction soon. The past 2 years, in particular the past 7 months have been dire! Or an increasingly good buying opportunity depending on how you look at it and what your time frame is.
I think you may be right. It can't get that bad though, at least there is only about 3 1/2 p downside now!
Might get some bargain hunters come in at some point, bu they will wait for the price to settle. Might even see it in the 2s soon.
So two thoughts on this interview. First was that is doesn't look like much will happen for the next couple of months - so let's call that 4 months then.
Second and more interesting was that they want to sell the gas they are currently wasting, into the system as energy. Does that mean there is a commercial flow rate? Or at least a rate that will allow an RoI for a very small power project. Just thought it was interesting that they were talking about selling the gas they are wasting.
Chat next in April!
I'll wait to see if there is an interview this week. The latest RNS was simply a Q4 2019 summary. There would have been nothing new anyway. We'll see what this week brings. It would be good to hear if flow rates have increased even if not commercial and what the upper and lower bounds are. A technical summary would be good also.
Yup. Nothing new in the RNS really. I think this line has spooked a lot of people who may be throwing in the towel:
"The Company is operating in a region where commercial CBM had not been produced before so there is no comparable data from this operating environment regarding how long it may take, or if it is even possible, for a commercial gas flow to be achieved. However, based on information to date, the Company has no reason to believe that the targeted commercial gas flow rates will not be achieved noting that the Company is generally pleased with well performance to date."
But commenters have been going on an on about Tlou being over confident. I guess they took note. Bit of a **** day price wise and we'll soon see what the new range bounds are. Nothing's really changed though.
Good question. I'd recognise that Lesidi flow rates are key, but need to be sustained. I'd play the long game and never sacrifice long term flow rates for short term flow figures. I'd recognise that after the IPO the share market is simply a market in second hand goods. I'd also not prioritise the short term share price. I would have explained more clearly the difficulties in CBM and how long this can all take, dangers of going too quickly etc and would have managed expectations so that the shareholders understood the longer timeframe to get these flow rates. But in terms of on the ground changes, not much. Maybe more drilling in Mamba, planning work re powerlines. That's about it.
Surely there is not anywhere near enough volume for TA on Tlou. The price is being moved by about £10k/day of sales which is extremely low. TA/charting is really mass consensus based on volume and more recently algorithms.
100MW by next year? So in two months then! I'd say sloppy journalism. My guess is he used 100MW as that is the PPA RFP figure and not the bid figure and that TG may have said 'power next year' meaning Q4. But it does shed light on the presentation that he gave to Bots investors last week. I'm still assuming he wanted to wait until after the election and then give investors a few days after the site visit to invest. I'd say if that is the case then a decent update will be due this week, as he'll want good news to whilst the site visit is fresh in people's minds. If we don't hear anything soon, then the flow rates may not be that good - and they should have delayed the site visit. We'll see.
I agree. I don't think it a coincidence that the field visit was straight after the election. They may have been holding off on flow rates until post election (which seems reasonable to me) and then will give Bots investors a few days to invest if they want to. That suggests flow rates tba in a week or so.
Or we'll have more of these drifting doldrums! We'll know soon enough.
So the Bots election is due on the 23rd October. Some pundits are calling this as going down to the wire. So I'm wondering if Tlou have held off from flow updates due to this election. It's seems reasonable to assume that if the flow rates are high, reflecting a large amount of methane below - then Khama (opposition candidate) could easily buy votes by demanding a greater share of the gas revenue for 'the people'. Not saying this is likely but if I was in Tlou's shoes then I'd keep quiet regarding any positive news until after the election. I'd see a positive announcement as a risk to the business, as it could be leveraged by Khama to swing some votes his way. All he has to do is say that there are decades of untapped wealth and they can be the next Kuwait, don't give it to the colonialists etc etc, 'vote for me'.
Not saying this is a likely risk, but Tlou may have noted it as a political risk, with the mitigation being 'keep quiet until after the election'. I guess we'll know at some point after the 23rd.
https://www.dailymaverick.co.za/article/2019-10-17-botswanas-election-will-go-down-to-the-wire/
https://www.voanews.com/africa/botswana-braces-high-stakes-election-later-month