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So this is about silver, but if the analysis is right the commodity situation has implications for gold and the financial markets as a whole. Health warning. The general view is that this is AI generated and likely pushing a certain narrative. That doesn't mean it's wrong, but it's as well to be aware. We won't find out until Sunday night/Monday morning whether the bullion banks are likely to launch what might be the biggest short raid in history to bring the price of silver down, whether there is a 'force majure' situation developing, or whether the whole thing is just a flash in the pan and that it will be business as usual when the traders get back in front of their desks in January. Makes a good holiday listen though...

Video is on 'X'.

pic.x.com/hmc8cEM1hY

For a bit of fun I asked Grok what a fair valuation of Rockhopper in SP terms. It searched 41 sources and settled on 90p. That still seems a bit light to me. I'll stick with 120p.

I'll stick with my 68p baseline for now, albeit that includes the new shares and attributes zero value to anything beyond phase 1 & 2. That's a bit of a nonsense, so I would have thought something like 120p would be a more appropriate landing point for the next few months.

There is some negative media speculation, but I don't really see what Argentina can do about it; the real threat of course being woke thinking in the UK government. It could not stop the project, but could threaten to betray the people who died in the Falklands War by watering down is defence commitments. Political dynamite of course but we have got the worst government in history. I'm not convinced the 53p issue is having much of an influence. I suspect the recent decline is down to day traders exiting, one or two strategic investors cashing out, and the potential for the share price to drift around for a relatively long period of time. It's the blink of an eye for those of us who have been in for 20+ years, but an eternity if you have a 'get rich quick' mentality.

I had expected some 'sell on news' activity, but thought it might peter out in the 75p - 80p range. It's gone a bit further, although I'll struggle to rationalise a drop much below 70p given the de-risked aspect of the project. I'm guessing the institutions are running the numbers, but may well be waiting to see how the politics play out over the next few months. It could be next spring before we get some serious players enter. With luck I'll be wrong on this one.

So this is where I am on a valuation. It's back of the envelope, but having built complex NPV models with all sorts of variables in the past I can't really put my hand on my heart and say that they are bound to be a lot better. I'm using the mid-year NPV reference point, and it really is a bit of a lazy and not entirely supportable method of doing it. So, here goes:

The 'Dev Pend' 727mmbls element attributable to RKH has an NPV of $1.85bn, or circa £1.39bn at $70 Brent. The whole 917mmbls is therefore $2.33bn NPV, or circa £1.75bn NPV.

Phase 1&2RKH are 111.65mmbls and relate to a gross amount of 319 (170+149). So, my take on this is that it's worth an NPV of about £608m.

October 31st shares were 646.2m. The placing is 198.2m (max) and warrants 49.5m (max). Added together is 893.9, say 894. Divide £608m by 894 gives you circa 68p. At 82p we seem to have phase 1 & 2 baked in, but only about 14p recognised for the remaining 209.3mmbbls (321-111.7). Assuming no further dilution this 143.3mbbls should be worth about 128p ((209.3/321 x 1.75)/894). Thus I'm currently thinking an initial target of about 196p. For info the 321mmbbls attributable to RKH I'm valuing at £1.75bn (321/255 x £1.39bn).

So what's wrong with this thinking?

1) It really is back of the envelope and is not exactly an approach I would recommend, though we are in a fast changing environment and to a significant degree model outputs are outdated as soon as they are published.

2) There won't be a glut of oil for very long. I could see the $70 assumption being closer to $90 Brent by the time of first oil.

3) Costs etc. We know there are still a lot of estimates in the official calculations.

4) It's likely that 2C estimates will be uprated. Another 10 - 20% is not exactly impossible.

5) This is just the start. One area. Others fields will follow in time, or Sea Lion extends...

I reckon 196p is still just a baseline. I think we'll see three figures in 2026 but it may take a bit longer as the boxes are ticked, and the institutions start to wade in. 196p is only a 2.3 bagger or so from where we are, but then again the project has been de-risked, and you can't expect fireworks in a far less risky proposition. As conditions change I would not be at all surprised to see that 196p start looking more like 250p+ a year from now. As for the SP I would be very happy to see 150p this time next year, although I'm not betting on it. The challenge over the next couple of years to to not get too bored with a probable slow move upwards rather than the jumping around we have seen in recent months.

I know that there are all sorts of approaches to valuing RKH that can be adopted, and this one can certainly be challenged. But again, what else have we got to work with other than what has been published?

Bottom line. I think 82p is a an undervaluation given where we are today. I would have though 120p would be more reasonable at this stage.

I would be interested in views on this. You could argue that we are fairly valued for phase 1 (at around £500m), although that attributes very little to plans beyond the initial phase.

Absolutely. After over 21 years in Falkland oil (via DES) I ain't going anywhere until I see a dividend. It was always planned as a retirement dividend payer although I didn't quite expect it to take this long. An RNS day, for me at least, is not always a good time to buy or sell - I tend to wait until the dust settles. But then again I don't day trade. RKH is now down from top of my risk list, along with my other 'high risk' gold play, MTL. Both are now on a production trajectory; both financed to first oil and gold respectively. I'll probably take a bit out of the two of them over the next year to invest in something else more speculative, but RKH will now remain a core part of my investment portfolio for the foreseeable.

I'll open another thread on valuations. Today's announcement changes a lot.

Transactions are higher than recently albeit I'm not yet convinced overall volume is that impressive, albeit the day is way from over yet. Selling on news was always going to happen for many day traders who have likely moved in over the last 2 or 3 weeks (hence the price incline). My guess is the selling will wear off after a few hours and more buyers will move in so there is still a good chance we will end up on the day. What I'm really looking for though is for the institutions to take an interest; the big chunky buys that will have a far greater influence that a load of small sales. The Falklands has likely been ignored for years by most of them. This RNS puts it back on the investment map. It will not be instant as the FI risks are weighed up against the potential returns. Politics will play a role, although Argentina is not the threat that it was a few decades ago. I think we'll see it in three figures in 2026.

I detect disappointment that the FID wasn't announced on Monday followed by fear that it will be soon, possibly imminently. I don't think the 53p or thereabout issue will be big enough to warrant a major change in sentiment. Also, the oil price is still pretty stable, and I don't think a Russia deal will make a vast difference to price. Overall world oil demand is still increasing, and will continue to do so in 2026. I've got more than a suspicion that oil prices will shoot up when markets finally wake up to the fact that world oil demand falls a some way off.

I'm of the view that the initial part of this unexpected selling was a tree shake, although now I think there has been some fear driven momentum selling.

As for the FID announcement, it is not a run-of-the-mill update. It is one of, if not the most important, events to date in the company's history. As evidenced by the nervous selling taking place it is very much price affecting. There are clearly some people taking the view that a delay is in the works. As mentioned before, I had pinned this week in my diary as an expectation for the FID RNS. If it doesn't happen, and were I not a long termer, I might have been tempted to sell. If it doesn't come through I'll just accept that I was wrong, and put my waiting hat back on. It's not as if we haven't had delays before. I do think it's incumbent on RKH to indicate whether the FID announcement will happen in 2025. It is very much price affecting, one way or another.

November! Now that was a typo and a half...

In all the years investing I've seen two things happen before a major announcement. The usual one is a sharp move upwards in the price one or two days beforehand, but I've also seen the opposite, as the decks are cleared for some favoured buyer to move in at as low a price as can be engineered. Now the recent uptick and sharp downtick could be a p&d exercise, or it could be that pre-announcement games are afoot. Except for a few weeks ago when I thought I was about to be surprised by an earlier announcement. I've kind of been expecting FID in the last week of September i.e. next week.

Can anyone come up with a reasonable explanation as to why it would not come until 2026. Everything I've read so far seems to suggest that all the big stuff has got a tick in the box against it. So, what is the benefit of delaying it further? Explanations in English please rather than in coloured billiard or snooker balls.

And this is where it links with the BBC bias debate. Ask yourself when you last saw two scientists of opposing views debate climate change on the BBC. There is plenty of science challenging the mainstream narrative but you are not allowed to see it.

Https://www.zerohedge.com/markets/false-temperature-claims-underpin-cop30-alarmist-agenda

My own view is that I accept that the climate is changing. I've been telling people for years that the answer is not to try and stop it, but to spend money on things that add value like adapting to it. Ask yourself, is money spent on flood or coastal erosion defences wasted vs. expenditure on carbon capture which is effectively spend on capturing someone else's carbon emissions. Money spent on adaptation is money sensibly spent, and spend welcomed by people who are affected by flooding. I don't care if people want EVs or heat pumps, but they must be made attractive to buyers from a cost and value perspective. Why not spend money on subsidies for these products rather than spending on wasteful net zero projects, and force-feeding people technology they are not ready for?

20+ years of reading this **** and i’ve still no clue wtf it all meant…

Yes, I know it has dropped again. The drop in spot looks like it was down to Powell's messaging that US interest rates may not go down in December. What I was impressed with is how little an impact this has had. It's trading at $3940 as I write, and looking like it's starting to stabilise. If the threat of keeping interest rates where they are hasn't battered spot gold I'm not sure what will. The Indian gold buying season is now over and U.S. interest rates could stay where they are, and yet gold remains pretty strong. I guess the fundamentals are still overwhelming shorter term technical influences.

Roll on $5000 gold in 2026.

I reckoned on it being pretty dam close about now, but the lukewarm, somewhat volatile, share price now has me thinking it ain't coming this week.

View invited.

Depends what you are looking at. Short term, yes, but the 200 day is the benchmark for the trend, and the current spot is still way above it. At $4350 I reckoned on a 10% correction which takes us to where we are now. Given the short term pattern it could well go further to around $3800. I say that because I don't think the 200 day really reflects the fundamental situation. Everyone is still buying the physical even if the traders are selling paper gold, and the Western hemisphere's debt crisis has not gone away. This is a relatively short term technical drop with a return to the bull potentially returning even before Christmas. I still reckon on $5000 in 2026, potentially in alignment with Q4 first gold in NIC. As fat as MTL is concerned that could quite easily see a doubling in the SP over the next 12 months, with further to go once we are in full swing. Meanwhile, what could happen on the other side of the world is the icing on the cake. There is everything to play for at these prices.

From its recent high gold is now around 8% down. I could still see a bit more, maybe to 10% or 12%. However, notwithstanding the fact that its still way above its 200mda, I think the fundamentals are so strong that we will probably see it bottom, perhaps around $3800. That would be healthy, and set us up for $5000 gold next year, just in time for NIC to come on stream.

People need to stick around for a robust pay-off in Q4 2026.

I don't see any implications for the FI. Although, for an internal audience, he backs sovereignty, as far as the islanders and HMG are concerned, he would appear to want a negotiated outcome. This includes consulting the FI population as well. I don't see much changing in the foreseeable future. To be honest I think a politically stable Argentina is a lot more desirable than dealing with a hothead changes in policy every so often.