Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Its great to see this new guy that's running Extraction SRL willing to give Mr Jennings 1.2p per share for 99m shares. He must think that they'll do rather more than 1.2p! :) Now that's the sort of VWAP agreement I like to read, makes a change!
Regards,
Ed.
Hi Nige,
Not sure how they'll release the results of both wells, flow tests are due to end March/April. Results due from the mining exploration activities around then too, so yeah a very active time for the company and likely news flow too. Time flies, development of Tobias should lead into drilling on Galinda and then preparation to drill KON-16 late next year according to the presentation. So yeah a great position for the company and its shareholders to be in right now. Fingers crossed all goes to plan.
Regards,
Ed.
Hi Sienna,
Yes I've read before that the company has authority to start buybacks, not up to speed on that can't say what the quantum of that would be. If we hit the 2024 and 2025 projected production it could easily cover share buybacks imo. With the outstanding warrants and the possibility of more draw downs we'll likely top 2bn in issues at some point. But then lots of oil/mining companies have that and more. Dilution here should be more than offset by increase in shareholder value though the development of the assets. The fact that the company could start share buybacks, and cancel those shares, after Tobias is fully developed (in line with the recent presentation) is a bonus at present. We now have a clean sheet again, no debt as of yet.
Yeah consolidations normally have a negative impact on share prices, but its what happens next that matter. DELT for example is up a little since it consolidated. I'd be much more in favour of a share buyback programme than a consolidation. Given the recent video and presentation I'm not too concerned about more conversions, its gonna happen, especially the warrants well in the money, but that's certainly not my focus.
Kenyan,
I agree, these assets are playing an important role in establishing onshore Kwanza production and given the possible projected production of national importance. That 628mmbbls structure on KON-16 is more the stuff of majors than tiddlers. Yeah it sure is exciting times.
Cheers good luck too!
Regards,
Ed.
Hi Kenyan,
I was wondering the same thing after reading the current presentation. It looks like from the timeline both TO-13 and TO-14 to be tested in parallel and test concludes towards the end of this Q. This may be to monitor pressure changes between the two wells and therefore prove connectivity. The previous RNS suggested connectivity between TO-13 and TO-14. We might get more information on this with the flow test RNS.
Regards,
Ed.
Nige,
Well that's possible DL might be able to spot some good assets in Australia, but then again Mr Zhou has an Australasian focus too. DL also brings up memories of Lenigas and oil and UKOG and as long as he remains no more than an holder, good stuff.
Regards,
Ed.
Nige,
Sure as part of the management team that specializes in the BM side of it Mr Zhou is likely to be a big influence and his connection to IBM etc. Copper gets a mention on page 21, more versatile than lithium and nickel. I'm an oil and gas investor with some mining investments, but recently I've been putting copper, graphite and uranium companies on my watch list (all alt power commodities, less EV reliant). Lithium, nickel and manganese are all very EV reliant and we've yet to see how that will take off.
As for Mr Lenigas, I'm glad he's an investor and not on the board of directors. :)
According to the presentation, we're going to hear about a lot of things in the coming weeks! If they eventually add some high grade copper assets in eventually I wouldn't complain.
Regards,
Ed.
Hi Nige,
As you know for a while all there was here was the Nickel JV. Canegrass and Mt Weld came in later, then obviously Angola. It did give the impression it was a switch to oil and gas and then the Ni assets were to get the chop. The battery metals are going to play a future role it seems, they mention copper, lithium and nickel in the presentation, a lot of the video was also focused on battery metals. The only other companies on AIM like that I can think of at the moment are Reabold Resources and Alba Mineral Resources, both microcaps with oil and gas and mining interests. Obviously lots of oil and gas companies and lots of miners as separate entities. So this would be an unusual, kinda unique mix on AIM to be potentially successful at both, it could work though.
Yeah its going be capital intensive to get Tobias developed, but that will lead to significant revenues according to the presentation. If you look at some of the ASX listed miners a few million AU$ can go a long way to drill shallow targets, so it could work for sure even though its not really been tried before, successfully anyway. We'll see how it works out going forward, management have stated their commitment to both and are aligned with shareholders etc. Should get results from Canegrass and Mt Weld next Q according to the presentation so lets see what happens then. Action packed year according to what we've seen recently and good to see promotion online too.
Regards,
Ed.
SteveV,
To get the same response and pressure build up that they got back in 2021 they need to do the same thing again. That would have been injecting methane and butane both, not just the NGLs. What they needed to do was made quite clear in the July '23 ops update. Not just recycle methane, inject higher and higher volumes plus NGLs just like last time. The pressure then gradually increases in the field and the oil production increases month on month as the pressure and miscible gas (methane and butane mix) helps to remove the oil. As we were told oil production from the BFU was a function of injected volume. To get to peak production they needed to increase pressure just like 2021 and inject the same volumes of gas and NGLs. Alas that didn't happen when all shareholders needed it to. Did that also kill off the JV, perhaps.
Regards,
Ed.
Well guys and girls,
You're welcome. For clarity I have a chunk of these and its in my interest to read all this stuff too. The links are useful to know what is going on in the region. This style of reward has its risks too, we've yet to see if the company can match its plans in the current presentation. Fingers crossed they can. Also the exploration drilling on KON-16 would be high risk, but hopefully we'll get a chance of success update after the new seismic. According to the presentation the target is 628mmbbls pre-salt lead (page 17), so massive.
Regards,
Ed.
Good morning Luke,
Interesting article for sure, looks like that discovery in Block 21 is about 120-150kms from KON-16 in this prolific basin. We know that source rock and migration is there on KON-16 from the pre-salt well that was drilled (17m of oil shows). The presentation yesterday was also confirmation of how few pre-salt wells are on our blocks. You can see clearly in that article what modern broadband seismic can do. That's a really impressive 3D seismic image.
Seismic sure has moved on from 1996 and that first offshore discovery was made offshore Kwanza, around the same time that Tobias was shut-in. The good thing is that the company is going to shoot more seismic to get a better idea of the targets down there. Again the presentation yesterday showed how loose a grid covers some of our blocks. Only two lines running across Galinda for example. We'll know more about what they're doing in the near term regarding seismic around Galinda etc.
Lots and lots of news to come if we're to see that circa 3000bopd, as mentioned yesterday, by Q4. One of the busiest small caps on AIM. If they hit their targets as set out yesterday, not small cap for very long!
Regards,
Ed.
Nige,
Good point those two tech guys are highly experienced, the type of guys you want in on these scale of developments/targets. Sounds like Mr Collins has identified lots of discoveries in Angola already and Mr Konneh has lots of experience in getting these large engineering projects done.
I agree, no hanging around for sure, lots of big ambition from this presentation and its active timeline; the recent Vimeo introduction video had a similar theme. Seems like the PR is already in motion as we approach the TO-14 test result.
Regards,
Ed.
Afternoon Nige,
This one is turning out way bigger than I expected given the production numbers for 2024 and 2025 that they're quoting. I thought they might have gotten there on FFD, not on two or three wells. I thought Mr Karam was tying that in with his 2026 bonds for £100m+ valuation. Seems plans are much bigger and more aggressive than that and we could be looking at peak rates by end of this year. May be one more Tobias well and a Galinda well started this year too. If all goes according to the presentation CRCL would have accumulated significant revenues over 2025 and 2026, with it all kicking off in Q4 this year. I had pictured a much more steady pace to peak flow rates. I'm not thinking if they'll exceed 17500bopd, if they get close to that I would be delighted. It wouldn't take long to get more than our current cap in cash on a 18% net interest of those numbers.
If it all works out the way its set out in the presentation and they make a discovery on KON-16 in 2026 it would be really handy to have those flow stations and pipes to connect to. But if he manages to get there anyone who stays from the early days would have made insane money. But today's presentation is certainly a snapshot into what the company is thinking and planning. If it all works out like that I'll be as much stunned as I would be delighted.
Regards,
Ed.
LseT,
It does still give the unproduced prospective resources as 11.7mmbbls on page 10, I think way back these were first described as contingent resources. Perhaps that involves pressure support and they also have that 7.7mmbbls as based on current resource estimates, Pre-CPR. So imo these numbers are likely to change.
If you look at the scale of development planned, its for three blocks and involves an export line to offshore (mono buoy) as well as different flow stations, a lot of pipeline and tank farm etc. Its quite a large scale development so I reckon gross cost could be $140m and net cost $28m. But the CPR is likely to show the economics and get reserves for RBL. The company will also have those bonds and sale of mining assets so the cash element of that is likely covered, but we'll see. We might also see another well drilled before Q4 as hinted at in the presentation. The quantum of the next bond draw down should give some information on what its for.
If they get even close to 100k bopd from KON-16 believe me they'll need pipelines in place!
Regards,
Ed.
LSET,
Yeah if their exploration targets yield 100,000bopd, most of that slide comes from KON-16 at 31.5% WI so if that's the gross number then that would be 31.5kbopd net to CRCL and easily a mid cap/large cap if they achieve that. Certainly x3 2025 NOI would put them around or above $100m using the numbers in the presentation. Not bad returns on a current £13m cap for sure! That is just Tobias too. We would have to see what level of debt they have, but at least we now know the ambitious targets the management are setting going forward. Tuenza-2 updip from the residual oil could be an interesting well for CRCL for sure.
Regards,
Ed.
Good morning Luke,
It took me a while to spot the RNS out today as it didn't pop up on ADVFN, still not showing on my monitor there. That is an information packed presentation for sure. Some bits are new to us, like they may be drilling more wells in Tobias between now and Q4 (Tobias appraisal beyond the flow testing). Cash flow by Q4 reads really well and confirmation of the CPR coming this year too, will be good to see what an independent makes of the initial 2P.
Projected gross production in 2024 from circa 16,000bopd, declining to 14000bopd gross in 2025 would be around 2500bopd net to CRCL, production decline rate suggests a reasonable natural decline of about 18%. That's coming pretty near term now for initial production. Oil is currently around $82/bbl, planned opex of $20/bbl leaves very healthy cash flow. IRR coming in at a very healthy 89% at circa $80/bbl. More infill targets on Tobias, had hoped to see some mention of the sidetrack potential in there but that may fall under the EPS design (as they do say may need more wells). Very ambitious production target at circa at what looks like 17300bopd ip rates or 3100bopd net to CRCL. Given the projected opex at just $20/bbl that's stunning cash flow to CRCL. If they achieve these ambitious plans its like going from $0 to about $54m NOI in not much more than a 1 year-18 motnhs! Flow rates from Tobias coming soon! If it happens like that it would be stunning.
I'm guessing the business development activities include the sale of Wowo gap and Mambare. Looks like results from the mining assets early next Q.
Regards,
Ed.
Morning Nige,
I'm good, hope you are too. I September '23 they gave advance notice too of their intention to draw down the second £1m from the facility in Jan. That second draw down didn't happen due to the interest free loan connected to the sale of the Ni assets. So today is just giving an advance notice of the second draw on the facility, no mention of changed terms etc, its still convertible at 0.8p. Well testing costs money, EPS design and installation would cost money too. I'm not overly surprised at this stage that they're tapping the facility to pay for ongoing activities in Angola.
Regards,
Ed.