George Frangeskides, Exec-Chair at Alba Mineral Resources, discusses grades at the Clogau Gold Mine. Watch the full video here.
Have a read of the latest RNS then!
TLDR: Solid deal but not as amazing as hoped. Still a much higher SP than current expected.
What could JOG now be worth? In our view, valuation of JOG’s stake in Buchan is now split into two parts. First is the 12.5% stake on which the company will now be fully carried to first oil. In our updated model this is worth 374p risked, or 468p unrisked. Second, JOG then has the potential to farm out a further portion of its remaining 50% stake targeting a full carry on its overall interest. We allow for the company to retain 22.5% overall (assuming similar pro rata terms to the NEO deal), and we value this additional 10.0% retained stake at 241p risked, 344p unrisked. ? For our Buchan valuation, we have assumed total resources of 110mmbbl gross are developed (total 2C is 120mmbbl gross), for gross CAPEX of US$1.0bn and with first oil in 2026. ? We then include values for the J2 and Verbier discoveries, the upfront cash payments under the farm out, and adjust for the end 2022 cash holding (reported today as c.£6.5m). Overall, this gives us a core NAV of 411p (which now includes the fully carried portion of Buchan), total risked NAV of 703p, and total unrisked NAV of 952p. This compares with our previous total risked NAV of 856p, which included a higher assumed working interest but a much lower level of assumed carry, and with the project now materially de-risked as a result of the farm out deal. ? Is the deal good value? We believe the deal is good value for JOG. The most important elements in our view are the material funding and highly credible industry partner that have been secured. In addition, we believe NEO has invested at a significant premium to JOG’s existing market value, as follows.
Should be about $100m EBITDA and around $60m FCF for 2023. Also important to note the c$400m of cash. Some very healthy numbers here even without massive growth.
The problem is the price is being manipulated at the moment. So, you'll have to find a good entry and hold your pants. Below 200p looks nice here.
The flow test will also update the SLB model for recovery rate and OIP needs update too. That will come in over the next several months alongside other drilling commitments. I expect a deal by end of this year, especially with SLB endorsing.
That or have the media in your pocket.
Let me put it this way, the fundamental value of this company and evidence to date is so good this well could go duff and it is worth multiples of this value at the moment. 80p was a steal, 120p was tempting and 45p is pure money. This company is worth billions and it will get a deal within 12m guaranteed.
Points from the important part:
- The entire well has hit oil
- They can move the well to avoid the high gas content
- The amount of gas uptake is equivalent to uptake of 1,500 barrels a day of oil (!!!)
- Even with current levels, it shows commercial discovery. They've all basically said it
Yes but only for health sciences which is niche and not all brands activated. Garden of Life and Optifast I can see are live examples. We've had the Nestle Global Head of DTC turn up to events and see facilities and show he is impressed. I'm sure we are looking to activate more brands because it is the way forward. I love Milkybar and even their current website says go buy at other retailers! How about you sell direct to me and improve margin and data. Some people really need to be fired at these companies because they are doing nothing in this area. Even Homebase is on the bandwagon for goodness sake.
Also important to note that P&G (Gillette owner) have lots of other brands like Olay, Ariel etc. they have on shoddy websites which aren't even DTC, just get sent to other retailers. Gillette is the trial case imo and will lead to many more sites going live for P&G in the future. Hopefully this is why Vivek has been brought in because we already have whales, they just need activation and you'll see some serious book building. This year has been tough because people have focused on cutting back. However, get through this into normal business, people seeing the success of DTC (Nike) and the company which has 2 of the top 5 Black Friday growth stories (therefore not a coincidence) and people will clamour for services. I'd love to see 30p again please, I'd like to add to my 15k shares.
THG does loads of the Pentland Group sites (mitre, kickers, Speedo etc.). US one now in the mix because they had to buy the US brand back a while back. Key one is JD Sports but not sure if we cover them. However, positive to note the group is trying to diversify away from JDS = more sites for THG.