The subtle way CHAR´s management is damaging us17 Sep 2023 12:31
We are all here because of Anchois. Nobody in his right mind will invest in CHAR because of the green hydrogen or the renewable energy projects, simply because we don´t have any clue about the economics of them.
Our problem is that CHAR´s management is taking advantage of the market´s appetite for Anchois, to keep funding projects and “ventures” that are questionable to say the least.
In the last 2 years, our collective interest in Anchois has been regularly diluted by management (via share placings) to fund projects and ventures as diverse as a solar and wind project in Zambia, an energy trading in South Africa, a new onshore license in Morroco, a water desalinization plant in Djibouti and a green hydrogen project in Mauritania.
Each one of these new “ventures” obviously require spending millions in advisory fees, salaries, travels, hotels, analysis of commercial and regulatory frameworks, etc.
We shareholders are being regularly asked by management to put new money in the company, in order not to lose our collective economic interest in Anchois.
Just an example:
On July 10, management informed that “the Anchois Gas Development has 2C contingent resources of 637 Bcf which gives the project an NPV10 of US$1.6 billion based on a working interest of 75% and a US$12/mmbtu gas price”.
Before the share placing announced on that day, the economics of Anchois had been equivalent to US$ 1,65/share (US$ 1.6 billion / 970 million shares)
Now, after the dilution provoked by that share placing, our economic interest in Anchois has been reduced to US$ 1,50/share (US$ 1.6 billion / 1.070 million shares)
A reduction of aprox 10%
The only way to avoid future dilution of our participation in Anchois would be to split CHAR into 2 different companies, one in charge of Anchois and the other one responsible for the “new ventures”
But I don´t think this is going to happen. Management already know that it would be much more difficult to raise money for a company that can only show to the market a handful of obscure and diverse projects. It´s much better to keep taking advantage of market´s expectations about Anchois, in order to entice it to keep funding the rest of the portfolio.
And this trend is not going to end. Adonis has already said in an interview that he has a “pipeline” of green hydrogen and renewable energy projects under review, to make “scalability” of those items of the portfolio.
I´m sure management will take advantage of any increase in price, as a resultant of an eventual partnering announcement for Anchois, to make a new placing and further dilute our interest in that project.
Regards
Fernan
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