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https://stockhead.com.au/resources/barry-fitzgerald-the-juniors-vying-for-some-hotly-contested-gold-ground-near-fosterville/

Indeed.....

First duck in the row.

This well is not a free carry........(I couldn't imagine where you got free carry from!)
The well (house silver was sold cheap meaning our % is too low regardless of buy option that was attached as it is alawyas a given in any well contrct)

I suggest this well should cost no more than $320k.

Response

This well is not a free carry........(I couldn't imagine where you got free carry from!)
The free carry is the Cypress carry on the deal that they charge their investors.

The well (house silver was sold cheap meaning our % is too low regardless of buy option that was attached as it is alawyas a given in any well contrct)
It is not the house silver, it has no production, no reserves and has no value in the balance sheet. The company had no intention of developing that 80 acres itself. You might say that they should have developed the acreage in the past instead of wasting money on Mesquite and I would agree with you.

I suggest this well should cost no more than $320k
As I said, I would agree if this were a simple vertical well. The cost makes me think that it is a short horizontal. "makes me think" ie., I don't know but it is what I would expect for the cost. If it is $800k for a relatively shallow vertical, then the costs are out of line.

XX

Sorry but you are conflating my comments;

Cypress promote drills to US Based investors who want tax relief on the IDCs. Cypress take a fee up front from the investors, take a management, operating and reporting fee and take a free carry (ie., they get part of the revenue/capital when the assets are sold). If Cypress have to give the money back to the investor they get none of that: for that reason, I think it unlikely they will not drill.

Separately, NTOG gets a carried working interest (WI). So as the deal stands NTOG gets a carried WI on the first well for 25%. So however the well turns out NTOG has a 25% WI at no cost to NTOG. If it chooses NTOG can farm back in on the first well for 10% WI at cost (ie., not the promoted cost that the US investors are paying). The reason for this is that NTOG hasn't seen the 3D, subsurface survey and engineering work for the proposed well(s). The net increase in the WI if NTOG were to exercise this option is 7.5%. So on an $800k drill, NTOG's cash commitment would be $60k (about £49k).

If Cypress decides to drill more than one well then NTOG participates at a 25% WI on an unpromoted costs basis.

"The Board will review the seismic data that Cypress has on the Well Area in order to assist its decision on whether to exercise the option." So at the time of the deal they had not seen the technical data.

The deal is for 80 acres out of 2,400 acres at Pine Mills: currently the acreage has no production, no reserves and no value ascribed to it. So hardly the family silver.

I agree on the cost. A simple vertical should not cost $800k, which is why I think it will be a short horizontal.

FYI the Woodbine https://en.wikipedia.org/wiki/Woodbine_Formation

DYOR

After the first drill, NTOG remains at 25% WI in the 60 acres and so would have to pay its shares of costs on any further drills: it would also get its share of production and reserves.

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https://www.juniorminingnetwork.com/junior-miner-news/press-releases/2779-tsx-venture/fsx/76235-fosterville-south-announces-10-000-100-marketed-private-placement-led-by-clarus-securities.html#.Xqjr97Jlt9Q.twitter

I agree £800k is a lot, which is why I think it must be a short horizontal and frack otherwise the cost is too high but the cost is not high enough for a long horizontal and completion.

In this case, Cypress are spending someone else's money. They raise money from private investors in the US who want US tax relief on the IDCs. If they don't drill they don't make their fees, management charge and free carry. I suspect they will drill as long as oil is north of $20. The price of oil over the next few weeks is not hugely relevant but the price at the end of this year and into next year is.

DYOR

I am neither positive nor negative on this point; just factual. Let's see. The company has ascribed no value to the acreage, that looks like it will change.

You rather miss the point:

Option 1 NTOG gets to see all the technical data about the 3D, subsurface analysis, EUR, targeted flow rate, probable reserves and doesn't participate but gets carried. No drill happens, NTOG still knows all of the information and if has cost NTOG nothing except a bit management time. It can now list the assets under probable reserves but can't list them as PDNP until a successful drill happens.

Option 2 same as above but NTOG increases its WI 10%. Same result no downside.

Option 3 same as 1 but drill happens: EUR, PDP, PDNP get booked and cashflow results.

Option 4 WI 10% higher then we book everything as in 3 but higher figures.

The only circumstances with a downside would be: take the extra 10% and the first drill is a dud.

DYOR

Well they either drill or they don't: at the moment NTOG gets carried, so where is the downside?

Thanks

Not directly relevant. I don't know, you don't know and NTOG doesn't know the details of what Cypress has planned. All we know is that they shot 3D or bought it at their own cost and approached NTOG not vice versa. Hopefully, NTOG will be in conversation with them some time this week and get the details of what they plan. The 30 days will soon run out, so they had better get their skates on.

I am hoping that they fully update us, once they have made a decision about the 10% farm back in option. It makes sense for NTOG to take the option up. If the POO stays low then I doubt that Cypress will drill but if it recovers then they will. So either NTOG doesn't have to come up with the $80k or it does but the price of oil is higher.

If Cypress doesn't drill then NTOG has all the knowledge from their planning without having to pay for it.

BTW it is unlikely that anyone would want to drill from November to March. The weather can be terrible and the costs go up. I don't know but I suspect that a short horizontal and frack is planned for the first well: they won't want to be fracking post October because they have to warm the fracking fluid and it sends the costs through the roof.

DYOR

The people buying in have done the 3D seismic not NTOG.

NTOG hadn't seen the 3D prior to the deal being signed. Think how good it must look for the farminee to still want to sign the deal in the current environment.

NTOG had no way of knowing what is there unless it did the 3D itself.

However, Mesquite does looks to have been a waste of time and money when NTOG should have been maxing out on Pine Mills. It seems NTOG has plenty of acreage where the same applies: ML has previously said he wanted the acreage because it gave optionality on drilling.

DYOR

Just as well you are not a shareholder.

All on the way up.

Copper bouncing back from lows...

https://markets.businessinsider.com/commodities/copper-price

An MoU has been signed with Valkor Technologies, to investigate the potential deployment of MSAR® technology in Utah, USA. update 30/03/2020

Make of that what you will..

DYOR

WTI looking good. A period of stability here with the BOD concentrating on getting the maximum out of Pine Mills would be good.

https://twitter.com/Guv999/status/1247473130710298624?s=20

Partridge you know how the system works, why try to mislead people? I was formally an insider and on the insider list maintained by the company.

My view conveyed to the company was then and is now that they needed to proceed with the deal. When they started looking at it, the SP was much higher. Whatever JP and RGM did people like you would point the finger. The choice was do a deal on less than perfect terms or wait in which case the accusation would be that the company and directors were doing nothing except burning the company's cash.

My view is that JP needed to show that he was willing and able to do deals and not just sit around picking up his salary. If you put your bias and prejudice to one side and think about it, this is not a bad deal. On a look through basis, it values the RGM shares at about 5p. We have the debt at a large discount to the redemption price.: ask yourself, why would JP want to buy unsecured non-interest bearing debt in a cash strapped ASX company? Just maybe he has a plan... A good outcome would be to agree to convert the debt, wipe out the RMI shareholders on the conversion and reverse Mambare/Vincent's company into RMI.

This a low cost option on the nickel price and Mambare/WoWo Gap. Nickel at $17,000 and this makes decent money. In the short term it costs us nothing to hold it.

I expect that there will be more deals in due course.

DYOR