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Initiating coverage with a risked NAV of 23p/sh (>400% upside)

We initiate coverage on Lekoil with a risked NAV of 23p/sh using a 14% discount rate and US$70/bbl flat Brent. It is trading on a >40% discount to our core NAV and there is >50x upside to our unrisked discovered resource NAV.

Rates are managed by an independent BoE now, unlike then

Just got off the company conference call. Transcript will be posted on the website shortly. The CEO said three things that caught my attention.
1. In the year to June 2019, per the accounts, a single customer accounted for 74% of sales. Today the larger customer is 9% of sales.
2. The repeat purchase rate is over 95%.
3. Post results some more junior members of staff have been buying shares

I agree, this is a huge buy signal. An endorsement from Veloso, which is what the video was, is the gold standard. Hope to find out more tomorrow

Thanks for highlighting this interview

Interesting. What is your source please ?

Do share

Revenue for H1 2019 was $22m, so annualising at $44m. G&A annualising at $18m. If cut by 25%, as promised, that would be worth $4.5m of profit.

I had the same issue. Hopefully the will be there before the open. valuethemarkets.com

Thanks very much for that GG. I was there also. Two takeaways from me. 1. The location next to the Road and pipleline is worth hundreds of millions of dollars in cost savings. Plus year round drilling is possible. 2. BR was highly confident that recoveries would be higher than 10-15% plus the fields are interconnected such that they are appraisal not exploration

Very interesting, thanks for sharing

Thank you very much indeed for this.

From the other place....Goldman Sachs analyst thinks that the AstraZeneca drug has an unclear regulatory pathway given that the earlier PhIII study for the same molecule failed to meet its end point.

What lending EMA approval ? I don’t remember seeing any reference to that ?

Touché !

Sorry, for PE read EV/EBITDA

Market cap is £9m. Cash is £5m. So Enterprise Value is £4m. Breakeven point is 50,000 tonnes. Imagine, for a moment, that they sell 100,000 tonnes in calendar 2020. EBITDA would be £2.5m. So, in that case, they would be on a 2020 PE of <2x. At full, current, capacity, EBITDA would be £15. So the PE would be around 0.25x. All free cash flow. No capex required. Which means dividends will flow

Maybe. But bear in mind that Lupuzor was given fast track last time and since then the Lupus sufferers lobby group has been arguing for a regulatory protocol that mitigates unreasonably high hurdles for statistical significance in view of the high placebo effect. One thing is unarguable. That Lupuzor is safe, has no serious side effects (unlike Benlysta) and for many sufferers results in total remission. So Lupuzor meets an unmet need.

Inevitably, the focus will now move onto the potential partnership where the intention is to initiate another Phase Three trial with an improved design/protocol. We can glean some insight as to the expected timeframe from the timing of the clock starting on the Sharing Agreement with Lanstead, which starts in five weeks (two months less 20 days).

Post this weeks raise IMM has a market cap of £21m. Less £8m of cash leaves an Enterprise Value of £13m. Which is not much to pay for a drug with such safety (proven many times), no side effects and proven efficacy into a large market.