Member Info for Jiving

Communication shutdown may just be due to imminent announcement of Interim statement expected Friday or next week, there is a blackout period for management/director statements/share transactions beforehand.

It is quite rational for Essar Mauritius to delay from two possible perspectives:
1. It is in the specific interests of Essar Mauritius management to keep their jobs which may be dependent on maintaining their shareholding in OPL226/Essar Nigeria at least until the new ownership of Essar group is determined. A new owner might finance their 20% so the management of EM might feel they have nothing to lose by delaying & finding out.;
2. EM have a veto, so hold out for the best possible price, they are in no hurry but Shorecan/COPL are. The longer they delay the more desperate Shorecan become the higher the price they offer, we know they are on offer 2 why not wait for offer 3 or 4? The problem with dealing with a bankrupt company is that in many respects they have nothing to lose.

My hunch is that absolutely no progress or headway has been made with signing an SPA since either August or the 9th October, because everything is dependent on securing the agreement of Essar Mauritius - now I don't know exactly where they have a veto but I suspect somewhere that is crucial as built into the Essar Nigeria Shareholders Agreement & all parties are aware of it which is why it has to be dealt with first. I agree with NoEasy that the forthcoming election could be a deal killer if we don't sort SPA soon but sadly I suspect we are no nearer to that than we were at the beginning of August or October. I really really wish this wasn't the case but....

(Off out now so no responses till tomorrow)

PC. As I pointed out a few days ago Pharmaxis which is in many ways a model for NFX - please note it was Dan who raised Pharmaxis as an example - where they have a couple of drugs with intl royalty deals & have already signed up a big pharm for a mega deal. Now they already have what we are trying to achieve - royalty income coming in so could be self financing, a big deal with a pharma now in year 3, & prior payment hurdles already met.

But they are stuck on a mkt cap of £60m, 3years after signing the big (£350m deal) mentioned by Dan they are valued at 17% of the big deal headline figure. Now of course the actual revenues that flows from different drugs royalty deals & the different amounts/conditions that attach to 'big deals' differ but the model is essentially the same - Pharmaxis have a deal for £350m, they have met the hurdles/conditions so far yet, they are only valued at £60m & yet they are at a stage NFX hopes to be at in maybe 2 years time IF they get royalty deals confirmed & IF they get a big deal for NXP002.

Jay. I strongly suspect that somewhere along the line of securing finance via an offset deal with a service provider for OPL226 (clearly legally owned by Essar Nigeria not Shorecan), & finalising an FDP for the approval of the NNPC, that the actual unanimous approval of the Essar Nigeria board is needed & in line with the Essar Nigeria Shareholders Agreement & EM has a veto, a few details of which were included in the 2017 Prospectus.

So it is possible that all EM has to do is nothing - just withhold consent for the necessary Essar Nigeria board approvals. IF that were the case it turns the problem on its head and Shorecan would possibly have to prosecute EM for the equivalent of 'unreasonable behaviour' of not approving an SPA or an FDP submission to the NNPC (months of expensive hateful legal wrangling). There has to be a very strong reason why 3 months after the EM bombshell wrecked Arthurs dream plan of SPA within a month, that absolutely nothing has happened, they clearly have some kind of block that cannot be ignored or over-ridden or it would have been by now! When will it end.........

The Project involves the drilling and completion of a horizontal oil production well offsetting the Noa-1 (as defined herein) oil discovery well and the drilling and completion of two to three additional high angle oil production wells in the adjacent Noa East fault block from a common wellhead platform, and placing these wells on production in an approved early production scheme. Essar Nigeria has prepared a work program for this initial campaign on OPL 226 in the form of an FDP for submission to the concessionaire, NNPC. The Issuer expects the presentation of the FDP to NNPC to occur in the near term.

I noticed a new listing statement appeared on SEDAR dated 26.10.18. Am skipping through it now, most of it copies the August Prospectus but I had not seen the FDP mentioned before, on P8:

"The Project involves the drilling and completion of a horizontal oil production
well offsetting the Noa-1 (as defined herein) oil discovery well and the drilling and completion of
two to three additional high angle oil production wells in the adjacent Noa East fault block from a
common wellhead platform, and placing these wells on production in an approved early
production scheme. Essar Nigeria has prepared a work program for this initial campaign on OPL
226 in the form of an FDP for submission to the concessionaire, NNPC. The Issuer expects the
presentation of the FDP to NNPC to occur in the near term."

Bob. I think we have all felt extreme frustration with Arthur's statements particularly his time estimates. Like others I have thought about complaining to regulators in UK & Canada but as you mentioned it would frankly be counter productive to do so as a shareholder.

Lets hope Arthur updates us on the key issues in the forthcoming interim statement. The 14 August MD&A was the first mention of the Agamore & Essar Mauritius disputes - issues that still seem to be with us & are likely hampering progress. We are definitely owed an update given what has happened since 15 August - EM going bad, a giant heavily discounted pacing, further price collapse down to 0.20p (from an early August 0.50p), delisted from TSX-V, no SPA after a month, no NNPC presentation as promised. Whats going on, where do we stand?

At some stage it would be v helpful for NFX to explain the potential size of the specific markets they are targeting. Dan has done that in a limited way by pointing to examples of big pharm's paying high prices for rights to drugs - Pharmaxis & Promedior were the 2 deals mentioned by him. But frankly I think priority is to become revenue sufficient via NXP001 and then once the various tests/trials produce results hopefully then they will explain the size/nature of the prize.

For the here & now I just want to see that £500k paid.

Given what we shareholders have been through in the last couple of years, I frankly find it appalling that 'our' company can't be fagged to let us know what happened with the Agamore hearing over a week ago. The insulting nonsense that in some crazy way it might give credibility to Agamore's claim is just that insulting nonsense. Informing shareholders of what took place has zero bearing on the viability of the case or the actions of Agamore going forward, just yet more of the insulting & dismissive attitude Arthur & Co have towards the people who pay their inflated salaries.

Well you throw '100 millions' around, often without specifying what you are referring to. With regard to NXP001 do you refer to annual revenue, or lifetime of the drug, globally or in the US, or is it valuation?

None of the drugs worth less than 100 million? Absurd they are not proven yet & you think someone will pay that - please give examples where '100s of millions' have changed hands for drugs at this stage.

NXP002 has a long way to go before being eligible for any kind of deal. The point about Pharmaxis (remember this is an example of Dan's not mine) is that they are where NFX hopes to be in say 2 years time - they have licensing revenue from a couple of products in different geog markets, they have at least 2 drugs proceeding down the pipeline with partners. One of which has been running for 3 years (& they met hurdles so far) for £350m total - but the market values them at £60m. My point is the need for realism - silly figures have been quoted here & elsewhere over the last 6-12 months regarding potential valuations upon success but the pharm shares in the market who are more advanced than NFX do not necessarily enjoy huge mkt cap. PXS mkt cap is 5 times that of NFX at present, that may be the best guide to the future.

No it does not come from the CEO Aim it comes from you. We only have your 'word' for that.

Just like all your repeated false predictions of huge news also you have hinted came from the CEO - and months later we are still struggling to get above 2p. Every one of your predictions has been false, maybe one day you will strike lucky after all if you make a prediction a week, one week it may come true.

Of course you have no comment or response to the simple fact that a company like Pharmaxis that has actually gone & got a mega deal with a pharma and has hit its initial objectives still only has a mkt cap of £61m vs a deal size of £350m. No comment on that grim market reality hey?

Aim. Where does your 100's of millions come from for NXP001, seriously where please reveal? So far we have a two stage initial deal with a Chinese company that has still not coughed up £500,000 let alone the £2 million they may or may not cough up some time in 2019. You quote 100s millions for NXP001 on what basis & why not 100s of billions, if you have no basis in reality its just silly Star Trek talk?

A company like Pharmaxis that has an actual deal with a major pharma (not a maybe deal in 2019/2020) for some £350m is only valued at £61m, 3 years into the deal when they have already hit certain targets.

Inner. Thanks a lot of that link, it is great to read something that makes at least part of the science/process understandable to non scientists.

Came across this article quoting NNPC head Baru where he stresses as 'the' key point the amount of royalties & taxes that would flow to the Nigerian state from the deal = $5.60bn. This of course is the key point for our deal as well (from the political perspective) and is why after all the delays we have experienced with NNPC they may actually fast-track this once we get SPA done. Buhari & his supporters would at least get one more deal with big state revenues signed before the 16 February 2019 election: https://www.tribuneonlineng.com/153151/

R_Dunc. Whilst I appreciate that a second SP is theoretically good news in terms of possibly securing a better deal, I personally do not want even a weeks delay on this thing. So I take the news of a second SP with mixed feelings.

Mozambique - news of a PSC being signed of course would be great but I fear it would have little positive impact before OPL226 news. Therefore I actually hope its announced after OPL226 not before.

I have just been back to Arthur's 2nd August interview at LSE. It is around the 5 minute mark that he says he expects the Service Provider Agreement to be concluded at the end of the month. He specifically said 'concluded' not 'announced'. He goes on to say NNPC have to approve all contractors & the actual bid prices for key contracts.

It is possible that the SP concerned will not allow an announcement until they have finalised terms with Shorecan or even waiting till NNPC approval. ie it may not be up to COPL/Shorecan to make the SPA announcement but a decision of the third party concerned.

And its not just Arthur who is on the line here but also Kola who will not want to lose face by not delivering (after nearly 2 years) an oil deal to the NNPC that works & and is implemented. Big downside for a failure in Kola's home market.

Jay, NoEasy. The TSX-V is one of the best markets in the world for raising capital for small to medium sized resources companies. Large amounts of money get raised particularly for 'hot' sectors. The horrendously low share price COPL has fallen to has destroyed liquidity the last year or so. Canadian Overseas of course started as a Canadian company with one listing on the TSX-V back in 2009 (as VLO then as now XOP). For the first couple of years they stayed just on the TSX-V, until 2014 when they also listed on the London main market.

I imagine Arthur as a Canadian still primarily based in Canada hopes that when the share price starts moving up again and hits a level say above £100m (= approx 4p) he might go back to the TSX-V. IF IF the good news keeps flowing, & liquidity returns to XOP in Canada & Canadian investors see a C$170m company possibly turning into a C$1b company then Arthur 'may' be able to raise funds cheaper in Canada (ie lower discount to market) than in London.

But the above is all medium term, what we need of course is the SPA announcement in November & preferably the closely linked NNPC approval in December. Presumably there are complex three way negotiations going on at the moment to ensure that prior to any announcements that the SPA deal satisfies the NNPC. So that when the presentation to the NNPC is made it is essentially a formality before NNPC approval, as all the hard slogging has already been done & key points agreed in detail.

Bob. You are living in a dream world if you think COPL being kicked off the TSX-V to the CSE is a positive not a negative. They did not leave the TSX-V voluntarily they were forced off for not meeting basic listing requirements. I actually trade the TSX & the TSX-V quite regularly & I can promise you nobody but nobody would ever welcome a share being kicked off into the CSE. When it is first listed on CSE it may well get some volume because when the share price went below the minimum of half a cent, that means there has been minimal volume on TSX-V. It has been offer only for some weeks (ie there are no buyers) and hence when the share price is allowed to trade in Canadian cents at the current level people will finally be able to buy/sell around the same level they now do in London which may spark some trading.

I would be interested to hear what our Canadian posters think about the move.