Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
The market wants a clear strategy to monetisation. PRD were all in for CNG. Was looking at a JV, binned the JV to go alone, then change of direction to sale of gas in the ground leaving the development to the purchaser, not clear on the structure from the last podcast.
PG is changing strategy frequently. Who’s to say it won’t change again. The market will not take notice until he actually does one of them. Once a concrete deal is signed or put to shareholders for a vote, why would the market take notice of the last thing said.
Drill and testing needed. See what happens then.
The deal PG mentioned was an example payment for around 40BCF. Anything over that a 10% royalty. That would typically be 10% of net sales from the purchaser for anything over the initial amount, in this example 40 BCF, presumably over the term of the licence. This would be easy to retain through the subsidiary company. If he could get that deal it could be very lucrative over the long run.
Would be odd to schedule the podcast when an update wasn’t required then claim hands are tied due to the current situation. If that was the case either announce on the 18th or better still after the results when a deal has been agreed. It won’t need a shareholder vote.
I am the one happy with a Moroccan exit at the price PG said. Given the current market cap and IPO price I think to realise $150-200m and 10% going forward would be some achievement. My only concern would be a special dividend but I’ll wait and see the deal.
What is known is PRD isn’t going into the CNG business as planned which would have allowed them to self fund any drilling and testing they wanted.
Is a large buy in for a purchaser and 10% royalty going forward with not being on the hook for any drilling, testing or CNG costs too much of a temptation for PG. Retaining 10% in the subsidiary allows him to still advise and use his contacts for the purchaser. He mentioned something about telling people what to do instead of doing, or something to that effect.
He’s never been interested in gas to power and if not doin the CNG now this looks like the Morocco on exit.
With it still being in the ground and no up and running CNG facility he isn’t getting $150-200m per 40BCF.
Should he get that amount I hope he returns a decent amount to shareholder as if it’s all retained for other projects a decision will need to be made to hold or sell. T and T isn’t a good a prospect as Morocco. Ok to hold if a decent dividend already paid, not so much if PRD just have a large balance sheet.
A successful drill stated by PRD even if independently verified will still require DD on the purchasers behalf. What would make them speed up that process, getting something for 150-200 which is worth a lot more.
See what he says on the 18th. My guess is more questions that answers again.
I’m not twisting anything. People are twisting to suit their confirmation bias. I am saying wait until he clarifies. Maybe listen to what he said about the DD again in the timeframe he stated.
He also said he wanted to get that 150-200m with no or little due diligence. Highly unlikely for that amount unless that DD was done with the previous prospective JV partners. Even then no chance if approaching $1billion.
Jimmy did a post on 27th Apr at 1342. I also thought PG was getting CNG up and running for cash flow to pay for all future drills without further dilution.
He now wants a quick sale prior to doing that without the need for DD in the next few months. It could change again by the investor presentation.
Everything on here is opinion until PG clarifies as what he said can be taken both ways.
He didn’t say ‘ $150-200m per 40 BCF’. That’s what we want him to have meant. That’s opinion as what he said on the face if it was that amount plus 10% royalties for anything over. That could be cutting and running early to get money in the bank now. That seems premature for size of the resources that could be proved up from drilling MOU3 and testing 1 and 3 which are expected short term but it’s what he said hence the confusion.
PG will have to clarify on the 18th May, if not before.
The effort to talk it up and down to scalp here and there cannot be worth it.
PG has stated, whether those believe it or not, that he’s exiting Morocco.
Still a decent return, should it come off. Not what some people on here were talking about though. We’ll know soon enough. Maybe those who shouted loudest would have exited before then.
The logical plan was to get CNG up and running from the gas agreements/leasing etc that PG has mentioned several times. Once the money rolled in the drilling would be self financing. No more dilution. The further down the road PRD got the more they could sell it for. Maybe PG’s glacial pace isn’t want ONHYM want, especially if they have a major in their ear talking them up being centre of European energy security which came about after PRD were already there.
Suddenly dropping 75 % working interest to a 10 % royalty after a buy in for the first 40 BCF, without the need for conventional testing or MOU2 to complete sounds like state involvement, he may not have a choice.
PRD was always going to get squeezed if it was a large discovery, if that’s the case what was suggested Sunday wouldn’t be a bad result.
Alternatively he could have just been tempted by the next shiny thing in Trinidad and changed direction.
It was 150-200 and he also quoted that £2.67 value when referring to $1.2 billion for CNG.
Two months ago he said re enter MOU2 whatever it takes and now he doesn’t need to.
Im not saying a change of strategy or direction is wrong but clearly what he says can’t wholly be trusted. See what he delivers not what he says.
PG is cashing out early so he doesn’t have to do the work, that’s saves both time and money but isn’t worth as much. Whether he gets the figures of $150-200m and as much as 10% royalty over 40 BCF we’ll have to wait and see.
I am happy he’s going down the route of monetising early should he get near the above. I would however like a half decent special dividend from the sale and not roll the majority into T and T. He mentioned it wasn’t the easiest place to work. That book value could depreciate quickly which wouldn’t bother me as much if we already had a 25-30p dividend.
PG has always stated he wasn’t interested in gas to power. He was never going down that route for the capex reasons you state. He did say CNG was worth up to £2.67 per share, pre latest dilution. That would be from producing wells. Three wells with leased CNG facilities could have been financed and was achievable. He was never going to get £2.67 but to get anywhere near it would have required the up and running CNG business. Why he has suddenly said sell for $150-200m pre any CNG development I do not know. But he stated he wasn’t willing to give up 50% of $1.2b for a JV. We don’t know the details of that offer but if it included the costs paid by the partner, which he was looking for before the talks started, that may have been a better option.
Something has shifted his focus and it isn’t cng capex. Perhaps we’ll find out more on the 18th May, perhaps we’ll never find out why.
It could all change again anyway so until something is signed and binding it’s all speculation.