Member Info for KeithOz

I'm not a big fan of Goldman Sachs, but here's their analyst Jeff Currie telling us that the commodities supercycle has only just kicked off. Oil & gas in the first couple of minutes, with a slightly different spin, then he thinks agriculturals are due for the biggest rises.

https://www.cnbc.com/video/2022/03/25/currie-we-are-only-in-the-beginning-stages-of-a-commodity-super-cycle.html

Wideboy, while I am in agreement that there is considerable potential at Disko, which is why I am here (no real interest in Dundas), where did you get the idea that Norils'k was discovered by Kobold's founders? Norils'k-Talnakh was discovered in 1923. I doubt that even Kurt House & Josh Goldman's grandfathers were born before then.

Not sure how to take this - quite a large placing at 7p, to finish a BFS which I thought must have been finished by now. Not sure what work they are doing at Dundas, and whether that is likely to accelerate the project, which let's face it, needs a hefty kick up the backside after years of seemingly nothing happening.

For Disko, great that they are getting on with things, but what's happened to the "drill-ready targets" they were mobilising for over two years ago, just before Covid closed things down? The Kobold drilling is stated to be petrological, rather than aiming for the specific targets that have been shown on the JAY website for nearly three years.

I would love to be wrong, but overall I am not very impressed.

I'm sure they are more than struggling - since the shares are not yet listed! First tranche will be listed 25/3, second tranche 31/3

RFJ - Legalwolf knows we aren't drilling for diamonds, but is quite correct to say we are using a diamond drill.

A couple of things I could add. Economic deposits are not just found within the carbonatite bodies, but also in the surrounding host rocks. When the carbonatite is intruded, it has both physical & chemical effects. The host rocks can be extensively broken up (brecciated) or cracked. Large amounts of hydrothermal fluids then migrate into the spaces in the breccia, and form veins in the cracks. The host rock minerals are altered - the fenitisation process referred to in the MM article - and concentrated deposits of REEs form out of the migrating fluids. These alteration halos can be a lot larger than for more normal intrusive bodies, so the eventual mine can be a lot larger than just the carbonatite.

Just across the border in South Africa, there is a large carbonatite system at Phalaborwa. This had been mined extensively in the past for a number of minerals, especially apatite, but REEs were not of interest at the time. It was recently discovered that there is a high concentration of REEs in the apatite tailings, and these are now being extracted by Rainbow Rare Earths (RBW:LSE), so what was thought to be waste has now become a valuable resource.

RFJ - all the hard work has been done while I was asleep! The Mining Maven link posted by JP2K provides an excellent summary of what carbonatites are - see Q. - What now for Kavango's Ditau project? That article was 2019, since then data from the two Falconbridge cores has become available, and suggested possibly commercial concentrations of Nb & REEs in the nearby carbonatite structures. Ditau has quite a lot of targets, some of them decidedly large. I should point out that 'rare earth element' is a misnomer - they are in fact quite common, just not in economic concentrations.

Ben has said he will provide an update on the drilling programme in the next few days. A couple of issues I will be interested to see are:
* Why the RNS of 22nd October 2021 included the statement "(KAV has) increased the exploration scope of Ditau to include base metals as well as REEs"
* Originally they talked about using RC (reverse circulation) drilling for Ditau, which is suitable for shallow drilling, and is cheap & fast - it brings up lumps, not core. The KSZ rig is DD (diamond drilling) which brings up whole core.
* Again, they also previously talked about drilling 'a fence of shallow holes', but now are talking two deep cores.

I'm sure there are very good reasons for all this, we will hopefully know more next week.

S64 - your arithmetic may be correct, but the assumptions on which you base your calculations are not. The geological chances of success of an oil prospect are calculated using perceptions of the likelihood of a hydrocarbon system being present, suitability of reservoir (porosity, permeability, charge) and whether an adequate trap is likely to exist.

For Rukwa, we already know all those factors are positive, since drilling has already taken place. What is missing for HE1 is obtaining a gas sample for analysis, and flow rate testing. That moves the 30% cos you quote, and those for each prospect in the original CPR, up by several significant notches. This is a totally different scenario compared to ADV.

I think that your suggestion to "only have a small amount left invested if you are confident of a discovery" is a little strange in these circumstances. Your money, your decision, but not what I will be doing.

fbrj - two very important points that may have been missed by many over the last couple of weeks:

1. In these times of crazy metals price inflation and serious questions over future supply, it is a very good idea to grab as big a portfolio of prospects as possible in your area of expertise, especially if going cheap - even if you do nothing with them for a year or so, the value will increase.

2. The share price has dropped (plunged?) on very low volume. Think what the volume would be like after a significant discovery - and the price rise associated with that demand.

R4J - Thanks for answering Bozi's question so eloquently, saves me from having to think so hard at bedtime :-)
Re. the Molopo deal structure change - I suspect that the one shareholder outside the original option agreement (Evrima) had baulked at contributing their share of the exploration costs being proposed by KAV. That is always a problem with minority shareholders - they can dictate to the majority, hence the revised proposal to buy everyone out to gain 100% KAV/POW control. I do recall that at one stage Evrima had said they would consider exchanging their stake for KAV shares, so we will have to wait and see how this one works out. From the last sentence in the RNS yesterday it appears that Ben is a little p'd off that it's taking so long for the minority shareholder to agree to a deal: " We have a drill rig ready to mobilise that we've waited long enough to deploy."

tk95: While you are quite correct that discovery will only be achieved by drilling, there is a lot more to exploration than that. Why did the share price drop so much? - because people had overly optimistic expectations that you drill a hole and win the lotto. What in fact happened is the drill has helped reveal how to win an even bigger prize, by apparently confirming the feeder zone and keel hypothesis. Yes, we will need further drilling, but first you need to be as sure as possible that an expensive drill hole is going into the right place.

Exploration is an iterative process, and KAV are very good at refining targets in order to minimise costs, and I am happy to let them continue that process. We all want a quick return, and that includes the directors of KAV & POW. If you think that you are better positioned to assess projects and schedule them for maximum financial gain, then AIM awaits tk95resources ltd with open arms, if not an open wallet.

It is sensible to do further TDEM/DHEM on the KSZ as the next step, while that is ongoing the only question is where the current drill rig is best employed - Ditau or Molopo. The KCB will use a different kind of rig (RC), and appears still to be awaiting final permits and drill target finalisation. I am confident that we will be seeing the DD rig at work at either Ditau or Molopo in Q2, then the KSZ Q3/4, plus an RC rig at work on the KCB Q2/3. That will result in a lot more than 300m being drilled. Without further work to refine drill targets, exactly where do you think they should have already drilled a few thousand more metres by now?

Malcy has some positive words:

"Eco are powering ahead with this CPR in which the numbers are truly stupendous, even shareholders may have blinked when they saw best estimate prospective resources of some 8.2bn barrels of oil and 7,417 BCF of gas. The report has everything in it except the recent JHI deal which includes the Canje block in Guyana which would provide icing on the top of this exceedingly good cake.

Clearly Namibia takes the kudos with its huge structures containing massive potential but actually if you look at existing portfolio it is carefully assembled with differing profiles and geographies. Recent drilling in every single area that Eco can be found has already started the de-risking programme and Gil and Colin have put together what is rightly been described as ‘the biggest small cap in the E&P world’. Indeed normally if you saw such a sizeable portfolio you wouldn't expect it to be in a company with a market cap of only £70m.

Last time I wrote about Eco I suggested that it might even be the ‘go-to’ exploration company in the energy mix, this CPR only confirms what a gem this is in the E&P sector, with funding available through canny deals, enormous strength from partner companies and investors who know a good thing when they see one. As they say on the stage, this one will run and run…"

This RNS came out way past my bedtime, so going through all the comments while eating breakfast...

The preliminary data that I have seen suggest Molopo Farms is highly prospective, and would be amenable to exactly the same exploration programme that KAV have been applying to the KSZ. There are also a number of obvious synergies with the current KAV portfolio - Botswana, NiCuPGEs, Power Metal Res, Spectral & Mendea. The issues to me were always would the resultant dilution be repaid with exploration success, and are there enough staff to get everything scheduled and executed within an appropriate timeframe?

This RNS is a little short on details, in particular how this is going to be paid for, but clearly indicates that the appraisal work done by KAV over the last few months has indicated substantial potential, not least for a rapid upgrade to the point where perhaps the project can be 'flipped' for development very quickly. The fact that both KAV & POW are apparently in agreement that the DD drill currently at KSZ-B should go to Molopo rather than Ditau suggests this is potentially a very exciting project.

The situation is you have the Boards of TWO exploration companies active in the same geographical & minerals areas who endorse this strategy - and they know vastly more about this project than all the members of this BB put together, and have a financial stake vastly greater than all the members of this BB put together.

You have a simple choice - trust the BoDs, stay put/buy more; or don't trust them & sell.

All this is about phosphates in Western Sahara, and will shortly be influenced by gas as well. Expect Germany to do a U-turn in favour of Moroccan rule in the next few weeks, when they realise they have from nowhere else to import their fertilizer and energy needs.

Error - PGs own company!!!

PT - CPRs from SLR have not given a valuation, and nothing in the annual reports. I am of course aware that Theseus (PRD's own company) own 50% of these two licences, but no dollar values anywhere. This is why I was looking at comparators.

If you have an hour or so to spare (!) then I recommend a listen to this webinar by Leigh Goehring and Adam Rozencwajg. I subscribe to these guys since they have a great record of predicting events well ahead of others. Here they have a lot to say about what is going to happen with the energy market over the rest of 2022. Very long link!

http://info.gorozen.com/call-replay-natural-resources-inflation-capital-cycles-and-esg-distortions-march-2022?utm_campaign=2022.03%20Webinar%20Replay&utm_medium=email&_hsenc=p2ANqtz-9bE4sXCDHFI_zXmwIAtiLR1Q22JRldXRphfsmrQfnhMOQ1Ogbl3yGY2Z9WNSga1hn8ymCRtbg40Pcasbuw-FBTDpGlxg&_hsmi=207349006&utm_content=207349006&utm_source=hs_email&hsCtaTracking=9811acf6-4cfd-4ead-b44a-d879acbffe25%7Ca92ff9d4-0b50-4efa-8fbc-404d9da45d91

While trying to fill in some of the large gaps in my understanding of the Irish situation, I came across some research issued this month by FinnCap on Europa Oil & Gas. EOG has FEL 4/19 - Inishkea, with 1.5TCF. They seem to be in approximately the same situation as us, awaiting conversion of FELs, and with a similar potential amount of gas - Corrib South 0.42TCF, Ram Head 1.0+ TCF.
FinnCap give Inishkea an unrisked valuation of $116M (£88M). After applying their 33% geological cos and a 50% commercial cos, that comes out at a risked $19M (£14.5M). No details of how they arrived at the unrisked valuation, but intuitively it seems a little low to me, and particularly compared to some of the figures suggested on this BB recently for PRD's Irish assets.

Can anyone make some (knowledgeable rather than merely opinionated) comment on this please?

ahh, exxxxcellent (rubs hands like Montgomery Burns). I have levered some plain facts from some abstruse posts :-)

BillyRayVal - It is indeed good evening from me! I agree with your your view that from the various announcements it appears more than 3 drills are hoped for in 2022. This is obviously going to depend on the amount of money an exploration partner is prepared to put up, and of course the results from the initial wells.

MOU-4 is 12km², -5 is 30km², and -NE is around 100km². Clearly they all need more than one well. Obviously I don't have the depth of information held by the PRD team, but if I could only afford 3 wells, I would put one in each prospect. If more cash was available, I would follow up with whichever of -4 or -5 was the most productive - the idea is to get as much gas into production as quickly as possible. The MOU Fan, of which 4 & 5 are part, is split up by at least one large fault. How this affects compartmentalisation of the reservoir will also need to be considered before additional drilling.

I am unsure whether it is intended to target the deeper play that appears to be present in the MOU Fan - if so, this would increase drilling time and cost for each borehole, but could ultimately double gas resource. MOU-NE is likely to have both gas and oil, be very complex, very large and very expensive. It will need multiple drills, so don't expect this to be up and running this year.