Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
"got an inside line into those high level iranian conversations have we dumgrano?"
Andy1022, I do not think Belgrano needs to have inside knowledge of the Iranian regime - you can get that from reading the informed comments of expert commentators on Iran - former British ambassadors/charge d'affaires, specialists at our universities that have decent Persian Studies departments (Oxford, St Andrews, Exeter, Durham, SOAS, etc.) and from Iranian specialists working at think-tanks that advise Western governments: Carnegie Endowment, RUSI, etc.
The best theories about the behaviour of the Iranian regime are the ones that join up the most dots. Common sense tells you the regime is brutal, is concerned about its legitimacy being undermined, is dependent on exploiting difference with the West to unite its people and is hellbent on projecting power throughout the region in preference to lifting the living standards of its citizens. It also invokes religion to bolster the power of the government. The regime is stable until it collapses, and it is probably foolish to try to predict when that will be.
Suffice it to say, the regime is intent on eradicating Western influence on its citizens (does not want to compete with seemingly more attractive value systems) so it will spend its vast natural resource wealth, on among other things, buying Iraqi politicians to try to get rid of us out of the Middle East altogether. Belgrano's posts are spot on.
Pepe Escobar sounds like a conspiracy theorist claiming Israel launched a plane carrying an atomic bomb that was shot out the sky by the Russians before it reached Iran (Aliens built the pyramids and conveniently left no trace and all that stuff). Israel's interest in retaliation on the Isfahan region was probably designed to give the Iranian regime a reality check about Israel's capabilities without escalating the conflict, a small enough retaliation not to rile Israel's allies who had urged restraint.
Although I cannot stand Netanyahu (Sarkozy called him a liar, which sounds right), I have no problem with them attacking Iran's consulate in Damascus to kill one of the people orchestrating trouble throughout the Middle East. John Bolton seems to me to be one of the few Americans who gets Iran right, and I have lived and worked in Iran. I think Belgrano's posts are excellent. Also Investrat's posts demonstrate more realism about the region than anyone else's. JMV.
"Not all KRI produced crude will find its way into the export pipeline"
That may be true, but there comes a point where the actions of the FGI against us amount to creeping expropriation, something we ought to have some legal protection against; otherwise, we would not invest there.
"How laughable is broad fords comments that GKP oil is not wanted !!!!
He never has had a good word or comment on the GKP board since his pal Tony left
GLA LTH the Guy is pure comedy"
Opulentia, if you cannot take the price volatility that comes with being invested in a stock that has a speculative risk rating, why don̛'t you invest in lower risk stocks with less share price volatility e.g. Unilever, a large cap stock with pricing power from owning branded, arguably ,must-have unhealthy ultra processsed foods? We are a price-taker in a host country that does not pay on time and which controls everything we can do. What is wrong with Broadford̛'s posts? He is one of the more knowledgeable posters. You seem to want to shut down all bearish posters. I have not sold a single share since all the purchases I made for a relative in April and May 2020, although I have a book loss due to inheriting from that relative at a later higher death price, and have recently added more for a different relative at 99.9 something pence. I have no idea if this will double on a favourable outcome from the pipeline reopening or will plummet on becoming a binary litigation play dependent on shareholders for funds. All outcomes seem within the realms of possibility. I hope for a favourable one though. Why don̛'t you stick to safer stocks instead of trying to shut down posts you don̛'t like?
Dumbly, all your points are spot on. But I cannot vote Conservative if it rewards economic illiteracy even if it is politically the right thing to remove a source of taxation that Rachel Reeves could claim credit for. It is all putting Britain in a doom loop, what with its TWO Labour parties, one of them being the Conservatives. Nobody is arguing the benefits of greater inequality, just wealth redistribution (sometimes under the guise of going for net zero quickly without any regard for the economic cost as long as the rich are paying for it).
I think it was a Nobel prize winning economist (and son of a Yorkshire miner), who now teaches at Princeton, said that a certain amount of inequality was needed for economic growth (or that there was a trade-off between the two?).
The point of taxation is to do it with the least squawking (like pulling feathers off a goose), but destroying wealth many times the amount of tax raised is simply despicable, especially on a false premise, so it is maybe time to declutter, sell up and get out of the UK for ever for me - there is no hope under Labour policies, under whichever Labour party is in power (Conservatives or Labour).
I have nearly recovered my loss on my initial investment here (18.5p entry price?) and the shares I got my daughter (3 timesed my initial holding at around 12.8p?) have done well. Amjad is right that the UK is a fiscally unstable jurisdiction. So maybe it is time to get fried daily in a tropical steam bath and put up with a noisy insect life, but save on CGT, VAT, and 80% on potential dementia care costs and benefit from a lower cost of living (no second home punitive taxes either, taxes designed to redistribute wealth to first time buyers). What's not to like from a tax point of view? It makes no sense to remain here.
Excellent post AimOilKing. The EPL is discriminatory, unfair (particularly in the context of the commodity price cycle where the government failed to help us when Brent crude was $20 a barrel and we were badly loss-making), wasteful of otherwise economically recoverable oil resources (we keep having those remeasurement losses that make our marginal tax rate over 100%), destructive of good jobs (and the associated tax revenue), bad for the balance of payments in so far as we have to import oil earlier than we otherwise would, destructive of our wealth by many times more than the tax raised due to its pernicious effect on our other costs (debt interest and hedging costs), and lastly it converts our loss of wealth into the Chancellor's ill-gotten virtue, ill-gotten because the aggrieved electorate (over their electricity bills) cannot be expected to understand all the issues unless Jeremy Hunt tells them the truth why the EPL needs to be scrapped, why we are not making the huge profits the electorate think we are out of the North Sea, why trying to do net zero too quickly pushes up the cost of renewables (probably to 9x the cost of fossil fuels if every country does it all together - we need huge amounts of copper, lithium, nickel, etc. and the prices of those materials need to rocket due to inelastic supply) and how fossil fuel producers will not be net contributors of CO2 in the future if they are allowed to keep the EPL money to invest in carbon capture.
I will not be voting Conservative at the next General Election, and if Labour get in I will probably move abroad permanently (deprive them of VAT and CGT). I do not wish to live in a country where taxes have to be raised constantly to plug falling tax revenues from a stampede of rich people leaving the country. JH knows all about the Laffer curve effect - he mentioned it in the last budget, but still extended the EPL instead of scrapping it. Not a stupid man, but a stupid Chancellor.
Yes, Co ckeye, it is the deeds, not the words that count in this part of the world, so maybe the ICG will deny the Kurds the use of the export pipeline. Thursday's Finals may have some more info on this. Fingers crossed.
"Is the suggestion that the Turkish pipeline will be used (avoiding non-use fees) but that ICG will supply the Turkish pipe by circumventing KRG?"
No idea, but taking oil south from Kirkuk, then across the Syrian border and up to Turkey to avoid Faysh Khabour seems a bit daft. Maybe I have not understood it right.
"This message has been filtered, please adjust your filters to view."
Deaf, dumb, blind, and delusional, the tertiary stages of buyback syphilis, a disease where the fact that the drop in net assets from a buyback is the same as that for an equivalent dividend being paid out causes the sufferer to think a buyback is just a distribution and nothing more.
There is a related disorder, buyback gonorrhea, where the sufferer calls the buyback "value-accretive" in the annual report and accounts at a time when the share price is more than 60% below the average buyback price. (Our former Chairman in March 2021)
"And while it's a distribution of value and not a creation of value"
It is a creation of value in so far as you are buying expected cash flows for less than their fair value. The accounts of course portray the transaction merely as a distribution of course, but to anyone trained in interpreting accounts properly, a buyback is not merely a distribution: you are still appear to be suffering from buyback syphilis, and you have even infected one or two of the better posters here, apart from giving our Board the green light to do buybacks at any old price.
Next you will be telling us light emanates from our eyes because it goes dark when you cover them, and that the sighting of an iguana with a missing leg is proof of the fixed creation theory because there are no 3 legged iguanas in the fossil records. It's time you acknowledged that experienced investment professionals like Buffet, Terry Smith, etc. are correct on this issue, namely that buybacks can create value as well as distribute it, but they only create it if the shares are bought back below fair value.
Giving up the cash and sharing the expected returns from the bought back shares among the remaining shareholders is primary school reception class stuff, except they use sweeties or tiddly winks counters to demonstrate sharing. Are you in denial that a sharing process takes place as well?
"£145m debt vs £145m market cap still makes this extremely risky, especially with such minuscule operating margins..."
Operating margins are forecast to be about 5% for the next three accounting periods (including the one we are in). That translates, on huge sales, into a decent ROCE on such a small asset base. Sure, you can't expect big OMs selling to financially more powerful customers, but as the net debt and the pension deficit fall (payments into the latter to rise sharply from October?), the net assets should rise considerably, and falling interest rates too should help. Forward PE of nearly 5, admittedly with a flat to small volume growth profile, seems cheap unless you are expecting closure of the Suez Canal and WWIII to start.
Indeed, Yahoo Finance shows a consensus analysts' price target of about £1.04. In about a year's time, the share price should be past that. JMV. No advice intended.
P.S. Once the debt falls and the net assets rise decently, Paul Scott and Graham Neary of Stockopedia will adjust the risk rating back to adventurous - they were asleep on the job increasing the risk rating to "speculative", so don't expect them to do the reverse in a timely fashion.
The top holding company is incorporated in Bermuda, so if Gabriel is a main board director, the Company Secretary would have to file Director Appointment form in Bermuda (the Bermudian equivalent of Companies House in Cardiff, which is probably in Hamilton).
Papineau LeGris, because of his qualifications (CFA) and his job title (Chief Commercial Officer?) is likely to already have considerable responsibility, so it is not surprising if he is a director of one of GKP's subsidiary companies e.g. the UK one, for which director appointment forms are usually filed at Companies House in Cardiff.
So no, G. PLG is not yet a main board director, but probably is a director of a GKP subsidiary. In any case, as he is a PDMR, he still has to disclose his share dealings in GKP. JMV.
Sorry, my laptop isn't working properly (the double post and some keyboard problems)
Further, some key points about buybacks:
* they can be eps enhancing while destructive of shareholder value at the same time (a hard point to grasp)
* directors can be malevolently motivated to carry them out particularly if one of their performance conditions is to increase eps
* triggering shed loads of nil cost options from meeting an eps target may cause directors to feel for their less well remunerated colleagues and cause them to award even employees who don't work at the coal face to be awarded unnecessary amounts of free shares
* directors who don't want to be questioned about it, may hold virtual AGMs to have better control over what questions get answered, especially questions that disrupt the narrative they wish to put over.
I don't know why Investors Chronicle thinks we have corporate governance issues.
"But, first of all, GKP has no debt. Secondly, I don't understand what you mean by " equity base".
Agreed GKP has no debt, but the accounting treatment of buybacks is not decided on the basis of whether GKP has debt or not. UK law does not allow new shares to be issued below par value (as I understand it, you have to go to court and get permission from a judge to reduce the par value of shares if your share price drops below this and you want to raise new capital - the judge or court intervenes to make sure that no one class of stakeholders (lenders or shareholders) in the company is disadvantaged unfairly by a capital reduction. Buying back shares is maybe a form of capital reduction, so you have to create a non-distributable reserve (usually called a capital redemption reserve to match the reduction in total par value of the shares bought back, and removed from the share count, whether by cancellation or by putting them into Treasury, but since the asset side (the cash) has fallen after a share buyback, the total sources of finance (debt + equity) has to fall by the same amount, but since you have created a capital redemption reserve to preserve a minimum total par value despite removing the shares completely from the share count and therefore from the sources of finance, the balance sheet won't now balance, so you 'pay' for the newly created capital redemption reserve by reducing a DISTRIBUTABLE reserve, out of which you would pay normally dividends, a reserve perhaps called "retained earnings", by the total par value of the shares bought back, so then the total sources of finance will match the assets.
The whole point of all this is to stop shareholders ripping off debt financiers by not just distributing all the accumulated profits, but also distributing the original founder's capital put up to start the company (selling off all the company's assets and distributing the whole lot to shareholders, leaving the nothing for the lenders because the equity base or assets the lenders looked to, to repay their loans, have been sold off and paid out as dividends.
The UK has laws about what a legal dividend is, and it has to be paid out of distributable reserves like retained profits, not out of non-distributable ones.
I haven't mentioned the share premium account (I assume it is, ordinarily, a non-distributable reserve which increases by the premium new shares are sold for above par value). But I am sure I have come across cases where companies apply to courts to distribute it under certain circumstances, but again they need permission from a judge, I expect. It is a long time since I passed exams in all this stuff (Stock Exchange Interpretation of Company Reports and Accounts) , and I am not an accountant or a lawyer, but common sense dictates that shareholders must not be able to fleece lenders by paying themselves excessive dividends (illegal ones) or by doing illegal buybacks that achieve the same effect. Hope this helps.
"But, first of all, GKP has no debt. Secondly, I don't understand what you mean by " equity base".
Agreed GKP has no debt, but the accounting treatment of buybacks is not decided on the basis of whether GKP has debt or not. UK law does not allow new shares to be issued below par value (as I understand it, you have to go to court and get permission from a judge to reduce the par value of shares if your share price drops below this and you want to raise new capital - the judge or court intervenes to make sure that no one class of stakeholders (lenders or shareholders) in the company is disadvantaged unfairly by a capital reduction. Buying back shares is maybe a form of capital reduction, so you have to create a non-distributable reserve (usually called a capital redemption reserve to match the reduction in total par value of the shares bought back, and removed from the share count, whether by cancellation or by putting them into Treasury, but since the asset side (the cash) has fallen after a share buyback, the total sources of finance (debt + equity) has to fall by the same amount, but since you have created a capital redemption reserve to preserve a minimum total par value despite removing the shares completely from the share count and therefore from the sources of finance, the balance sheet won't now balance, so you 'pay' for the newly created capital redemption reserve by reducing a DISTRIBUTABLE reserve, out of which you would pay normally dividends, a reserve perhaps called "retained earnings", by the total par value of the shares bought back, so then the total sources of finance will match the assets.
The whole point of all this is to stop shareholders ripping off debt financiers by not just distributing all the accumulated profits, but also distributing the original founder's capital put up to start the company (selling off all the company's assets and distributing the whole lot to shareholders, leaving the nothing for the lenders because the equity base or assets the lenders looked to, to repay their loans, have been sold off and paid out as dividends.
The UK has laws about what a legal dividend is, and it has to be paid out of distributable reserves like retained profits, not out of non-distributable ones.
I haven't mentioned the share premium account (I assume it is, ordinarily, a non-distributable reserve which increases by the premium new shares are sold for above par value). But I am sure I have come across cases where companies apply to courts to distribute it under certain circumstances, but again they need permission from a judge, I expect. It is a long time since I passed exams in all this stuff (Stock Exchange Interpretation of Company Reports and Accounts) , and I am not an accountant or a lawyer, but common sense dictates that shareholders must not be able to fleece lenders by paying themselves excessive dividends (illegal ones) or by doing illegal buybacks that achieve the same effect. Hope this helps.
"Nobull still thinks the company owns its shares after they've been bought and cancelled."
The balance sheet would not balance as between assets and their sources of funding when the net assets drop regardless of whether the net assets drop for dividend being paid out or for a buyback.
In the case of a buyback where the shares are not cancelled but put into Treasury, that source of funding has to be removed from the balance sheet to match the loss of cash on the assets side, but as the shares no longer exist on the sources of funding side, you are correct that they are no longer owned in the sense they can't be voted on or received dividend, but a common sense view suggests the can have a loose ownership in that they can be put back into the share count any time by distributing them or even selling them at a higher price than they were bought back at.
I don't have any problems understanding it now. I don't suffer from buyback syphilis. Of course when buybacks are done it isn't quite as simple as removing the shares bought back from the share count (aka sources of funding) whether cancelled or put into Treasury, because debt financiers have to be protected from a dwindling equity base, so a capital redemption reserve has to be created on the sources side of finance side that is equivalent in magnitude to the nominal or par value of the shares put into treasury, and this charged to the retained profits source of finance. I get it that in the accounting sense, the bought back shares put in to Treasury are not "owned", but in a common sense way they can be considered to be loosely owned (albeit with none of the rights of ownership except the one to distribute them back into the share count with the full ownership rights at a later time. I am glad you now accept that buybacks need to be done below fair value and in that sense are not always a value-neutral distribution even if the accounts make it look like they are. Whether they are or not depends on the price that was paid even if the accounts don't care about the price paid.
"No difference between the two [buybacks and dividends] as far as I am concerned, as they are convertible to each other."
If the market thinks the company is paying £1.20 for £1's worth of expected eps, it will price that in fairly quickly even if the accounts continue to show the buyback as a value-neutral distribution (the net assets drop $25m whether a $25m dividend is paid or a $25m buyback is done, making them look the same to Putup and to you, but not to Warren Buffet, Phil Oakley, Terry Smith and most CEOs .
Buybacks and dividends will most likely be the same if the company buys in its shares below fair value, but not in all circumstances regardless of price paid for the shares, a small point that Putup simply can't grasp (buyback syphilis).
Why should the rules about prudent, risk-averse investing be different for a company buying in its own shares compared with an outside investor buying the same shares? Both need to buy below fair value.
"Oh no, the zombie is back. Nobull still doesn't get it. (I have him in the filter bin. One of only two.)"
It is always difficult deprogamming members of cults (the accountancy cult) to cure them of their faulty thinking. Not all eps growth is good, particularly if it is done by jacking up the company's risk rating to unacceptable levels.
It is like putting a cross to Dracula explaining to you that buybacks are not merely value-neutral distributions. You don't get it do you? Maybe if you read fewer accountancy books you wouldn't need Phil Oakley's penicillin for your disorder.
https://www.investorschronicle.co.uk/comment/2019/03/08/buybacks-versus-dividends-which-is-best/
And another of your problems is buybacks are both distributions and capital allocations (expected cash flows shared out from either the cancelled shares or from the shares put into Treasury) but you don't accept they are capital allocations like whether the money is best spent on hard assets or on financial assets (shares).
Finally you want different criteria for investors buying GKP shares compared with GKP buying its own shares. GKP buying GKP shares don't need to worry about whether they pay above fair value or not according to you because it is a value-neutral distribution but other investors, if they are rational and risk averse, do need to be careful about not paying £1.20 for £1's worth of expected cash flows. Your view is illogical. Both need to take care to buy below fair value.
I can see reading too many high powered accounting books does cause buyback syphilis - you are in the tertiary stages of the disease:
Take a second dose of penicillin:
https://www.investorschronicle.co.uk/comment/2019/03/08/buybacks-versus-dividends-which-is-best/
"I totally agree with PUTUP that a buyback is value neutral as far as the company is concerned."
It is value-neutral the way the accounts portray the transaction, but the accounts don't tell the whole story. If you borrow money at 10% and earn only 8% with it, you are destroying shareholder value: a company needs to earn more than it weighted average cost of capital to add shareholder value. If you buy expected cash flows worth only £1 and pay £1.20 for them (e.g. by doing buybacks above fair value), you are destroying shareholder value, something the accounts can't show (the accounts aren't a nuanced account of changes in shareholder value, nor should they be). An example is when the multiple of earnings drops the share price more than an enhancement in eps adds to the share price e.g. due to the company becoming more risky due to having a more risky capital structure. JMV.
A perfect time for a buyback?
1. On the grounds of valuation: yes;
2. On the grounds of the importance of preserving liquidity when we have low business predictability (see our snowflake diagram on Marketscreener): no; (low business predictability to me means there is quite a high risk of expected future cash flows differing from actual cash flows achieved what with the risk of payment defaults, contract revision, exchange rate and oil price volatility)
3. On the risk of the exact same amount of cash expended on buybacks having later to be raised by issuance of a greater number of shares than were bought back (destroying shareholder value by dilution):no;
4. On the grounds of doing the opposite to what the herd are doing and on it being very hard to part with the cash (because of 2 and 3): yes;
5. On the grounds of tax efficiency and genuinely having surplus cash (not having any debt): yes.
Overall, no objections to buying back 10m shares at £1 or less on the assumption cash coming in from local sales can reasonably be expected to roughly match monthly outgoings.
While paying more than that or buying back more than that might suit some people (especially those with buy-back syphilis, a disease where people become over-invested in the power of the accountancy profession to describe reality correctly: they believe because the net assets of a company drop in the same way as they do for a dividend leaving the company that a buyback is just a value-neutral distribution . A buyback can be eps enhancing at the same time as destroying shareholder value, for example if the multiple of earnings drops at the same time e.g. due to more dilution risk having to be priced in due to too much debt replacing the company's equity, for the multiple of earnings can drop the share price more than enhanced eps increase it.
Like sex offenders, people with buyback syphilis are very hard to cure: they disrespect Warren Buffet's views on the subject; they refuse to take their medicine (Phil Oakley's article in Investors Chronicle on how buybacks can destroy shareholder value if done at the wrong price), and like all members of cults they need to be deprogrammed by repeatedly confronting them with their disorder.
P.S. there is a related disorder: buyback gonorrhea where the sufferer has been badly advised (probablly by someone with buyback syphilis?) and calls the buybacks value-accretive when the actual cash flows achieved fall short of the expected cash flows at the time the buybacks were done. I am not sure what value-accretive means, but it could mean the IRR > 0% but that could still be shareholder-value destructive if the IRR < the weighted average cost of capital.
Just my thoughts.