Member Info for ps200306

"some long term holders have been blinded by their bitterness towards the former CEO ... Many have lost patience and recently sold out as a result and have lost huge sums of money only to now regret the decision"

Utterly bizarre rationalisation. The SP is the same as when I sold. I could buy back in this minute without losing *anything*. Makes me question ST123's grip on reality.

"the new CEO has rescued the phoenix from the ashes "

Uh, how? By raising money from suckers like ST123 who bought in at a multiple of the current price?

"Any new investor should look at Sound with a fresh pair of eyes and not be blighted by the previous failings of a board who have clearly cost investors eye watering amounts of money."

This from the guy who bought in a year ago at 266% of the current price. Who can provide absolutely no justification for his predictions of success, in fact claims that the future trajectory is unknowable. And who claims that the company cannot possibly be valued, in spite of SOU paying for a valuation that anyone can read. Makes you wonder why he's invested. Even a paid ramper couldn't be THIS stupid. I have a sinking feeling he isn't being paid. Is he genuinely saying that SOU's existential tax crisis is nothing to worry about? And what's with his extreme phobia about anyone mentioning it? Weird!

ST123: "nobody can provide calculations with any accuracy not even Graham... There are just too many variables that could fluctuate massively ... we can not begin to predict ... Trying to work out the current value of the asset or shareprice is not only impossible but pointless ... it is unclear how this will resolve itself ..."

Pretty amazing that this guy calls himself a "trader". You have to wonder why SOU paid a broker to produce a valuation if everything is so unknowable.

"at least I am still in the game and have not foolishly lost patience and sold out"

By his own logic he can't possible know whether this is foolish or not.

Thanks pduk. For the avoidance of doubt, I'm a "he". STD123 is just stirrin' it :-)

... cont'd ...

Let's assume if all the hurdles were cleared that the deals with ItalFluid and Afriquia Gaz would then be easy to close. Then we have perhaps two years from now to first gas. The revenue from LNG is entirely committed to paying off debt for the next decade. SOU is valued at less than zero by their own broker on the basis of LNG alone. To be worth anything it must raise $80m in debt to build a pipeline. Again, that effort is dependent on clearing the tax and LNG hurdles first. Even then it is a tall order. Graham has said that traditional sources of funding are not easy to access for fossil fuel projects. A deep-pocketed farminee would help, but SOU's last attempts in that direction wasted an entire year of ultimately fruitless negotiation. Graham has also said that Phase 2 (the pipeline) is being pursued in parallel with the Phase 1 LNG. However, the lack of any specific announcement suggests to me that this is at a very preliminary stage. Were the money available, construction timelines for a pipeline are potentially shorter than for LNG. SP Angel's prediction of revenue in FY23 seem to imply that pipeline gas would be flowing by then. So if the Phase 2 funding got sorted we would not be talking about years and years before SOU started to be worth something (6.5p / share according to SP Angel). The revenue would then open up the possibility of funding further drilling.

All is by no means lost. ShareTrader123 claims I have been "predicting Sound's demise" but that is not true. However, there are some very binary forks in the road, hinging on making the tax bill go away and accessing Phase 2 funding. My own assessment was that the risk was too great (*for me*) and I sold 95% of my holding. Your assessment must be based on risk appetite and how long you are prepared to tie your money up for. Given SOU's history, I believe any short term upticks in price will be merely based on market sentiment followed by inevitable drift. That has been the pattern for four years now. Real long term value depends on actually achieving all the targets and I think that is several years away, if ever. Other people may take a different view. Beware of anyone who takes a different view and isn't prepared to say why (particularly someone who predicted just weeks ago that the SP would double, instead of which it halved). The sort of inanities that get trotted out, such as "we own 47.5% of $2.4 bn worth of gas", are meaningless. There is no value unless it is exploitable, so demonstrating a path to value requires showing how all of the hurdles up to Phase 2 will be cleared. Even then the valuation is not huge, so depends on yet further speculation about exploration prospects which have been found wanting so far.

ilyas01: "@ ps200306 - am trying to understand the point you are making in the messages below. Is the company is doomed and we will loose all our money? or am i missing something. Have a decent holding in this share and assessing my next steps."

I have no crystal ball and don't pretend to have any more facts at my disposal than anyone else. Any opinion can only be based on observations of SOU's trajectory to date and guesses as to what will likely happen going forward. SOU have been trying to monetise the Tendrara assets for over two years now, though plans to do so go back considerably further than that. While these efforts are ongoing the share is being progressively diluted as SOU continually raises money to keep the lights on, or promises chunks of equity to creditors and potential partners.

However, that is all water under the bridge. The question is what happens now. All we can do is look at what SOU needs to achieve, guess the likelihood that they will achieve it and in what timeframe, and look at their own broker valuation as to what that will be worth.

It seems to me that number one item on the agenda is the tax bill(s). It seems incredibly unlikely that SOU could close any deals with prospective partners without getting certainty on the tax bill. No sane partner would pay cash up front to someone they knew was being pursued for more than they could pay. SOU cannot afford to pay the tax now or in the future. All of its revenue from LNG is required to pay debts. We know that from their own valuation. So even an agreement with the tax man for a deferred or phased arrangement would be problematic. SOU needs the tax demands to go away. It's very difficult to assess the likelihood of that because we don't know what arguments are being made by the two sides. From what SOU have said, the tax demands sound spurious. At the same time they have not been dismissed in nine months and the Moroccan tax man is clearly sticking to his guns. What's more, SOU have said that proceedings could last a year and still not be resolved. A year from now the outcome will be academic as SOU doesn't have funds to keep the lights on that long, nor any easy means of raising them (SP Angel estimates SOU's cash position at 4m, with projected FY21 expenditure of 3.4m). None of this is to say that an early resolution is impossible. Just that it is an unknown with big consequences and therefore a large risk.


cont'd...

ST123: "I can see from my 1 filtered post that the serial spreader of doom and gloom is at it again."

It's really quite hilarious watching you and ktf pretend you're not reading the posts. And you *still* can't help responding :-)
As for serial doom spreading, if you were honest you would acknowledge that I have done nothing but repeat the company's own announcements. Remember, "in Graham we trust"? Yet as soon as I merely reiterate what he's said you claim we can't possibly know the facts. You don't seem to have a very firm grip on reality.

ST123: "10 paragraphs of trying to micro analyse anything positive and turn it into a negative"

Only 7, but who's counting (apart from you ;-). So you found something positive in that last RNS? I'd love to know what it is. Oh wait, you don't read the RNS's for fear of having to engage with reality.

ST123: "just recently bailing out before the rise and then buying into PVR which have halved since".

Yeah, keep telling yourself that. Actually I bought PVR on a dip. As for bailing out before the rise ... uh, have you checked the SP or are you afraid to look? You're the one who hung onto a share that has halved in price. I bailed with two weeks to go before a deal deadline and no sign of either the bondholders or tax man being sorted. I suppose one out of two ain't bad, even if Graham had to give away a quarter of a billion shares and warrants. Fact of the matter is SOU is in deep, deep trouble. And even it manages to extricate itself its prospects don't look very hot.

ST123: "The journey to first gas will materialise and the shareprice will rise way beyond current levels".

Only if delusional investors like you forget (as you are wont to do) that even at first gas SOU is *WORTH LESS THAN ZERO*. To be even worth a few pennies, a $90m loan is going to have to fall from some magic money tree. Graham himself has said (and yes, I'm remembering that you don't follow company news) that traditional sources of funding aren't interested. Perhaps Morocco has realised that a minnow like SOU is not going to get Tendara gas out of the ground and has decided to expedite matters regardless of the reputational impact. However, I won't speculate that far. All I know is that it seems unlikely the tax man is going to turn around after nine months and say the tax bill was just a silly miscalculation by some arithmetically challenged underling. Especially when they've just issued an even bigger second one.

Nope, looks like even a well-intentioned Graham can't save investors from the shafting we suffered from the former CEO. Even the pittance that remains is looking like a booby-trapped prize.

ST123: "This tax fiasco will get sorted. This again is not the fault of our current CEO. It will not derail his plans in getting us to first gas."
ST123 (one day later): "this could be a blow no doubt but then again it may get sorted as none of us really know."

So it's definitely going to get sorted, but none of us really know. Yeah, that sounds coherent.

ST123: "the last thing the authorities would be doing is trying to put obstacles in the way that would send out warning signs to future investment."

And yet the multiple tax demands are there. Fascinated to know how you square that circle? Don't bother answering. After all, you're the guy who doesn't read the RNS's and then claims we can't possibly know anything.

ST123: "None of us know for sure the outcomes but it would be more logical to suggest we will get to first gas than not."

Because ... reasons.

ST123: "I notice by my one filtered poster that the board serial doom and gloom spreader is still there so everyone feel free to sell up and buy shares in PVR and lose the remainder of your money and then haunt this board with bitterness and regret."

LOL. Another pretend "non-reader". One who hasn't noticed the share price is exactly where it was when I sold up, and half what it was when he *didn't*.

ST123: "this has not put off the bondholders"

Like they had a choice? Any tax demand would take priority over their own claims. If they don't keep the ball rolling and hope the tax issue gets sorted then they end up with nothing. As it is, they're currently down $1m on the notes that got converted to shares and have 140m warrants at double the current price.

ST123: "I'm sure no company would commit to building a multi million pound plant if there was a hint that Sound were in any way going under. These deals are subject to due diligence and the fact that some company is still prepared to go ahead speaks volumes."

Uh, what reality are you living in? That's exactly the point -- they're NOT prepared to go ahead. No deals are closed yet, for the exact reason I said back in mid March: nobody's going to sign on the dotted line with this issue still outstanding. And there's absolutely no sign of it going away anytime soon. Plus, as I will continue to point out for the hard-of-understanding, SOU will still be worth LESS THAN NOTHING even when the LNG gets signed, delivered and commissioned.

ST123: "I look forward to Graham giving future updates of our journey and I am confident he will deliver."

All together now: IN GRAHAM WE TRUST. Still can't figure out if you're a paid ramper or just the leading contender for most delusional poster of the month.

Hey ktf, why not tell us all about your filter list AGAIN? 'Cos everyone really wants to hear you bangin' on about posts you pretend not to have read. LOL.

ST123: "This tax fiasco will get sorted. This again is not the fault of our current CEO. It will not derail his plans in getting us to first gas."

So you haven't shown up here for exactly a month. Then, lo and behold, on the first sign of bad news you're back with "in Graham we trust". Seriously, who's paying you for this cra@p? Your last parting words were that you hadn't sold out at your 3p breakeven because the price was going to double in the next few months. So you already got trapped in the share for a year, having bought in on the June 2020 hype, then after being forced to average down to 3p you didn't take the chance to exit when you had it. And now you're down 50% again. And you complained about *MY* investment advice? At one stage today the share price was lower than I sold out at.

I have no idea what's going on with the tax bill, and neither do you, nor anybody. Chances are it's going to be a long drawn out process as yesterday's meeting clearly didn't go well. The tax officials are sticking to their guns whether the claims eventually turn out to be spurious or not. Time is exactly what SOU don't have in great supply. They need advance money from a deal. Also, I'm sure as usual you ignored my figures which matched SOU's own broker figures, but the revenue from LNG isn't even enough to cover SOU's debts over ten years. There's no way they can afford this tax bill. Unless it goes away they will not be able to close deals on the LNG let alone a pipeline. That makes this an existential issue for SOU. I'm not going to speculate about nefarious goings on in the Moroccan establishment, but maybe someone is getting impatient about SOU's inability to consummate a deal.

The additional tax bill based on a 2021 assessment makes last year's bill sound less likely to be a simple miscalculation or an innocent mistake. Something seriously fishy afoot. I don't necessarily share the optimism that it will be easily thrown out. Even if it is, time is of the essence. SOU needs to be closing deals and getting some advance cash in.

ericnat: "Hopefully the meeting held yesterday (31 May 2021), with the assistance of our State-owned partner ONHYM, at the Ministry of Finance will help to satisfactorily conclude this matter."

The language in Graham's comment at the end of the RNS is quite recriminatory. It's pretty obvious that the meeting on 31-May did *not* go well and the tax authority is sticking to its guns. With the additional levies on SARL AU one has to wonder if someone in the Moroccan establishment has it in for SOU. Regardless, the timing is disastrous for SOU. The 3-Jun meeting appears to be procedural -- there will be no resolution until the process runs its course, however long that takes. I don't believe SOU has any chance of closing the outstanding LNG contracts until that happens. The combined tax bills are now considerably larger than its market cap. How long has SOU got before it needs more cash to keep the lights on?

Just when you thought it couldn't get any worse ... an *additional* $22.5m tax demand arrives. And the upcoming meeting on the issue could be just the start of a year long process with no guarantee of resolution at the end of it. Graham calls it an "unwelcome distraction" from delivering value. I suspect "show stopper" would be more accurate. I find it hard to believe that either Afriquia Gaz or ItalFluid would proceed with contracts with this dangling Sword of Damocles threatening to fall before SOU gets to first gas.

I prefer to think of it as realism rather than negativity. And a counter to the sort of unfounded hype on here such as "we're due another tick up", or "Graham is renegotiating a better deal with the gas purchaser", or "the tarot cards look good". Pains me to think of anyone wasting any more money on this until Graham sorts out the LNG *and* the pipeline. SOU's own estimate is that it's worth nothing until then.

scarf: "Morning PS200306. Are you still holding shares with SOU."

Yep, multiple tens of thousands worth (down 95%). No plan to sell any time soon. Looking forward to getting half way to breakeven some day if the LNG gets built, the pipeline gets built, and the exploration yields riches beyond SP Angel's wildest dreams. For now, we are still negotiating the first of those hurdles after double the amount of time Graham said it would take to get to FID.

koozer: "why does it keep going down again and again"

Because it isn't worth anything. In fact, if Graham sorts out the tax bill and gets the LNG project going, it'll STILL be worth LESS than nothing. If Phase 2 gets sorted out beyond that, it'll be worth something. I guess the market has decided not to look that far forward.

+1

No manipulation is required to keep the price at rock bottom. Lack of news will do that just fine.

That Q2 presentation seems to have a few inaccuracies. It mentions "Exclusivity for both the purchase of LNG and partial financing of Phase 1 development". But exclusivity was set to expire on 31st Mar according to the RNS issued five days prior. What the presentation does tell us is that neither the funding nor the completed LNG sales agreement are in place yet.

FID was originally planned for 2020. And last weekend was the second anniversary of the RNS where monetisation of the Eastern Moroccan assets was announced. People have probably forgotten that it was many months even before that when SOU announced that a "Consortium comprising Enagas, Elecnor and Fomento continues to make good progress in preparing for the BOOT contract for TE-5, which sees the Consortium executing FEED at their cost, securing the required US$186 million capital investment and executing the project, in exchange for an annual tariff".

SOU announcements about imminent deal closures have meant diddly squat in the past. How many years have we been waiting for the wider Tendrara GSA which (like the LNG GSA) is still waiting for the "definitive" version to be concluded. When is Graham going to provide an update on the tax bill which -- unless Afriquia Gaz are extremely negligent in their due diligence -- is inevitably going to hold up the show?

Nine million share options, nearly 1% of the company for a pair of non-execs that probably turn up to three meetings a year. Nice.

Me: "SOU won't be drilling anything this side of 2024"
ddboy: "Is that a fact or your thoughts ps200306 ?"

It's an educated guess. Any drilling will have to be funded by revenue. SP Angel projects pipeline revenue starting in 2023. If that's the case then you could conceivably see drilling that year. But when has SOU (including Graham) ever met a schedule? Back in June last year (with pandemic restrictions already in place) he was promising Phase 1 FID in 2020. So he's already six months late on a six month schedule. I suspect the tax bill is the big blocker as there's no way Afriquia Gaz is handing over $16m in loans and share purchases to a cash-starved company with a $14m tax bill hanging over them. SOU are now promising Phase 1 FID "this year". Yes, they say they are pursuing Phase 2 in parallel, but I'm guessing the emphasis is on Phase 1 which they need to stay alive. In short, the wheels grind very slowly at SOU. If Phase 2 ever gets done I can't see it being in place and generating revenue in 2023. In fact, I think drilling in '24 is optimistic.