Sapan Gai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
I'm not suggesting he will use it all the cash, just that there are means to fund acquiring CUDAs WI already in place. As well, CUDA owe approx. $2M to SWP. $20M plus $2-3M in cash is sufficient.
Who's to say the senior credit facility can't be renegotiated if needed. There are better options than raising equity with bucket shop firms available to Art. That is different than the position we found ourselves in prior to Atomic takeover.
Rumours and speculation of a placing are completely unfounded in my opinion. My opinion is that any aquisition of CUDAs WI can be made with existing funds and the credit facility already in place (subject to approval).
COPL have $10M cash and an option on their senior credit facility in place to fund future development that should be sufficient for consolidating WI in Wyoming.
"The Facility has a base size of $45 million, with an additional, or "accordion", $20 million to fund future development at the sole discretion of the lender."
I've been musing this one over. Tin hats at the ready please.
What 'may' have instigated/accelerated the downfall of CUDA, including potentially disrupting the sale of their other assets that subsequently fell through, was if the producing asset they have stake in was underperforming.
What if BF was consistently achieving 4 -5,000 bpd through Q3. If CUDA were posting positive cashflow, their lenders were receiving repayments on time. Would they have managed to keep their lights on, enough to stay afloat until figures increased further as field development progressed.
I'm not saying it was orchestrated, but it certainly didn't help their position that their was a lengthy disruption to the production in Wyoming.
Production seems as though it may increase in Q4 as gas supplies are re-established for MF. Unfortunate timing for CUDA. Go figure.
We know for a fact there is one interested party in CUDA's asset(s) who have the immediate funds and means to facilitate a sale. Art has made his intentions well known from the start regarding consolidation of ownership in the Powder River Basin assets. Further, I have no doubt he has been in contact with CUDAs lenders to notify of his interest. If those lender(s) are indeed interested in recovering their funds, and by all accounts it appears the case, then there is a very obvious path to that. And unless I am mistaken and CUDA have repaid COPL, they still owe a significant sum of money to the company.
It seems to me the sale of CUDA's interest in PRB to COPL, the simplest, quickest and tidiest way to partial resolution with their lenders. And on top of that, it appears CUDA will shortly have no choice in the matter.
You're welcome Jiddy. I've watched it and thought it was quite good. It lays out the plan for wider expansion of the region and discusses further drills in the next 6-8 months on adjacent blocks once the federal deep well is put in to production. All good information if you can look past daily sp movements.
It has always been for 100% of Atomic. At no point was the aqcuisiton touted for less than that. The loan facility was intended to cover the full aqcuisiton cost, so why the immediate need for funds when in a week's time you'd expect the SP to be higher...
Trading is not how I would expect it given the run WTI /Brent is on currently and that the company is on the cusp of an immediate net production of 1000 - 1500bd and increasing at $42+ netbacks.
Similarities can be drawn from a typical oil explorer drilling a well, but with vastly improved COS, an understanding of production figures and a better netback per barrel. As with those, there is usually some de-risking ahead of the big announcement and it may be that is what is happening in some cases as we draw nearer to the long stop date.
"Yeah, because what people write on these boards influences the share price. Jesus Christ. Is there a list of stupid LSE cliches somewhere?"
It's stupid to not even consider these boards as an influence on investors / potential investors judgement. Advertisement has a similar effect on psychology, whether you take that information in consciously or not. Sentiment plays a huge role in small caps and it's inherently infectious. If you tell me boards and social media don't influence people, you must also believe pumps and dumps don't exist. You must also believe everyone reads and interprets public news releases in full, without asking other for information. Look at the GameStop rise - where did that materialise from and how did it grow?
Don't be so disrespectful and condescending.
@Bladderman ref. "Is this being held down for the new buyer and using the CFD leverage to do so"
I was having the exact same musings the past couple days. I don't really wish to sound like a conspiracy theorist (I know I will) but the obvious person who benefits from a subdued SP right up until completion of the deal is the Atomic owner. $4M in COPL equity upon closing so it makes sense for him to want a lower SP. He certainly wouldn't want to see a spike in the SP the week preceding completion. I think he would quite rightly be miffed selling his company at a huge discount on the barrel, when oil is buoyant and the pandemic nearing an end, and then getting his equity at a big mark up to the price that Arthur and his mates recently raised at.
If COVID was an issue for the Nigerians back in October / November, it is most certainly still an issue now. Just google the infection rates in Nigeria since the last extension, <100 cases/day in October to between 1000 and 2000 cases/day in January. Nigeria has also went in to a second lockdown, not unlike the UK. It's all about whether you accept that as a valid excuse or not. For me, it does but I can understand the scepticism.
You don't have to look far to see other initiatives, awards and applications that have stalled due to COVID / lockdown in Nigeria. Couple that with the slow pace of Nigerian work generally, it is the most plausible explanation for me as to why OPL226 it's not gone through yet. Yet to hear anything that would convince me otherwise.
The Marginal Fields award was supposed to happen in September 2020... still waiting. The Petroleum Industry Bill has been languishing for years and was apparently ready to pass last summer...
In fact, COPL have been in this position before last time around, with an expired PSC. NNPC renewed the PSC 11 months after it had expired. We are in a different position now, all ready to go, so one would hope they won't be that long this time around. However, the point, Nigeria take time. Things there are just slow and it is certainly not unique to COPL.
Arvanlaar, you raise good points and further dilution obviously harms the SP in relation to MCAP. However, viewed holistically, it is better with this dilution than not at all as it comes with the Atomic deal. Atomic is the catalyst to add, for arguments sake, £100M to the market MCAP. To get the Atomic deal we require 100% dilution or 10B shares total. We are diluted, but the value added to our investment is 5-fold at 0.2p. It may take some time to get there but that's investments for you.
Now, you could say we would be at 2p with a MCAP of £100M without the recent dilution, but how would we get there? Could Arthur have found some other way to finance the deal? Probably, but that would also come with dilution, either in terms of a reduction in value of the asset or the shares in issue. Why wouldn't Arthur want as much of this asset as possible at circa $2/bbl and not give that away to some other entity. Each % is value adding and if that means dilution, then so be it.
LB - you still don't get the point. The placing is not being spun as positive BUT the Atomic deal is. If you can accept that having cash is necessary to acquire Atomic, then it is a necessary evil to get the deal done. It's the bigger picture that is being spun as positive, because it is. What did you suppose would happen?
I don't like being diluted yet again, but I understand that on balance, it will add value to my investment through the Atomic acquisition.
LB28 - correct in the sense that the shares in issue has increased but the SP / MCap doesn't rise on thin air. If you view the equity placing as necessary to land the Atomic deal, and some 'dilution' is required in whatever form that takes, then the upside hasn't halved because without it, there would be no deal. The Atomic deal adds value to the MCap and opens many doors that were previously closed to COPL. Take the placement in isolation, then yes, but wrap it up as part and parcel of the Atomic acquisition then it can only be value adding.
Many have already mentioned this - £12M placing (possibly more to come) and additional debt to land a $200M deal and a lucrative producing asset or no placing / no debt without the deal. What has more upside? You are too focussed on a single aspect of the deal overall. I would love to acquire Atomic for free but that's just not the way it works.
Shaa, we've had that award for a number of years now. Unfortunately Moz has gone through a troubling period with natural disaster and corruption which has been a stumbling block for progressing the awards. Last I looked in to this, we were waiting on several Majors to progress their licences first, which would serve as a go-by for ShoreCan to progress theirs in turn. For me, Moz is on the back burner. Maybe some progress has happened since but I'm not aware of it
Shaa - hopefully not as many as that to go through. The idea behind it being a private placement is that they too are long term holders rather than the bucket shop brokers that flip almost instantly, if not before the shares even hit the market.
It's really disappointing the price of the placing and the warrants that have been issued, no denying that. However, as Jay mentioned, there is a larger plan here - a $6M placing is not done on a whim and not just for operating costs. Some of it may be used for the Atomic acquisition but Ryan Gaffney suggested that that will be covered via debt, at least in part "We believe it will give confidence to the debt investors COPL has been in discussions with to provide the debt required to complete the transaction." Will some of it also be used to acquire the West Africa opportunity? I'd be surprised if it's not and we don't hear of that shortly.