Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Exploration, I am struggling to understand why would Schlum want to block drilling? They have been going through a thorough process to determine the precise location of the drill (and that would have undoubtedly involved discussion with Schlum).
I am also unclear why this is perceived as a hold-up, the last FSC made the next steps clear in my mind, especially with the plan to agree the TE10 location and commence ground works for TE9 and then immediately TE 10. I like the idea of both drill locations being locked down and ground works in place.
Would also be nice if anyone on here moaning about having a FSC can refrain from passing any future comment about questioning what is being done, the pace, the BOD, JP, communications, delays etc.. The FSC is a rare thing, an insight into the company and your chance as an investor to ask what is on your mind (but which you moan on about on here).
Fellrunner, we have had alot of news since the last FSC:
- Basin model which is off the scale in terms of complexity and what it tells us on the scale of our project
- placing to provide a position of significant financial strength
- FEED, 20 inch pipleine & Enegas
- Sidi farm out process commencing
- TE9 location confirmed
Plenty to talk about, ask questions on and learn from. Personally, I can't wait and will be asking many questions. Each to their own.
Good day all, some good posts and some twisted posts, it’s getting a bit like Love Island on here! Personally I really like the raise, the amount and the timing. Surprise myself sometimes! When stripped back several facts are there – (1) the 3 well program was already funded, we had line of sight of $25M at the time of the May FSC with Sounds share of the 3 wells being c$15M, (2) the new money is therefore not for the already funded drilling (sorry to repeat but think it is sometimes necessary on here!) but to strengthen the cash pile – stated in the RNS, in JPs email MK shared earlier and in the company tweet today. In my opinion, this is further de-risking. Partly as a contingency is things to do not go to plan, partly giving options for what else may lie in store (there are other irons in the fire remember) and critically to strengthen JPs and JJs hands at the negotiating table. Negotiate from a position of strength.
None of us like dilution but its 3%, none of us like a lower price on a placing but its 7.5%, and none of us like a falling SP but it has held up well today. All in all, I think this is good business, well times ahead of things like the GSA and drill news. Another piece of the jigsaw filled in if you like. Good day all.
Evening all, slightly delayed following the LSE outage at the end of last week, please find below the summary note I wrote and which has been posted and shared on twitter - please have a look there if you prefer an easy to print off document (via dropbox). Link below (hope it works from here). Hope it helps and all makes good sense. I remain very excited about our prospects here!!
https://t.co/STHAMbHY1m
Page 4:
What an array of assets
Colter - confident will drill in 2018. Corallian have held off until after the summer removing many of the objections surrounding the tourist season. Various studies being undertaken in respect of the environmental aspects of the approval process.
Wick - operationally dependent whether Wick or Colter is drilled first. The same well management company is drilling both, with 40 day drills each.
Oulton and North Sea - no value attached in the NPV calculations. Both would form 2019 drills.
California - no CPR will be conducted – the cash flow will speak for itself and with drilling taking place over the summer, the wells will have been drilled by the time a CPR was conducted. Work-overs first, possibly West Brentwood first followed by Monroe Swell but operationally not decided. Rig activity is fast and availability good.
Parta - Parta license area not fully grasped by many. Potential value for the license area great than that of Colter. A CPR is being carried out for Parta near term. Do not have to drill 2nd well, could just drill first well which is funded. Looking for value accretion, could be farm-in at asset level similar to what happened with Corallian, could be that Danube raises money. RBD can maintain % (similar to Corallian). Agreements are always set-up to ensure RBD’s interests are preserved.
Exit Strategies
Exit strategies are not pre-defined – for example whether asset sale or listing. The key is to ensure progress irrespective of asset outcomes.
Colter & Wick could fall into the type where underlying asset is sold if successful whereas Danube aim is to become a self-funding production vehicle.
What was also clear is the intention to keep recycling – there are much larger costing & value wells out there which fit the Reabold strategy.
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All things financial
There is a few million left for investments with the cost of the wells in California circa £1M, but the intention is for some of these to be funded from the early wells.
Sachin talked about the importance of not holding onto cash unnecessarily – getting the cash into the ground is where the value will be gained. Sachin has used the phrase about cash in the ground regularly and clarified for me that this means both indirectly at company level to facilitate drills or directly at asset level to drill – so both Corallian and Gaelic examples.
In brief:
• Low over-heads – Reabold does not have an office and associated wider staff costs.
• Dilution – has only been for accretive purposes. No point being sat on cash – the strategy is to get the cash into the ground – get the asset deal in, once funded it is designed to increase the value of the NAV and crystalize substantial value in the near term.
• Not seen as dilution in conventional sense – value accretive and do not forget that both Stephen and Sachin are share-holders and their interests are aligned to investors.
• Future consolidation – the company has received mixed feedback on the concept, with strong views on both sides.
• Dividends – could consider but in the present market, recycling capital is so strong at the moment.
• Lloyds/Halifax - have incorrectly categorised Reabold as a PRIP, Reabold have written to the companies highlighting why this is incorrect.
Page 2:
Under starters orders
It has felt like we have been under starters orders for some time now but what is abundantly clear is that the company is now entering the “operational phase” as Stephen referred to it - imminent work-overs followed by 6 drills in H2 2018, extensive news flow and it is clear that the team are not sat on their hands in terms of their next investment.
Stephen and Sachin both point to the fact that they are assessing a number of potential investments, some at a mature stage. This does mean of course that their hands are tied in providing updates and news on this aspect, details can only be brought to market once the deals have been concluded and this does take time.
What could these deals look like? Well for starters Stephen highlighted that there is several million still in the bank even accounting for the drilling costs being allocated for California, and alluded to potential deals being considered as very clever. We have seen how clever deals can be first hand with Corallian and the subsequent influx of farm-ins resulting from the Reabold investment.
Deals invariably take time before any drills would occur which takes the timeline of drills into 2019 from the time of deal – which aligns with the strategy of ensuring that an exciting range of drills are planned in 2019 as well as those in the second half of 2018.
We talked about relationships and how Stephen and Sachin have assumed their roles on the boards of Corallian and Danube. Stephen focussed on the constructive relationships developed during their time at M&G and how the constructive approach is key to their forward-looking relationships. They consider the basis of relationships as one of their key criteria when assessing potential investments.
In terms of PR, communications and getting the message across, it is fully recognised that the strategy of Reabold is not as easy to get across to investors. The team think this will change as the operational phase commences. A conservative approach has been adopted so far, ensuring credibility at a time particularly when deals are being completed and before operational work commences. The company is now entering this operational phase and investors can expect a very strong news flow.
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I had the pleasure of meeting with Stephen Williams and Sachin Oza today, accompanied by James Crothers of Camarco who kindly arranged the informal meeting. I have been a huge fan of the Reabold story, regularly increasing my investment during 2018 as part of my strategy of increased exposure to a few stocks with transformational potential – Reabold certainly should be transformational.
Overview
I first met Stephen and Sachin at the Turner Pope investor evening in December 2017 and was impressed by what they had to say then and even more so now.
I came away from the meeting with increased confidence (it was high already) and with an enhanced insight to the focus, conviction, ingenuity and drive with which Stephen and Sachin have conducted their business dealings and foresee the road ahead.
For anyone who has watched their interviews on BRR Media and has been impressed, in particular the one last week following the California deal, you can imagine how I felt sat down asking questions, a little awe struck perhaps mixed with excitement that these two gentlemen are our CEOs and have devised and are executing a most exciting strategy which they have laid out before us.
Nothing of what was discussed is market sensitive or not previously known, the views I have expressed are my own (and I do have a vested interest) but the conversations helped to fill in some gaps and provide way markers of the direction we are taking. The points from the meeting which I set out below have been fact-checked by Reabold/Camarco to ensure my scribbled notes reflect things accurately.
Thanks Chrishutch, I am the author of the article. Will post the wording on here now when get onto my laptop now that LSE is back up and running.
Hi PNE79, I have wondered about this and did ask JP in the last FSC about Pipeline - "can you please shed any light on why the non-binding interest from OGIF and AGF did not come to fruition in respect of financing the building of the pipeline? Are there upsides to the BOT over this initial interest" to which JP replied "AGF has been working with us to secure the BOT - so I see them as one and the same. This will be easier to explain when we have signed and announced the BOT we are planning for.". I will follow up for clarity in the next FSC as do not see this as a big issue - AGF will get a success fee according to the RNS and they have been involved in putting the deal together, also we had 11 companies wanting to be involved plus I am not sure OGIF fit the bill - Enagas are the experts in this and what we need now is the experts and from what I have read, this is a huge endorsement having them onboard. Big tick from me on this one.
Morning all, now back to facts (thanks for the vote of confidence Tableleg). On the production rates, I think the plan sounds fine and as Exp said, is better to be consistent with plan and on the conservative side. But remember, this is just the starting point for what we have already discovered. The existing discovery should in no way be de-ramped or slurred, it is there, it flows well and what is now really important is the steps the company are putting in place to commercialise it (just as they said they would). Looking back on last week�s announcements, the thing which really stood out to me over and above the 20 inch pipe (which in fairness James alluded to and asked us as investors to keep an eye on the size to determine the current thinking of what we have here), is Enagas. A Spanish based consortium, headed by Enagas. Not sure how much people have looked up on Enagas but this is a really big player in what we are doing (Spain�s leading natural gas transmission company and Technical Manager of the Spanish gas system). �their network comprises over 11,000 km of gas pipelines, six LNG terminals, three strategic storage facilities and six international connections joining the Spanish Gas System with France, Portugal and North Africa. It also has 18 compressor stations across the country, along with transmission centres, regulation and metering stations and network connection points ensuring proper primary gas distribution around the country.� And that is just Spain! I really think this deal is strategically positioned for our benefit and is a huge endorsement to the work done by Sound over the last year on the deal but also in the current discovery and the volumes we are aiming to prove up through the seismics, basin model and the drills. Will try and post more later.
Morning all, well what a week - 4 in 4 and this one really is significant in more was than one. The 20 inch pipeline is clearly the headline grabber, and James has alluded to us keeping an eye on the size in recent presentations to give an indication of what they are thinking. What I also really like is the quality and scale of the Consortium: Enegas is huge and is "Spain�s leading natural gas transmission company and Technical Manager of the Spanish gas system", basically it runs the national gas grid and operates in 8 countries. The link to Spain is also clear, Spanish companies want a footprint in the Moroccan sand. Attracting such companies to come in for the FEED and BOOT is in my eyes is significant like the size of the pipeline. Indeed a big endorsement to what we have discovered, what we plan to prove-up and for our team conducting these deals.
MikeGP, you are indeed correct. Not sure how my table will come out on here, but crying and pasting and re-jigging it, we shall see. A simple table based on JJ's comments in Norwich. Sensitivity Calculation - net to Sound Nat gas price $ 7 8 $ $ 9 1TCF Reserves �1.20 �1.50 �1.80 NB: 10% discount rate - undiscounted figure is �3.50 NB: 2% movement in discount rate has +/- 20% sensitivity
Another great find Ducati - thank you. Note the last sentence: "Exploration and production Anor 1.5 billion focuses on initiatives in area of downstream (refining, marketing, petrochemical, lubricants and trading) spread between international expansion and maintenance and improvement of key assets. The expansion includes service station business in Mexico and Peru. It also plans to boost growth in Asia and South America for lubricants and in France and Morocco for liquefied petroleum gases (LPG)." Also, "In any case, most of 15 billion (53%) will go to exploration and production business. The company that chairs Antonio Brufau will invest two thirds of 7.9 billion to increase production of hydrocarbons an average of 8% and ensure an optimal level of reserves in medium and long term. Most investments will focus on organic growth in existing assets."
Adding three more to the further news items: 1 TE-9 and TE-10 well site locations to be announced 2 Rig to be mobilised from Sidi 3 Updated basin model to be released, .. ( 9-17-31) 4 BoT Contract to be concluded 5 GSA Agreement to be concluded 6 Sidi Farm-In agreement 7 CPR 2 to be released, presumably in Draft and the Final form as per CPR 1 8 Seismic to be completed(?) 9 TE-9 Spud- late July/early Aug? 10. TE-11 EIA 11. Stage 3 Seismic progress updates. 12. Macquaire broker coverage/extract 13. Potential growth/consolidation project/flags in the sand 14. Aerial gradiometry results