Member Info for SeaTank8300

Added to my holding today at 21p

If you understand the figures you are claiming then you should be happy to explain them and source them. I'm not sure what you mean by teaching maths and accountancy.

I sent around the UBS view on long term spodumine 6% pricing a few days ago but nobody commented. If pricing is capped at around $1,200/t for the long term, I don't see why this mine will be built at all. ALL's value becomes like an option. The project NPV at $1,200/t falls to around $700m I guess, which is puny in the scheme of things, with much less margin for comfort than before. Prices are at around $600 today which is what their mine's AISC will be - so it wouldn't even be profitable today if fully up and running. I'm just saying, even when the Parliament givens the go-ahead, what are the chances the mine will be built? It seems unlikely to me. I'm just warning you all. I think the only upside at this point is an acquirer taking the project as option value. If there are any informed alternative views, do tell.

From UBS:

Q: What is happening to the spodumene cost curve?

It continues to widen and flatten as producers respond to falling prices (spot ~US$600/t) and growth

from new lower cost assets (e.g. Africa) or brownfield expansions comes on in the lower part of the

cost curve. Our analysis highlights the spodumene SC6.0 CFR China breakeven cost support level of

~US$1,000/t of two years ago has fallen to US$700-800/t.

Australian equities are currently pricing in ~US$1,150/t Spodumene SC6 CFR China compared to a

current spot price of US$600/t and our revised long-term price of US$1,200/t.

We believe the market is still overestimating: 1) the level of short-term cost support, and 2) the long term price. Having cut our 2030 EV demand forecasts 16% and updated our long-term incentive

price analysis (~1.75mt of new lithium supply required by 2032), we trim our long-term spodumene

price 8% to US$1,200/t. Ahead of a material demand impulse or supply cuts, we move back to an

underweight stance on the sector.

As we work through only the second lithium cycle since EVs, we have a larger and more diverse

supply side than last cycle. Cost curves have been flattening and price support falling (US$700-800/t).

While we expect more supply cuts, our reduced long-term demand and lower costs lead to a reduced

long-term incentive price for spodumene of US$1,200/t SC6 CFR China.

In my view, at this stage, no institution is likely to commit any more fresh capital, whereas every time they see a meaningful redemption they will have to raise its proportional amount from SAVE, so there are basically only selling institutions. That is enough to weigh the stock downwards. This tide of flow will turn with positive news flow that a corner has been turned with the business, namely material decrease in receivables and/or big arbitration award.

Happy to announce I am now a shareholder. Just bought almost a million shares.

The last time I bought and sold was end of 2020 and I made a solid 100% gain in a handful of months. I expect to do the same again.

Knott hasn't covered himself in glory the past five years but he is due some share price-moving good news, particularly regarding arbitration and receivable payments. I suspect he has done the math/probabilities and can only see upside from 7p. From the numbers I have looked at, I would agree.

As I said in an earlier post, patience is required with Nigeria, but the orderly outcome almost always results. So hold on.

Everything in Nigeria tends to take a very long time. Take a conservative ETA or timeline then add the same again and then same again. It will happen though.

This is a decent approximation of SEPNU's production I believe - a strong bounce was seen in April. Will be interesting to see what is delivered in May, as March and probably some of April were impacted by the leak issue.

QUA IBOE

January, February, March, April 2025

Crude Oil 4,580,997 4,227,836 3,504,376 4,296,506

Condensate 55,999 55,197 56,460 55,062

Blend Total 4,636,996 4,283,033 3,560,836 4,351,568

https://www.nuprc.gov.ng/oil-production-status-report/

Yes I believe ANOH will be able to commence operations with this LNG evacuation route

Https://businessday.ng/energy/article/nigeria-lng-set-for-12-gas-supply-boost-on-seplat-deal/

Market estimates for the US business are unjustifiably low considering the US customer deposits already in place; everyone is low-balling. We know management want to list this in the US but they won't do it until the US is at least a quarter of revenues. In the meantime they are hoovering up shares in buybacks and paying themselves tonnes of stock, knowing full well there's a big payday ahead. These guys are very smart indeed, making no effort to drive the share price. They could simply pull a leaver (CAC spend) to drive active users but choose not to because they don't need to; remember that ROI on driving active customers suffers a steep diminishing returns slope, so better they hold back and save the cash for capital returns and investment in these new areas. Damn smart people.

Swatton, from what I understand by looking at the news and production figures for the Qua Iboe terminal from NUPRC, terminal volume fell 21% in March vs the average for the months of January and February, so yes there was a production decline in March, which appears to be attributed to a leak. I believe this will have been fixed by now otherwise SEPL would have mentioned it. Uptime has always been a variable in Nigeria. I think what's more important is that the restoration programme is going extremely well to date with immediate production benefits, with plenty more to undertake in the near future.

From memory, ANOH should deliver around 10k bpd of condensate to SEPL (its 50% share) when operating near expected utilisation and the net profit contribution of the whole project including dry gas and LPG sales should be at least $50m to SEPL, but with significant upside (could be $100m) at higher oil prices or with better uptime. I believe a base case of $50m is conservative. They do need to get the wretched thing operational though, for every year delay is costing around $20m in debt servicing.

The non-payment of receivables is very material indeed; not only is collection of cash owed the life blood of the business, it raises ongoing questions about the sustainability of their corproate offtake agreements. It is better to be clear and honest about the situation. Look at the cash flow statements: operating cash flow has been negligable because receivables have been ballooning. Revenues have been recognised in the P&L but the cash is not collected. Indeed, I would like to know where we stand as at end 2024, but the annual accounts are not published until June (?). I really hope it is before June, as that is a ridiculous timeframe for accounts to be delivered - again, undermines confidence. So a frank assessment is this is very material. That said, I do believe a settlement will have to be found and I do believe a decent portion of these receivables will be paid. Not just for legal reasons; also the political landscape is calling for contracts to be enforced, as the whole energy system needs to maintain trust. Finishing on a positive note, that management and others are injecting equity at this stage is a very promising signal that settlements will be made and a reset is possible.

I don't think the receivables grew because of the Naira depreciation. Either these receivables have valued in Naira, in which case they would have shrunk 70% in dollar terms, or they are valued in dollars, in which case the FX move has no impact at all. I believe they are valued in dollars as that is how gas contracts are priced, but settlement is in Naira, which is as per the regulation on commercial gas purchases. I guess the customers are asking for the receivables to be settled at historical FX rates, i.e. between 50% and 70% haircut in dollar terms. They will meet somewhere in the middle I guess.

Wholeheartedly agree with this Fitch report and there's no doubt they have queried the dividend trajectory with the management team in detail so it's not guesswork.

US$200m in dividends equates to around 12% yield at today's share price net of the 10% withholding tax. It really is a wonder that the share price is not yet back at all-time highs. We are certainly going to get there in the not too distant future.

Liquidity is a reason for the low valuation and there are relatively few uses for the cash flow if it is retained, so (in my view) dividends will be the priority and share buybacks are unlikely unless traded free float and liquidity rises significantly. But dividends are great in my view.

I'll try to explain but I am not an accountant. Net profit is net of the statutory tax rates for their operations as per IFRS. However there are a number of tax benefits offered by Nigeria for investing into production, which offset cash tax paid. Under IFRS accounting methodology the difference in P&L taxes and actual cash taxes paid must be accounted for on the balance sheet by deferred tax liabilities, now >$1bn. It is an accounting entry to balance the cash flow benefit to SEPL. These deferred tax liabilities will continue to grow in size so long as cash taxes paid are lower than statutory tax rates, which is indefinitely in this case as SEPL has long-life reserves and will continually invest to grow or maintain production.

In short, ignore Net Profit, focus on Operating Cash Flow.

Understanding this is key to understanding the moaning about the cash generation of the acquired MPNU asset, because MPNU stopped investing then cash generation converged with P&L net profit; but now SEPL is investing again in these assets, operating cash flow will gradually lift to converge to SEPL's onshore assets. In three to four years time, the offshore assets will be extremely cash generative and as there will be limited options for the cash other than distribute to shareholders, so the dividend outlook from around 2028 onwards is massive.

The results were solid and I suspect management dialled down customer acquisition expenditure (impacting new and active customers) because ARPU was growing so well since there is little point firing on all cylinders considering the board's plan to buy back as much stock as possible at attractive levels. The US non-OTC business was a given a very low-ball guidance figure in my view; they will smash this at the current rate of segregated deposit growth. This business has 10% and growing, so I don't know what folks are moaning about. I forecast a £4 share price about 18 months ago and I stick with that, probably by this time next year as by then I suspect the US contribution could be >20% and the board will be drawing up a timeline for Nasdaq.

Thanks scotpak. Do you by any chance also know the mechanism for repatriating/offshoring/upstreaming with the capital controls in place? It sounds like they raise debt in Nigeria (I am not sure in which currency?) through a banking arrangement in exchange for cash paid to them in the UK, but I'm unclear and also not sure of the haircut or ongoing cost of this. Perhaps I misunderstood entirely.