Good news - suggests they expect WR-B01Za to be as reliable as JKT-01Z. Would have been a nice touch if PH had thanked shareholders who have endured the systemic dilution as well as 'employees and directors' who took the shares, but there you go.
Also just for clarity the surrounding permits are being pursued under the JV not by EUZ in isolation, this from a Denarius announcement yesterday :
"A desktop review and necessary application route for additional permits close to the Toral Permit has commenced and will run over the next 3-6 months to identify and complete outstanding questions to enable an exploration application to be submitted to the Junta of Castilla y Leon".
We're not winding down on Toral. Denarius are funding EMI to crack on and complete Option 1 work:
"Accordingly, we can now proceed aggressively with an initial 12 month work programme for Toral alongside the MLA, which will be conducted by the Europa Metals' team and supervised by Denarius' technical team. The programme will progress this high-quality base metals project which benefits from the ongoing support of regional governments and local communities".
I see Denarius have completed their placing meaning they have raised CA$18.7m in total with the RI and disposal. If they're spending US$1.95 in the initial 12 month work programme could they have spent the requisite $4m to complete Option 1 in around two years? So at that point when we go down to 49% we'll have the MLA in, a new PEA, new JORC and a full understanding of the enlarged licence. I guess it will be difficult to judge the full merits of the deal until we know what the new surrounding permits might hold. We also need the 7000m of drilling to be successful. I notice we've changed drilling contractor from SPI to Explomin, wonder if there is any significance in that.
JMA you won't get the institutional banking investment to build the mine without the feasibility study. EUZ & Denarius believe that more confirmatory and infill drilling is required to make the economics definitive.
I think we might hear something about Project II soon. They must have had enough time to monitor the JSR-01 DEEP appraisal well and have an idea which of the intervals offer the best prospects for a producing well. In an ideal world I'm hoping we can now afford to chase the gas on licences XIF & XIB (Project III) simultaneously. More clarity surely coming in the Q1 update, could even be worth delaying slightly so there can be more surety about the revenues we can expect from WR-B01Za.
When this well spudded the SP was 1.275p, so really we ought to be improving on that near term. Hopefully some media might give it a kick particularly if they can step up the work programme on multiple fronts.
With reference to the video I've always thought that the partnership with the state company is one of the most exciting elements of Block's future. Hopefully this well will perform consistently like JKT-01z vindicating the Project I strategy but the potential of Project IV where we have a 50% Farmout with GOGL with no cost to Block simply looks like a huge win, win situation particularly with Georgia in a hurry for independence.
CHRI5P - I notice that Denarius' additional fund raise closes today. Hopefully they've raised an additional CA$8m following extra demand after their RI. Just got me wondering if they might partner us on the new project.
Evening CHRI5P - yes I did sell a bunch at 25p, could have done better as I seem to remember it flashed up near 30p as the JSE mega rise pulled the AIM index up. Not for one minute feeling smug as I bought them all back between 15-20p so showing a substantial loss on those. Still I'm reasonably happy with our prospects, the Denarius deal isn't what I'd hoped for but it keeps us in the fight, they've demonstrated substantial fund raising abilities and have a big backer selling heaps of gold so their credibility has been reassuringly proven since the first announcement of the farm in.
I would point out to anyone new looking in wanting to make a balanced judgement about EUZ that investors other than DB have participated in placings over the years. In the last placing 43% of the new share capital was bought by "certain new investors " at 4.5p. At the time that was a 60.7% premium to the market which suggests to me that a significant proportion of the investors who wanted a stake in the company following the Denarius announcement came in with fresh eyes and can't be accused of chasing losses. Whether DB are chasing losses is more debatable, I would be doubtful that an investment house with duties to their clients would invest on this basis but I also don't know how rigorous their risk assessment processes are. Certainly their investment like most of ours has not been a success to date but I can't imagine them throwing more money at the problem without grounds for doing so and having a reasonable expectation that matters will improve. Why would they with thousands of other investment vehicles competing for their business?
Good to see they've been busy. Sounds like the enlarged mining area is more than just Antonina. Also going ahead with two rigs for the first time.
Nice move today but I thought they could have made a better fist of selling this P IV deal in the RNS. Seems to me that Block have secured a decent deal here. GOGL have received funding from the state O&G company (GOGC) to push these deals forward in a drive for energy independence and we have 50% exposure to this one with limited costs as our cash liability is capped at USD 50,000 per annum.
"Under the terms negotiated, Block and GOGL will each have a participating Interest of 50% in the respective areas. As consideration for the farm-out, GOGL is to complete a work programme, across Didi Lilo and South Samgori, which comprises:
- The acquisition and processing of 210 km of 2D seismic data
- The reprocessing of 1,000 km existing seismic data, within and around Didi Lilo, South Samgori and the remainder of XIB.
The cost of the work programme is estimated at USD 3.0 million, comprising USD 2.5 million for seismic acquisition and USD 0.5 million for seismic reprocessing".
The potential upside from all that expenditure must be huge and we're in to the tune of 50%, looks like good business to me.
Mm's I also thought it was interesting that DB agreed to a placing price of 4.5p together with "certain new investors" when the SP was below 3p. Had a look back and hadn't realised that the new investors account for 43% of the last placement so they must have seen something to like, not like there aren't plenty of other things to invest in so some encouragement there, though perhaps not for people with very high averages. I happily admit I'm struggling to see how we could launch a new exploration product on current funds but does it have to be exploration? Let's see what Myles comes up with.
Certainly if Denarius use every day of the timeframe they have been given it could be nearly four years. Option one is three years from signing (Nov 22) but extendable by 90 days. Then they have another year if they wish to spend 12 months thinking about going for Option 2. Personally I don't think it is in anyone's interests - Denarius, EUZ or the Junta for it to take that long so I don't expect it to but the fact is that is indeed the maximum timescales they have negotiated. So we have the £580,000 raised Nov 22, the $US100,000 already handed over from Denarius and anther $US550 due throughout the first option period. Clearly that isn't going to fund an ambitious new exploration project which is why I'm hoping for a realistic in-jurisdiction venture with near term cash generation to keep us ticking over while ultimately 20% exposure to an actual mine becomes a reality. We also have roughly two thirds of the CDTI grant / loan to repay, starting with biannual repayments of €21,822 scheduled to begin in 2024. That figure is calculated off the entire soft loan and I note we didn't take the third tranche despite completing the operational commitments so as things stand the repayment figure will be lower. That raises the question - why not take the free money, part repayable (70%) yes but at Libor 0% even for a year you're giving away the net benefit of inflation plus the portion of the third tranche that isn't repayable (30%). This leads me to wonder if our relationship with the CDTI could be evolving and could be a clue to the next step and new project.
The $2m doesn't come until Option 2, so in the coming phase EUZ need something on a realistic scale with near term cash generation. I have my own thoughts about what might be likely to happen but suffice to say I don't see how an ambitious exploration project is feasible at this juncture.