Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Last week's RNS was a responsible response to a minor drilling problem which has been resolved allowing drilling to continue. In line with that release I expect imminent news on TD being reached. Testing will then take 12 days. Target is known, hydrocarbon trace during initial phase of drill, TD imminent.
As Concurrent Technology RNS'd yesterday resulting in the jump in its share price......
Global supply chain shortages continued to suppress revenues in H1 FY23; however, the current position is very different to January 2023 and, whilst supply chains have not returned to historical norms, they are much more favourable and continue to improve. In recent weeks, the Company has taken significant deliveries of previously supply-restricted components and is seeing improved forecasts from suppliers for both schedules and quantities
This is Vorsprung durch Technik not some wildcat drill in some 3rd world bush country. Everything is going to plan and this minor setback has been responsibly related to the market period.
The fact that increased hydrocarbon presence is being seen 100m above initial target is both anticipated and highly positive for this drill and imo offsets the minor delay. Any transitory dip in price should quickly reverse given the jump expected on success in the very near term. Managed with typical German precision.
They said 25 days so it was good policy to relate this minor problem to the market as it has caused a short delay. I doubt it would have been even mentioned otherwise. To put it into context, it was forecast to take AROUND 25 days to reach the prognosed TD drilling depth of 2255m (1709m True Vertical Depth. The team are now just 100m above that initial depth with increased HC contact. The delay should only be a few days at most as progress resumes. Better to keep investors informed than give the pessimists more fodder.
The oil is there
The rig and team are SOTA
The Rhein director has been hovering up shares above par
The tie-in pipework is literally adjacent to the drill
Germany is desperate for ANY hydrocarbon fuel.
Upside significant, downside covered.... period.
Quote: Drilling operations are expected to take in the region of 25 days to reach the prognosed TD drilling depth of 2255m (1709m True Vertical Depth), with an additional 12 days scheduled for testing.
Patience....
Using SOTA equipment and the Vorsprung Durch Technik mentality 25 days is today. The target is known, the results will be as expected. We may or may not get a preliminary RNS - in 12 days precisely we will get an appraisal, the contents of which will be the only pat-on-the-back job done event. Time to raise a stein or two.
I suspect it's very difficult to keep an information blackout in an onshore well such as this. The equipment being used and team competence are what you would expect in Germany as highlighted by the site visit team. I expect the price to start to reflect hands-on sentiment as TD approaches in either direction. Positions have been taken and the depressed price now could swiftly shift. An interesting play given the position and proximity of the well to proven drills and tie-in infrastructure. Worth a small exposure methinks.
The PMI interim gave a fair view of current investor sentiment and the BoD has never fallen into the fatal trap of overpromising and underdeivering. It's a seasoned crew with an excellent track record for prudence and good risk spread. It has huge capacity to cope with increased volumes as investor sentiment turns.....that is one of the reasons that makes the stock very vulnerable to M&A activity at this very low MCap. Either gaining traction as an independent or swallowed at a substantial premium, it's a good share for a patient investor wanting a divi with both recovery and takeover speculation in the mix. Solid but oversold.
The absurdity of the current price is totally at odds with the facts. One approach could be to consider the fund manager's AuM as a significant value driver. Assuming a base case industry average valuation multiple of around 1% of AuM, the £11 billion AuM would equate to £110 million in value. Adding the cash holdings of £31 million, we have a total estimated value of £141 million (£110 million + £31 million). However, it's important to note that this is a base case estimate and doesn't account for other financial and qualitative factors like the prudence, providence and quality of PMI. When you factor in those parameters even a moderate fund manager with PMI record would be worth 2% AuM giving £220m plus £31m cash. That equates to £251m MCap - that's roughly twice its current level and not fully reflecting the underlying quality.
This is my rationale and why i see the company as a very palatable target for a bigger player. Take the package, add in the economies of scale and cut out duplication and anything around £1.50 a share is a steal. Mega vulnerable at this time but equally able to thrive given change in investor confidence as market moves forward. Personally I see PMI losing its independence in the very near future as the target of a £1.30 rising to £1.60?? unsolicited bid from Phoenix Aviva L&G etc.