11 reasons to be positive about ADME23 Oct 2019 17:35
Obviously, DO YOUR OWN RESEARCH.
But I'm feeling a lot more positive about ADME than I was a couple of months ago, so I thought I'd post a quick list of reasons.
1. We have an energetic new CEO in Osa, who has significant industry experience and knows how to negotiate bottom-up (companies) and top-down (government bureaucracy) in Africa.
2. We have two new board members, one a very experienced oil exec, again with African experience, and the other an experience financier.
3. Since the Sheikh dumped all in a big fit, Peel Hunt picked up a sizeable chunk of his shares, before buying more a few days later. Since then, their exact holding fluctuates because they also market make here, but has stayed around 19%. They must see value here to do that. They know how to dump if they wished to, and haven't.
4. We've recently had a placing at a premium of 20-30% of current sp. That's 2-3 entities willing to invest here, but who think it worth paying more than they would on the open market in order to give the company the capital it needs to progress its plans.
5. Zark Capital now own a decent chunk too, and their role is to bring other parties to the table to secure funding.
6. Aje is soon to have covered the costs of its first phase of production. From Q1 2020, all money from that will be sheer profit.
7. Panoro has just sold its share of Aje to Petronor, for a total consideration of $35m. Even dividing that amongst a 12% stake (there's a case to be made for saying they had 6%), that makes $3m per percentage point. We own 5%, so that's $15m valuation for our share at a minimum, which is £12m, or 20p per share. Minimum. Just for Aje
8. The above Norway transaction also shows that Aje is desirable as an asset, not a rump to regret holding.
9. There was some worry that Aje phase 1 will run dry in about 18 months too and that the other partners may never develop phase 2. We now know, from an interview dated 4th Oct, that phase 2 is given the green light.
10. The CEO was working, even before his appointment, on some deals that will expand ADME over the next 12 months or so to take shares in new producing assets.
11. With a twinkle in his eye, there may be options eventually to expand further, either into owning assets outright, moving into exploration, or moving onto the main market. Who knows - but that would be the icing on the cake.
The share price is majorly depressed because it's never recovered since the sheikh pulled out. I'm underwater.
But it seems to me that the negativity of that has been more than priced in for some time, and some of the above items have come about since that crash. When you factor in the potential of Aje alone, a price of 20-25p seems right. Factor in the potential for expansion, for which funding is already coming in, it could well be higher. 5-6p is way too low. I don't have more to throw at this to lower my average, but I'm now quietly confident that over the next 12 months I'll break even, maybe into profit.
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