Member Info for spike501

“Oil turned going well“

I wouldn’t be so bullish on oil short term - latest IEA forecast is that demand growth will be slow next year and can be met by growth in non-OPEC production.

OPEC are currently struggling to agree, I’d be vary that the next move could be the Saudis increasing production by backing away from their voluntary cuts, in order to drop prices, hurt non OPEC producers and focus the minds of OPEC members.

A few follow up comments on the various posts.

AISC at $1000-1100 would mean free cash flow of around $45million but that wouldn't be profit. Profit will be substantially lower as they have non cash costs - mainly depreciation/amortisation.

They've not really be so clear on what they mean from free cash flow for the dividends. How far does it include cashflows for investing/refinancing activities as with the payback of debt incurred for the current expansion and the investments required for the planned expansion to 100,000oz there might not be much free cash flow for several years. I assume it will ultimately be some metric based upon operational cashflow with some adjustments for financing and investments.

Given the progress so far and assuming 2024 achieves what is realistic, they should be in a position to comfortably pay a dividend for the financial year 2024 (i.e. payout in 2025). What would be nice next year is that they announce a capital reduction to ensure they can pay a dividend, which would then ensure the market takes note.

“ Spike501, i think that is a little naive. if they hadn't stepped down, the 3 shareholders had the required votes to fire them”

Legally they have stepped down -hence no vote required. I wasn’t making any point beyond that.

The directors stepped down, they weren’t sacked hence no vote required.

"Time will be the deciding factor here. JSE will need to put down solid production numbers month after month, with no disasters and ideally a kind oil price. "

Yep precisely this - there isn't a lot of liquidity headroom now for any further issues with Montara, they now need reliable, stable production for the rest of this year to help restore trust in operations, then subject to oil pricing I would expect SP to increase in the run up to Akatara coming online.

In terms of who I would least rely on for their view on the SP valuation of a company, here are the places

3rd place: The house broker

2nd Place: The Directors

1st Place: Malcy

“I agree that suspension on 2nd October would have been the right thing to do.“

Suspension would 100% be the wrong thing to do - you can’t take decisions to lock peoples capital up immediately and indefinitely due to bad news. People have to free to extract their capital while a company continues to trade legally other than in very exceptional cases.

Had that happened here it’s likely the share would have been suspended and people would have lost everything anyway - as it was people could exit and move on and new buyers take a punt.

Billy, don’t be a hero

“What can trigger going to administration here? “

The BoD no longer considers the business a going concern. The directors now will be taking frequent legal advice to ensure they don’t breach their fiduciary duty to ALL stakeholders and end up with the risk of personal liability.

“You’ll probably make loses back on VAST which is starting to fly again”

That’s likely jumping out of the frying pan into the Volcano - Vast is an absolute dog, you might as well flush your cash straight down the bog.

“The problem of course is the debt - they have first dibs on the sale value no doubt with penalty clauses. So in a sale my guess is the first $300m goes to the lenders and shareholders get what's left. “

No one is stumping up $300milliom to pay out the banks. The banks will be negotiating with potential partners who can assume the debt as it stands and take the project to completion without taking any haircut, while potential acquirers may want the banks to take some haircut.

The only hope for equity holders is that the cornerstone investors find it useful to keep HZM as a vehicle to maintain liquidity in their shares and avoid complicated change of ownerships processes, but I highly doubt this leaves anything of more than 5-10% of the enlarged share count for existing equity holders.

“I would assume min 20% of NPV or maybe approx £200M GBP.”

You’d assume wrong as any potential buyers are now negotiating with the creditors, not the equity holders - they hold all the cards and have no need to pay anything to equity.

“Am I correct to think that its current MCAP is now below its cash value? thanks.”

No you are wrong as net cash is negative.

“The 30 barrel oil spill is factual, as confirmed by JSE at the time. Note that JSE is the only one having to pay into the decommissioning fund due to its credit rating.“

Yes it’s factual, but the number of barrels spilled is not an accurate assessment of the severity of the issue on operations- the fact only 30 barrels were spilled actually reflected well on the control processes in place.

JSE have to pay into the fund due to the enhanced decommissioning legislation brought in, in 2021 whereby if a titleholder was not able to fulfill its decommissioning liabilities, then the regulators can go back to the previous titleholders, there all acquisitions in Australia result in pre funding of decommissioning liabilities so the seller of the asset isn’t on the hook in the future.

Why should it be suspended? That prevents anyone left in the opportunity to sell and preserve what little capital they have left.

The institutional selling has mainly been driven by the Odey fallout.

Describing it as a 30 barrel oil spill is ridiculous - it was a long term outage of what is Jadestone’s most significant asset and unfortunately this is one of the risks of Jadestone strategy of picking up end of life assets and trying to extract value,l. Despite the issues they seem to have retained confidence of the regulator and the remediation work has been successful, but there is still understandable nervousness about Montara and it remains a substantial part of production and cash generation - that will go away over time if there continues to be operational reliability and it becomes a lesser share of Jadestones overall portfolio, which the acquisition today addresses and will be further addressed when Akatara comes on line.

I am critical of the BoD for not being more cash conservative while they were having issues with Montara and that was what led to the raise, but it’s not worth getting rid of the CEO for.

Jadestone operates in South east Asia where Blakeley had a wealth of experience, did an extremely good job with Talisman and again is building an impressive portfolio of assets.

Not sure anyone would think bringing in CEO who only has experience of South America would be a positive.

Disastrous update, 30 days working capital left

Can’t see any good outcome for existing shareholders, no white knight is coming to bail them out. Might end up being left with 5-10% of the company if lucky.

No question the BoD made a bad mistake with liquidity earlier in the year and being forced into a poor funding and I was heavily critical of them at the time, however Paul Blakeley has got an impeccable long term track record especially in the geographical area Jadestone operates.

It’s nonsense suggesting being Zuniga would make any difference, it more likely be a negative for the SP.

“Any sale will not be in regards to the SP, it will be in regard to the asset valuation imo“

I wish I had 1p for every time I had read this on a bulletin board.

"Labour aren't stupid. They'll adapt policies to secure jobs and energy security self sufficiency. They are just trying to attract the green vote with these sound bites."

Which is exactly an unstable political environment and exactly why Repsol has walked away from Tain - both parties with their lack of any long term support have already killed the North Sea. Labour will have no need to try and make further political comprises as it will be already dead - if anything I expect they will move to be more restrictive.

The North Sea will just act as a drag on the SP while the market thinks money will get diverted there, any actual value from development via cashflow is at least 5 years away if not more and I reckon there is about a 20% chance max it ever gets developed.