Member Info for spike501

"Labour have promised to honour existing NS licence's and projects when they come to power but will approve no more new ones. This will give existing players a closed shop monopoly."

Correct, Labour have formally announced the death of the North Sea. So what do you think that does to the capital expenditures and operational costs for any future fields? Service providers will no longer be investing or maintaining a presence, contractors are not going to hang around, few if any workers will enter the labour force, so the pool of experienced workers will dwindle and rates will go up. The North Sea is already a high cost basin and will lose substantial economies of scale and get worse.

"Imv this has been manipulated down to make a low ball deal look attractive."

Take the tinfoil hat off for gods sake - there is no grand conspiracy for a minnow like I3E.

They need to quickly ditch or somehow spin off the North Sea, its acting as an substantial and increasing drag on the SP as the market rightly fears the North Sea is a money pit. That's almost certainly what is driving the reaction to the announcement of the LTIP with continue focus on the North Sea.

The immediate vesting in the case of a substantial sale is just customary and nothing more - its always in management incentive plans, otherwise a sale would conflict with their interests.

Walletinvestor is just an an automated bot site - it has no actual research or knowledge of the company behind a stock it’s just supposedly a set of algorithms that look at the trading, but I doubt it is even that, rather just an engine to capture clicks, as revenue and try and suck people into subscription services - same as Wall Street bets.

Agree - timely update and strong update.

Conservatively allowing for commissioning time, maintenance periods and mining capacity next year they should mill 800,000 tonnes and so produce 45.000 ounces and free operational cashflow of $36million assuming $800 per ounce

The year after 960.000 tonnes (again allowing for downtime) and so produce 54.000 ounces and operational cashflow of $43.2million.

With potential upside from grade improvements and I think $800 per ounce is relatively conservative.

"On your theory they could buy the whole company at today's market cap, stump up the extra cash and own the lot fully funded for $250m.

La Mancha need to buy the remaining 73%, if they could do it at today's mkt cap that would be £50m x 0.73 = £36m, call it $50m. That's cheaper than buying 7% at 4:1 dilution, wow it is a bargain! Now they own 100%, so putting up the extra funding suddenly becomes a lot less painful."

La Mancha don't want to own a mining company though do they? Its not their mandate, nor do they want to be fully responsible for trying to fund the deal as $250million will be way beyond their interest in sinking into one asset. So this is not even part of their playbook.

Its highly likely the cornerstone investors here will participate, but they need to attract new money and I doubt they will have any interest in protecting the 50% of equity investors who won't pay to play.

I'm skeptical substantially more debt will be made available, I suspect the bank's will push for other solutions here, not least as 35% is only the increase in capital budget, there is also a delay in cashflow. I expect the majority of contribution by the bank's here will be through the renegotiation of terms, amendments to covenants etc, I'd be surprised if there is substantially more funds coming.

Maybe on the royalties you are right - I don't have much feel for that.

Best of luck though - I just think you are being very optimistic on the outcome and I can't think of many precedents, where as I can think of a lot of precedents for very heavy dilution and the NPVs of the underlying assets had no impact on the issuance price. The market here looks to be pricing in around a $200million equity raise with substantial dilution and I think that looks about right.

“But that's a 7% increase compared to what they have now, and cost them more than the current mkt cap to buy it. Does that make sense to you?”

The current market cap is discounting the fact that more funding is needed - so even if they bought the whole company they’d still need to solve the funding gap which would be now their problem 100%.

You seem to think there is a white knight out there willing to bail out existing equity holders, by paying way above current SP. Why would anyone do that?

The big holders will take their medicine through dilution, put in some more cash to maintain their stakes and ensure it is attractive for new money to come in.

At 80% dilution, those guys can all pro-rata invest and remain below the 30% and so maintain or slightly increase stake which then provides about 50% needed and the other 50% is probably priced attractively enough for new investors.

Assuming a $200million raise at an SP slightly lower than current SP.

“No it won't. You couldn't buy 10 million shares at the current price without spiking the market, why on earth would you be able to buy half the company?

The current price is a reflection of the free float price, dumped by PIs and small instis, less than 20% of the total. “

I’ve lost track of the number of times this mantra has been repeated with investors referring back to the NPV of the underlying asset.

If it was really the case that any new equity financing would be done with reference to the underlying asset NPV the share price would already be responding, when instead it is pricing in deep dilution. Those who will invest equity in the next round (most likely the cornerstone investors) have the power here.

Yet again a set of naive AIM investors are likely to learn a hard lesson.

“Expecting equity funding here, using the companies old npv calculation,“

Any equity funding will be based on current market cap.

“However, to say that serentiy is not factored into sp is a red herring. If bad news ocurrs in this regard the sp will get hammered regardless.”

Not convinced- O&G investors are valuing free cash flow and returns at the moment. I think removing the risk of spaffing a whole lot of cash on CAPEX in a high cost, politically contentious basin will be looked on kindly. Not to mention the BoD have hardly covered themselves in glory in the UKCS so far.

What I think could be wise is a spin off of the UKCS assets into a separate entity which I3E maintains a holding in.

Yes agreed, this looks like a Sirius to me as well.

"It's a factual statement. If you're going to add liabilities to create a narrative why don't you add assets too."

Most of the other assets relate to a 65% completed mine and they are balance sheet carrying values and not the price anyone would actually pay for them.

Its ludicrous looking at the value of cash in comparison to market cap when overall debt exceeds cash.

"Cash balance £130m is multiples of the current Mcap as well"

This is a ludicrous statement - the company has liabilities in the hundreds of millions of dollars.

"The key takeaway from this quite comprehensive analysis is the actual funding shortfall for HZM is actually circa $50m, not $175m as they already have an existing circa $125m facility in place."

Which misses the additional working cap needed due to the delayed start and doesn't consider any additional contingency that senior funders are likely to require.

"Has the concern about a further fundraising gone away already C123? No! there was never any in the first place, just MMs out to make a bit of money while they can."

Some of you guys are in cloud cuckoo land.

"Just get rid of it and focus on our 700 drilling locations in Canada which we are currently drilling far too slowly."

Totally agree, the UKCS is a political minefield and a higher cost end of life basin - the previous licence holders can smell the coffee, I3E should also.

Nothing really wrong with that update - sales and revenue are slightly down, but anyway we knew about that as it was due to the maintenance activity in Q1.

They might miss budget a bit, but I think it was always optimistic that the upgrades would not impact production and they should still produce and sell around 16-18koz in the second half.

Almost 200,000 tonnes were mined in Q2, so mining has increased by around 50%, so they are well placed to process around 800,000 tonnes next year assuming the capacity is in place relatively early in Q1 which would produce 40-50koz depending on what grades they can achieve.

Overall operationally I think this was a positive update - I always had 2023 down as a transitional year and development is clearly on the right track.

As usual releasing news at last minute and skipping updates doesn't say much for shareholder relations which is holding this back as much as anything.

“You don't get big oil onshore, whytch farm oil comes from under the English Channel. “

You might want to check with the Saudi’s on that.

Unfortunately they were forced into hedging 50% of their production at what looks to be the low point.