Member Info for spike501

Still think an update will come, it’s very different environment now to last 3 years with capital available and secured and gold prices continue to provide additional cash flows for development.

Perhaps held off until the share consolidation is done and its no longer a penny stock?

I simply can't see the case that this is the end of the bull run for gold. During the banking crisis gold didn't peak until Q4-2011 well after the recovery was underway and frankly we haven't even started the recovery from this one yet, all thats happened is the bounceback from the lockdown, but no one knows what the really damage done to the economy is and that will only be apparent when Governments unwind all the special support schemes. There is still another stimulus package to come in the US yet

There is a huge amount of negative yielding debt and zero interest rates so limited incentive to hold cash and the FED, BOE and ECB will both hold yields down for a substantial time yet, years most likely, which effectively means ever more liquidity.

I wouldn’t go anywhere near HUR or UKOG

"That should be an over all sp of 0.20 for Wressle alone imo."

That would Wressle alone at £40milion, $50million.

UJO has 260,000barrels of 2P, 750,000 barrels of 2C and 240,000 barrels of prospective resources.

How on earth is 1.25million barrels of oil, with only 260k barrels actually proven, worth $45million?

Your PE basis for an oilfield has already been explained to be nonsense and just because you refuse to accept reality, doesn't mean its going to go unchallenged for other naive investors to lap up.

A PE of 10 is used for a company that has strong visibility of stable profitability on an ongoing basis. Wressle production and this profitability depletes 20%+ on an annual basis.

A PE of 10 on Wressle first year production, gives a price per 2P barrel in the ground in excess of the current price per barrel of oil.

Again, even the house broker for UJO only assigns a valuation to Wressle of $5.3million

Look at the production profile in the broker report.

You can't do a PE calculation on Wressle - its nonsensical as its a depleting asset and besides does not turn $2million profit. UJO will still likely be loss making at company level with Wressle on production after taking into account D&A and corporate overheads

Shard Capital's most recent research note assigns a valuation of $5.2m/£4.2m to Wressle or about 0.03p per share. Given current 2P is 0.68million that gives around $7.5 dollars per barrel 2P in the ground which is pretty fair. Your valuation of Wressle gives a value per barrel of 2P in excess of current oil price.

http://unionjackoil.com/wp-content/uploads/2020/07/Union-Jack-Oil-Initiation-of-coverage-6-July-2020__-Retail.pdf

“ -$85m Convertible bond (currently priced at a 62% discount to par).”

If bond holders take losses, shareholders get nothing.

Last production update came 10th August, which was 1 month and 10 days after quarter end so an update should be expected next week. In general anything up until the middle of the next quarter for an update is fine.

I'm pretty confident regular updates will now come as they have publicly listed bonds who will also be requiring ongoing updates.

"SP up or down next week ??"

Yep

"Higher or lower than today ???"

Yep

Personal view on the consolidation is that substantial funding is required for the medium term development and a portion of that may need to be equity. As a penny stock it won't be an eligible investment for many institutionals, that I believe would potentially be interested in investing if the short term development is successful so this move is part of that process.

I don't see this as a negative, I don't think equity funding is imminent and actually getting institutions on board further down the line would be a good thing.

“ iis were happy to plough £7M in @016”

Which iis? There are been no TR1s.

It doesn't matter if you are Warren Buffet - if there isn't sufficient cashflow from the field to repay the bonds the result is still the same.

"Then i have an oil company currently pumping 13-14kbpd, so i issue a new bond for £200m, or decide to float the company and repay myself every penny that it cost me and have plenty of cash for running the company."

The current bonds are trading at a substantial discount as there is severe doubt there will be sufficient cashflow to repay them - so why would you be able to buy the old ones back and then issue new ones at par? What has changed that means the £200million of new bonds will be repaid?

We already knew what first half production was as its been released in the quarterly mining updates and we also know why Q2 was relatively disappointing as they could not mill the full amount of what was extracted.

Short to medium term targets were clearly from the annual report, which is to reach 850,000ktpa of mining and be able to process it, which should take production up towards 45000oz per year.

I'm not sure there is any point them giving specific targets for the rest of this year as there are so many variables and given track record no one would much believe them anyway. However the individual elements were covered
- Extraction substantially increased and now stable at annualised rate of 600,000kt - this is a substantial increase on last year and is expected to be increased short term.
- Maintenance and investment mostly finished on the mill so less likelihood of milling issues.
- Mine development to increase grade and reduce dilution.

They are clear statements confirming execution so far and outlining near term steps that will be executed - if the continue as they are then Q2 should be very nice and sets 2021 up to push further

Very positive to be honest - not necessarily the backward looking numbers, but the forward looking commentary that seems to indicate execution of the mine development is increasing.
- They continue to average extraction of 45-50kt per month, so Q2 increase is not a flash in the pan
- Expect to increase extraction further due to additional excavator
- Confirmation that most of the maintenance on the milling is complete, so hopefully all ore extracted can be milled (only 80% in H1)
- Marked reduction in dilution and improvement in grades expected.

So second half..
Assuming ore extracted and is 300kt and 100% is milled, together with an improvement in recovery due grade/dilution of 20%, second half gold sales would be 13,500 ounces, which together with a higher gold price (assuming gold stays at least where it is now), then revenue would double in the second half compared to the first half.

Add on that Teren-sai is advancing with production planned to start 2022, not surprised at all by the market reaction.

Couldn’t anyone else make any sense out of that post?

"Lets see what the TR1s say

I'd be surprised if we see any, I suspect most will be flipped."

Yep agreed.

"The demand was well in excess of what the company’s brokers had expected and I understand that a primarily institution-led order book was of the highest quality."

Lets see what the TR1s say