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As some may be aware, Tracarta is a John Wardle investment vehicle. The latter is the CEO of Amerisur, an AIM-listed oil company. But I am not sure how many people realise that his academic background is in mining. He has a degree in Mining Engineering and a PhD in Rock Mechanics and Geophysics. And let's remember this is a working project. The company has been extracting and selling Tantalum to an exacting customer. It has had plenty of time and opportunity to evaluate the site's potential. And this is a very sizeable area covering some 452.7 hectares. Whether or not the JORC report is positive, I have no idea; but the Board has had a lot of opportunities to carry out its own research. I suspect, but cannot prove, that it may simply be using the JORC report to confirm what it already knows.

Sitting in the back of my mind is the evaluations of this area carried out by the South African Government in the 1970s, mainly concerning Uranium, that pointed to very high levels of mineral deposits.

With the company slipping out of the MSCI Global Small Cap Index in May 2018, I suspect that it may now be under the radar of some fund managers. Without too much fanfare, it delivered on its Elikhulu project and has moved a long way towards becoming a low-cost Gold producer. Incidentally, it might be worth bearing in mind that it has a two year grace period on its debt financing for the project. My understanding is that repayments will begin in April 2019. Of course, there could be a collapse in the Gold price or unforeseen problems with Elikhulu but the company now seems to be on much firmer ground that it has been in recent times. And most of the heavy lifting in terms of capital expenditure appears to be behind it. Basically, there seems to be less pressure on its cash flow.

With an obvious focus on Tantalum, it's easy to forget that Kazera has substantial and readily accessible Lithium reserves. The JORC report will provide detailed and actionable data. Putting that into perspective there are three major Lithium producers due to IPO this year. The first is a spin-off from an American company, FMC Corp. This is expected to list on the New York stock exchange in October 2018. It's raising some US$500 million for a 15% stake in the business. The other two are Chinese: Tianqi Lithium and Ganfeng Lithium. Both expected to list on the Hong Kong stock market later this year and both looking to raise up to US$1 billion.

Basically, even with the recent slump in Lithium prices, there appears to be a great deal of investment and cash focused on this resource. My understanding is that Kazera's Lithium seems to be close to the surface and relatively cheap to mine.

Hi Rob

An error on my part. When I see an Edison Research report I simply assume that someone has paid for it. That aside, I think it raises one important point and that is the scale of what is happening in Argentina.

It may be paid-for research but this piece produced by Edison, in my view, is definitely worth a look for those interested in the Argentinian oil sector. It gives a broad outline of the industry and then focuses on several listed companies, including President. It also gives some perspective in terms of what is going on.

Lest we forget, Argentina is a large country with a land mass of some 2.76 million square kilometres (UK: 244,820 square kilometres). The oil and gas play, both conventional and unconventional is simply huge. I am unsure as to how many investors have grasped what is at stake. Not only is there a lot going on, especially in terms of shale, but it's not difficult to see the potential for substantial growth.

https://t.co/97XqIbRI9z

Focusing on Puesto Flores is only natural given that it's where the bulk of the company's production is being produced. However, Puesto Guardian does present a substantial upside. And, it's easy to forget that the company's concession there runs until 2050. The mandatory work associated with the field, some US$10.75 million, was completed in 2016. So there is no rush to drill due to agreement obligations and time frames. However, what really seems to have set back its plans is the problems that it has had with a Chinese supplier of pumping equipment, the Kerui Group. Even after sending in a team of engineers the latter was unable to deliver on the deal. President has been trying to negotiate a settlement but I would suggest it will be fortunate to get anything. As for going through the Chinese courts, forget it. That said, it still has possession of the pumps.

Just a final thought, in 2016 its 2P for Puesto Guardian increased by 2 MMBO. Or to put it another way, its replacement figure was 16 times its production figure. There appears to be much to play for.

The company's bank loan facility of US$8 million was taken out to finance the Chevron acquisition in late 2017. This is a 42 months term loan with an interest rate of 7.5% above LIBOR. The company aimed to reduce this debt to US$6 million by the end of 2018. So it appears to be ahead of schedule. In addition to this, it has in place a US$15 million revolving loan facility with IYA Global, a company controlled by Peter Levine. The interest rate on this facility is 10.5% and the maturity date is 31st December 2021. Having converted some US$2.2 million of the loan that was utilised into equity (16.8 million shares at 10p) in November 2017, the amount outstanding at 30th April 2018 was US$13.5 million.

It might be worth bearing in mind that the US$2 million per month positive cash flow is after paying the Rio Negro Province its final instalment of US$7 million for the Puesto Flores and Estancia Vieja concessions. And also after paying down some 25% of its bank debt – now around US$6 million. Basically, it's generating significant amounts of cash.

As for its gas prospects in Estancia Vieja, any gas utilised by the company for internal purposes will be royalty free. Only the gas that is sold on the open market will be subject to royalties.

Just a minor point but financially significant, the Chiritza re-pumping station will be paid for by the Ecuadorian authorities. It may be coming in on time and on budget but it will not be paid for by Amerisur. The company's fees for using the RODA system will be offset against the cost of construction. Basically, it will get a significant uplift in throughput – up to 9,000 BOPD but at little cost. The only real cost is management time and of course upfront expenses, which it will recoup.

When interviewed by Malcy in January 2018, Giles Clarke indicated, in my view, that a dividend was dependent on the oil price remaining firm. Brent crude was then trading at around US$70 per barrel while the stock price was around 22p. The former is now touching US$75 and the latter is about 15p. And yet in response to questions recently posed by a private investor and available online, dividends will be considered when the company is “Delivering sustainable production from multiple fields”. With production from just two fields and a chronically late drilling campaign, I get the impression that the company is doing all it can to retain the cash.

In my opinion, the company is unlikely to be sold for a major premium. However, it could be a very attractive investment that returns substantial amounts of cash to its owners. And that means that it needs to start paying dividends and soon. The institutions really do need to step up to the plate.

As Cobus Loots pointed out in last week's IG interview, with Elikhulu entering production later this month, the company has reached peak funding with net debt at R1.7 billion. Basically, it's looking at strengthening its balance sheet in the immediate future. There is also the prospect of the Royal Sheba mine feasibility study due to be released in September. And as Loots noted, this is part of its existing mining rights so there should be no permitting issues. The inference that I took was that this could be brought into production reasonably quickly. Even though the grades will be lower than what they are used to at some 3/4g per tonne, the studies they have already conducted indicates an orebody of some 0.48 million oz measured and inferred.

In my opinion, Loots has done a good job re-focusing the company as a low-cost Gold producer – as a stand-alone project, Elikhulu is expected to produce some 56,000 oz of Gold per annum at an AISC of less than US$700 per oz.

It certainly appears undervalued when one considers its levels of cash generation. With its entire capex programme for 2018 fully funded at an oil price of US$45 per barrel, cash netbacks of US$40 per barrel with oil at US$60 per barrel and a 2017 year-end cash balance of around US$40 million, I believe it's in a strong cash position. In fact, so strong it should start paying a dividend. A special dividend of say US$10 million would put the stock on a yield of around 5%. It would, in my opinion, be the easiest way to increase the stock price. It would also eliminate the stigma of being a non-dividend paying resource stock. In short, it would be more likely to be viewed as an investment grade business.

If the company is not going to return cash to investors, what is the exit strategy? My understanding is that no bids have ever been made for the company. No solicitations have ever been made public. It seems fair to assume that there are no serious buyers in the offing. Implicit in not paying a dividend is the assumption that the management can better invest the money than investors themselves. Sure, Berkshire Hathaway has never paid a dividend but the capital appreciation of the stock more than compensates for that. This is not the case for Amerisur.

And let's not forget, the Directors of the company have been withdrawing cash and lots of it from day one of its listing. Not for them the promise of jam tomorrow.

It may have mentioned the possibility of changing auditors in its 2017 accounts but I suspect that it could be under pressure from the institutions. After all, it has been with Grant Thornton since floatation. And it does, rather bizarrely, seem to operate its accounts function out of the UK. Changing auditors, in my opinion, should be welcomed by shareholders.

The Board has been given free rein but appears unable to deliver for shareholders. Considering what is at stake, I would suggest that it's time for the institutions to get their hands dirty and to get involved with running the business. Incidentally, it's not out of order or rude to ask what the CEO actually does for his money any more than it would be to ask a company driver what he does for his money. That's a normal question posed by the owner of a business to his manager. But I am not entirely sure whether the institutions are asking this type of basic question. In my view, it's unclear as to the degree of technical oversight undertaken by the Directors which may go some way to explain the recurring inaccuracies in the RNSs.

We are now three quarters the way through 2018 and no wells have been drilled. The target was up to 16 wells for the year. This could be achieved and we may be looking at a very successful campaign. On the other hand, we may need to accept that success at the drill bit will require a new management team. And this can only be done through institutional action.

It obviously depends upon the scale of the gas field and the logistics. However, it may open up some interesting acquisition deals in Puesto Flores. And it might be worth remembering that this is not pie in the sky. President is due to announce the results of the first test well in the next couple of weeks. It's also due to release plans for the second and third test wells. Even though it estimates that the project will have a payback period of just 18 months, I think we really need to see the numbers.

A key point that I got from the recent question and answer session for private investors was that although President's Estancia Vieja gas field does not appear to be a major gas field, it will probably produce more than enough to make the company's fields in Puesto Flores and Estancia Vieja energy self-sufficient. As Peter Levine pointed out, this is no small feat bearing in mind that the company now spends some US$150,000 – US$200,000 per month on electricity. In addition, there are no royalties associated with the gas if it's used for the company's internal consumption. It obviously needs to spend on infrastructure but it's looking at a payback period of some 18 months for the project.

Albeit very discretely, late on Friday afternoon, Columbus Energy released the results of its recent AGM. All Resolutions were not “Duly passed”. Resolution 5 allowing the dis-application of pre-emption rights was rejected by shareholders. I point this out as Trinity Exploration really hit private investors hard through a placing that gave priority to institutional shareholders and the Directors. The result was an almost immediate 30% fall in the share price. Hopefully, Columbus shareholders have the backbone to stand up to its management when they have to. Incidentally, that simply means being bothered to send in a proxy vote for AGM resolutions.

The company is on my watchlist but I would not get involved unless I was absolutely sure that all shareholders are going to be treated equally.

At 500 BOPD, Puesto Guardian is going to be a long slog. The impression I have is that this licence has been a lot tougher than they ever envisaged. And the workovers have not been that successful. Which is why they will be drilling new vertical wells later this year. The upside is that they have completed the mandatory work and have a very long licence.

From what I can understand, President was expecting no more than US$68 per barrel going forward for the near future. Its capex programme has been based on a much lower figure. Unless there is an immediate collapse in the oil price, the lifting of the cap by the Argentine Government seems to present a substantial upside.

As for the prospect of populism returning to Argentina, a major left wing candidate for the 2019 elections is no other than the Governor of Salta Province. This is the chap that oversaw the granting of President's 35-year licences - a term hitherto unknown for almost all resource companies. Far from being an anti-establishment figure, he seems to be courting foreign investors, albeit very discretely.

Argentina's return to the MSCI Emerging Market Index will, in my opinion, be a long-term fillip for President Energy. The company is still on track for a listing on the BCBA. Short-term there may be concerns about oil prices and the peso. But, longer term, Emerging Market status and a local listing will clearly widen its potential shareholder base.

It may have gone unnoticed by some investors but Pan African was relegated from the MSCI Global Small Cap Index in May 2018. I would suggest that this is important. Many tracker funds would automatically sell the stock and therefore depress the price. However, within the next few months, Elikhulu should be in production. In which case, the company will be transitioning into a low-cost Gold producer with most of the capex heavy projects behind it. Successful implementation of its plans could see it back in the Index within a short period of time. In effect, forcing Index funds back into the stock. Needless to say, the Rand price of Gold is outside its control and so is the domestic political situation. But the broad point I am making is that the Index trackers may have resulted in the stock being oversold.