Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Given the weakness in European gas prices, today's HY results shows how much operational progress JKX has made and how well placed they are for the future. They've improved on every metric but the standout is progress in Russia with Well 5, and now moving to 18 & 20. With costs fixed all new/additional revenue is mostly profit — this could boost annual cash by $10-15m:
Outperforming on almost all metrics
— Average daily production: 10,132 boepd (H1 2018: 8,728 boepd)
— Revenue: $45.3m (H12018: $42.4m)
— Cost of sales (excluding DD&A and production taxes): $8.9m (H12018: $9.9m)
— Profit from operations before exceptional items: $8.9m (H12018: $7.2m)
— Exceptional costs: $2.3m (H12018: $2.9m)
— Profit for the period: $2.2m (H12018: $1.9m)
— Profit per share: 1.32 cents (H12018: 1.13 cents)
— Operating cash flow: $12.2m (H12018: $15.7m)
— Capital expenditure: $10.8m (H12018: $4.6m)
— Total unrestricted cash balance: $10.6m (31 Dec 2018: $19.2m)
— Gas inventory up to 25 MMcm at 30 June 2019 (31 Dec 2018: 4 MMcm) with estimated value of $5.4m
— Oil inventory of 46 Mbbl at 30 June 2019 (31 Dec 2018: 39 Mbbl) with estimated value of $2.6m
"The Supreme Court of Ukraine has now refused to accept the cassation complaint of the Poltava Tax Authorities for procedural reasons and therefore this appeal will not take place. The case is closed in favour of PPC."
I wonder is our influence starting to assist with these claims falling in our favour.
From their last annual report: "We have now initiated a substantial three well workover programme and a newly contracted rig was mobilised to the field in late 2018 for the first workover on Well 5".
Today's announcement is very good news, it adds 1,022 boepd, more than 20% to overall production with Well 5 alone. With two more workovers to come, total boepd could reach 7,000 to 8,000 boepd by year end in Russia. We know operating variable costs are more or less fixed, so Russian income should rise significantly.
Quarterly results due later in the week and HY end of July. @ 40p it looks cheap.
Novinsky can take RPT in any direction he wishes now and this news will make for a more interesting AGM next week. They need to communicate more clearly their strategy for growth and augmenting shareholder value. There is no point sitting on $70m cash without a plan for putting it to use. After all, Novinsky is the main beneficiary so it's no brainer.
I expect a steady move upwards from here.
Phrontist
Those directors resigned because of the way their other board colleagues were unceremoniously relieved of their duties. Apparently a recruitment process is underway.
Drill results were positive yesterday — strange to see the drop since.
It seems Well 5 in Russia is important and sounded relatively positive it will come through. It has been drilled (again) "to the planned depth of 5,200m on 3 June and the completion is currently being run in hole".
A positive outcome to court cases could push this materially higher.
Conclusion is: operationally things are moving in the right direction and the price is being held back because of uncertainty over corporate governance.
Plenty to play for here.
Hope this helps.
Benjie, you're broadly right. Kiziltepe is likely to be 11 years producing 25,000/oz+ and while Tavsan is only 4 years at the moment, it has the potential to be 6-8years @ 30,000/oz — 200,000oz at least is open-pittable. It's conceivable they will be producing circa 450,000 to 500,000/oz+ over a period of 10 years @ $700 profit per oz = $350m ($175m attributable). The stated NPVs are $42m + $34m = $76m.
Anywhere in between will do very nicely.
That excludes Salinbas, which we own 100%, less royalty stream of 2% — the value of Salinbas could be several times larger than the above.
As they say, do the maths.
Many shareholders complain about how much directors support the companies/boards they sit on — Ariana's record speaks for itself: http://www.lse.co.uk/DirectorsDeals.asp?shareprice=AAU&share=ariana
I expect this to rise steadily until we see Salinbas assay results, once a JORC arrives this will be at least 5p+.
We own 100% of Kizilcukur and.....
"The mineralisation encountered within the top 40m of the Zeki vein system shows sufficiently high grades and widths to support an open pit operation. The occurrence of coarse gold and bonanza grade gold and silver mineralisation in places is highly encouraging."
With gold at 1,330/oz, low operating costs, cash growing, the main loan being repaid rapidly and a major drilling programme underway at Salinbas, this must be one of the most undervalued gold juniors on AIM.
We shouldn't forget that Ariana didn't think they could afford to fund the drilling programme at Salinbas from existing revenues. This just shows how much progress they've made in 12-18 months.
As we all know, while Salinbas is the really big prize. However with Tavsan coming on stream, we will producing 50,000 oz+ at incredibly low cash costs. Our net attributable pre-tax cash could be minimum £15m per annum and that's without Salinbas and other satellite opportunities.
If they continue along this trend and Salinbas comes anywhere close to their expectations, I know the top people involve see this as a £100m+ company.
The comments in their annual report were pretty emphatic:
1. "The Group considers that the Order is groundless and that the outcome of the legal proceedings challenging the Order will ultimately be in favour of the Group, and consequently, the Group does not anticipate any negative effects on its operations in respect of the matter."
2. It also says that the reassessment of the remaining reserves and resources at the VAS field is being undertaken by an independent petroleum reserves consultant.
The VAS order was politically motivated and will be struck out, as has happened in every other similar case.
If there was any doubt about the VAS order surely the company would have halted the VAS reserves reassessment due for completion in 2 months time.
A re-rate will come in due course.
Krok — it's fine to highlight something which doesn't make sense, but to be critical and negative based on your speculations without the facts damages your credibility. It's also why investors should take some of the highly speculative nature of your commentary with an even bigger pinch of salt.
The amount of price volatility in Regal is not justified as management is delivering quarter on quarter and have plans to add more wells and plenty of cash in 2019. Many AIM companies would be enviable of RPT's record of the last few years.
Krok — you're inflating your criticism to justify your speculation.
Not issuing a dividend doesn't make Regal any less investable as it depends on one's investment strategy. If you only invested for that reason you may want to think again. If it happens it's a bonus.
We don't know the facts surrounding the cash in April. They're a very prudent and experienced management team (especially with the addition of Dmitry Sazonenko) and I can't see how they would misjudge their capex investment as you speculate.
Again, you inflate the VAS order issue when the company has clearly stated there is no basis for it — when this type of thing happened before it disappeared in due course and the price recovered spectacularly. You need to know how these things work in Ukraine — it's a fairly regular occurrence.
As far as 2019 production is concerned, I think there is more than enough in Sergii Glazunov' outlook statement to justify to get close to 5,000 boepd, given average daily production is already almost 4,300 boepd.
Anyone who criticises these results must have their own agenda — it's a superb financial and operational performance. The RPT team is delivering in a very measured way and that's their style. With their massive reserves I can only see cash and production trajectory going one way. There is a quiet confidence to their outlook statement and I can see their planned development growing significantly in 2020 — Capex almost doubled to $9m in 2018 and is likely to be maintained. I like this comment "it is also intended to undertake further evaluation of the VED area (e.g. in VAS) of the licence, which appears highly prospective on the current 2D seismic data and will benefit from the improved imaging of the new 3D seismic data.
The VAS order was always a red herring and will disappear now that the elections are out of the way. This type of interference happened before and died a few months later.
There is no reason why Regal can't reach 5,000 boepd in 2019 and over well over 6,000 boepd by next year.
The standout figure is that total production @ 10,200 boepd in March.
Although figure not quoted today, CAPEX seems to be continuing and that suggests more production could be added to the 10,200 boepd
Total free cash (added) in quarter is down due to lower gas and oil prices (and probably higher CAPEX), but prices have since recovered, so long-term cash trend should stablise from next quarter.
Only $6m left on the bond payment
Looking forward to what their 3D seismic survey reveals in the West Mashivska field
Management doing a solid job and plenty of upside to come.
AAU's costs are less than half of HUM's. AAU's presentation last October 2018: US$612 - $371/oz Q1/Q2 operating cash costs. In most cases, cash costs can be 10-15% below AISC, but not in AAU's case. They're virtually the same due to low local taxes.
This is why AAU is one of the most attractive (if not the best) gold plays on AIM.
It's pleasing to see Vast build some consistency and a more measured approach to their announcements. I detect a step change for the better.
All three items in the Update are nearing conclusion and it appears they're coming together in a very coordinated fashion. It really does feels like a new beginning and AP has a chance to make amends for the shortcomings of the last year and the mistakes of those that went before.
Vast couldn't have persuaded SP Angel to act for them at this tricky juncture unless there was a major change coming in the company's future prospects.
I'll be adding to my holding and have already voted in advance for all three of the resolutions at the GM.
Good luck to all those who have remained loyal — our time is coming.
One of the reasons some shareholders gave up VAST last year was the highly geared balance sheet and lack of funds coming from PP, so this finally addresses that issue and opens up the door to build a proper company unencumbered by its legacy debt arrangements.
The original terms agreed by Roy Pitchford with SS on Pickstone has meant they effectively controlled VAST. Despite AP's best efforts, all Zim funds were diverted to other SS projects (e.g. Sulphide plant, Eureka), VAST has never seen a $ and never would. Minority shareholdings in Zim, especially for gold operations, are of no real value to VAST. A majority holding in diamonds is hugely more valuable, not least because we're in control of the profits and funds can be remitted to VAST through the new FX arrangements now in force. This transaction alone is a game changer for VAST.
The balance sheet will be transformed which allows VAST to agreed new finance arrangements for BP and diamonds. Long-term shareholders need to see this as a watershed moment and we should be judging AP from this point onwards.
Any new renegotiated offtake agreement will hopefully refinance Manaila and BP in one contact and if that happens VAST will have very manageable debt arrangements for the first time in years.
The free cash numbers from diamonds and BP should propel VAST into the company it always had the potential to be.
Can't wait for the next few weeks and to see what the balance sheet looks like.
SP Angel would not have taken VAST on unless they had a plan.
Notwithstanding the increase in production and good management, Q1's result clearly demonstrates that companies operating in Ukraine are still achieving decent gas prices despite the slow down elsewhere in Europe. With record cash levels and building steadily, increasing production further over the medium term and/or acquiring other assets must be very much on their radar. When MEX-119 comes on stream in September this should boost boepd by another 10-20% and increase cash further.
From today's result it should be obvious to all of us why Victor Pinchuk increased his take from 24% to 28% in February — he acquired another 4% on the cheap when the price was at 40p. If that's not a buy signal for us now I don't what it isn't.
Regal announced record increase in reserves at MEX-GOL last year, they have yet to report the same for VAS which they are undertaking this year.
I would expect the VAS order to fall away soon given the political situation has eased post elections. Each time something like this has happened in the past, the share price dropped only for it to recover in spectacular fashion. Just before the order was issued last month, the price was heading towards 60p+ and with today's result it more than justifies that price range.
They sometimes hold back stock looking for best prices in a fluctuating market and why inventory can vary from quarter to quarter. Inventory is virtually cash equivalent. To get an accurate picture, add inventory and cash and then compare them Q to Q.
I agree Ukrainian gas prices are the key to cash build, but they often benefit from domestic pricing which is more favourable and stable than in the rest of Europe. Russian prices are less prone to market movements. They say they're looking to improve their pricing strategy in Russia. I believe the impact of lower gas prices on JKX will be modest and could easily be offset by rising production and tight cost controls across the group.
I'm optimistic over the next few years and the board has a very strong grip on the future.
Correction, even better figures: Over $8m was added in last quarter Q4 '18 (there were no bond payments due). That equates to over $30m per annum less bond payments and rising with increased production. Three bond payments remaining — Feb '19: $6m, Aug '19: $0.4m and Feb '20: $5.8m. That's $32m less $6.5m in 2020 = circa $25mm net cash per annum.
After Feb 2020, we could very well be looking at a company adding $30-35m free cash per annum with no debt from next Mar with rising production to 10,000 boepd. By my calculations we could see JKX sitting on circa $100m cash within about 2 years. The question is what do they do with it?
We also need to remember that JKX has won many of their rental claims already only for them to be appealed. Whatever happens these claims seem very manageable and may get strung out.
Looking forward to Q1 2019 results next month.
What investors need to focus on is cash trajectory. Over $8m was added in last quarter Q4 '18 (there were no bond payments due). That equates to circa $24m per annum less bond payments and rising with increased production. Three bond payments remaining — Feb '19: $5.5m, Aug '19: $0.8m and Feb '20: $5.5m. That's $24m less $ 6.5m in 2020 = $18m net cash per annum.
After Feb 2020, we could very well be looking at a company adding $25-30m free cash per annum with no debt from next Mar. By my calculations we could see JKX sitting on $100m cash within about 2 years. The question is what do they do with the cash?
We also need to remember that JKX has won many of their rental claims already only for them to be appealed. Whatever happens these claims seem very manageable and may get strung out.
Looking forward to Q1 results next month.