Member Info for TrekMadone

Hi tc,

Just saw your post pop up on the side bar here. Yes I have also been a little miffed. But I can name several stocks even in different sectors that are ‘undervalued’ and have drifted these last couple months.

Imo, not evidence based, but I think it’s a combination of the holidays, low volume and easier money to be had in higher mcap stocks with lower risk.

When you look at the indices v commodities we are at the biggest disconnect for some time historically. Even though this is ‘copper’ you can add gas into the mix....

https://www.mining.com/120-year-chart-shows-commodities-have-never-been-this-undervalued/

TXP is 100% of my ISA for good reason. It’s my Yolo stock! All our other investments are in Mrs Trek’s pot.

SeagullsFan,

Well done on your bargain here. I am pretty sure you will have the option to, if so inclined, to derisk ahead of the Royston result. I derisked part on previous drills here and they came up trumps! Lol!

TXP has been a multi-banger for me like many others from early days and I will be adding more at the next ISA! It’s early days and there’s still huge potential upside. £10 is my TP in a few years.

Good luck with your investments

Trek

I have been building a position in TGA. It’s a spin out from AAL. There’s research on that BB if anyone is interested. My point is there is a huge value disconnect between the spin out that is TGa and the asset + AAL have fixed them up with cash, transitional management and other financial support.

Imo this is reflective of ii pressures to see their investments decarbonise. It’s almost at any cost!

TGA have a great ESG plan and now as a separate entity trade on a pe of less than 2 with an FCF of 63% of their mcap pa! They have signed up to a 30% min divi of FCF divi that equates to around 25% at today’s SP. The price of thermal coal has been going through the roof as pits close and demand increases. Yet 1/3 of global energy is coal dependent.

It really is a similar albeit more mature story to the opportunity that affords SAVE atm. Just swap gas for coal, Exxon for AAL and SAVE for TGA and you have a similar narrative.

Then you add in AK and I think he could be pushing a similar huge bargain against a relatively open door.

From an Exxon perspective they want to be seen to be responsible ‘offloaders’. That is why AK has majored on the ESG aspects of SAVE. Exxon can be seen to be delivering into a safe pair of hands that respects the community, the wider economy and drives the efficiencies necessary to deliver safe energy as clean as possible. Gas is cleaner than oil or diesel.

Imo we could be on the cusp of a similar bargain to TGA.

All said. After this flipping summer I am glad we are suspended!

Usual caveats

Trek

Ps ok it’s a subtle cross ramp but it’s still on topic and I think reflective of sentiment.

Hi Lazypunter,

Welcome.

Here you go,

Listen to the interims presentation on the Co website or at the very least go through the slides. You have to register but it’s free.

https://www.thungela.com/investors

Then look at this research note that was kindly posted by another poster here. My sincere apologies for forgetting who but take a bow!

https://stockspinoffinvesting.com/thungela-resources-buy-the-toxic-waste/

There are some good posters here RVO, Rylidan and others who post data and opinion. Critique their posts against your own POV. But please don’t let this BB disintegrate like AVCT with foul abuse.

TGA are now where AVCT want to be in terms of metrics. TGA is not gonna be a 20bag like finding a cure for cancer or stumbling on 5TCF of gas! But it’s nonetheless significantly undervalued and I see £5-£6 pretty quickly and an easier nights sleep,

I am here for a long term divi play. It’s now one of my biggest holdings.

Good luck with your investments

Trek

Thank you RightOn,

I was not aware of that option. It’s going to be quite exciting to see how they move this forward both from an ops and a financial perspective. I like innovation and financial diligence. So many lifestyle execs on AIM one has to keep eyes open!

I guess the collateral for the pref shares will be the asset as they are higher than ord shares in the pecking order but from memory below corporate bonds. Corporate bonds can be punitive. Asset backed issuance is not a problem especially if they can get a good rate. It also gives them a fallback position of a placing or straightforward loan if things don’t work out. I like it when they have options.

Like others I am expecting a run through 100p here on the next assays. I just need to buy 10k more shares to reach my target holding here. I feel time is not on my side!

Thanks again for the intel

Trek

Hi Righton,

I totally agree they are doing a very good job. I am aware of the shallow sulphides. I posted some data on an earlier post.

I hope you are right and they pull it off. The preference shares are an option but they are still dilutive. I was not aware that had been discussed and would be grateful if you have a reference (TIA) . Likewise they could also buy stock back on the open market as cash flow materialises.

All said I am not worried about any dilution in any shape or form here because of the quality of the BoD and asset. I am just keeping an open mind and discussing a POV.

Thanks for your reply.

Good luck with your investments.

Trek

Must say I am with Sp and MT re: placing. I posted as such on Tuesday 21:42 with some data.

I would rather see cash raised and full steam ahead together with a loan rather than being restricted by credit terms. Having to design a project for short term repayment benefits than longer term cost savings/efficiencies is not ideal.

You don’t want to be drilling an underground mine if your objective is an open pit. With an open pit you get what’s on top first! A few million cash can provide greater optionality.

The trick is that the asset enhances the equity so it’s instantly accretive not the other way around. So you 1.1 shares are now worth 2 tons instead of 1 share previously being 1 ton.

It’s great that this BoD have the best intentions of shareholders. That tells us if they do raise a little it’s for the best and if you look at the ‘syntax’ their intentions have been caveated to ‘avoid’ dilution.

In any event any dilution will imo be at a much higher SP. Some nice problems to have!

Ps. I don’t know if anyone is looking for a new divi payer if so check out TGA. It’s way under radar. Trading on a pe of just over one and throwing off 63% of its mcap a year in FCF! Divi is looking like 25-30% at current SP. Here’s a paper.

https://stockspinoffinvesting.com/thungela-resources-buy-the-toxic-waste/

Good luck with your investments

Trek

Hi Noob,

“Not sure if I'm being stupid but a water rig is what is used for water well drilling. Anyone?”

You only need to watch the first 5 mins to get the gist...

I guess it’ll look like this using cement rather than bentonite for the casing.

https://youtu.be/2I4yrhaISQM

Pretty light and manoeuvrable, no pad needed. Can hit some shallow targets pretty quickly and cheaply. Well they have to as we are now eating into the £10m!

Lake beds and Red sandstone shouldn’t be a problem.

It would be nice to bag a discovery before Christmas more for technicals in terms of proving the science and bagging some free gas. However, like others here I think we need to drill the Karoo with the right rig to set the SP on it’s way to....

Trek

£5

Thank you KeithOz,

Very helpful analysis. I am a reflective person and am pretty much on the same page as you with the shallower targets and most definitely the ops needed at depth.

Good luck with your investments.

Trek

£5

Tricky,

I concur but not on the same scale as you! Albeit I am now back in the money on my original stake.

Good luck with your investments

Trek

Thank you QS,

I do try and stay on topic as constructively as possible even if it’s contentious. As long as one is respectful I think a BB can be a gem for sharing research and discussing difficult points. Atm, imo this bb has sadly disintegrated but hopefully we should get back on track.

The big money here is very likely only 1200m away! That’s really not that difficult with the right gear!

It’ll come!

Usual caveats

Trek

£5

Hi Ndn,

“Wet claystone is totally impervious to gas as long as its not fractured
130m of it gives us a fair chance I’d say

There couldn’t be a better seal”

You have probably answered Bunsa’s question more succinctly without realising it. The 130m seal is above the Karoo. It’s in tact. That’s possibly why the shallow drills have not been as successful.

“A 130m thick claystone unit was encountered above the top Karoo sands, indicating good seal presence for the Karoo reservoir.”

We need to stop ‘dancing around handbags’ and get a bigger boat and drill this!!!!

Usual caveats

Trek

£5

Usual caveats

Trek

£5

Hi Bunsa,

““but I am not sure about those clay seals containing free gas above the basement”

“What leads to these concerns?”

It’s my amateur deduction from the following within the RNS’s.

Tai 2 was 20m from Tai 1....

“Tai-2 is located ~20m from Tai-1 and utilises the same drill pad”

Tai-2 objective was to prove a working shallow system....

“With confirmation of a working helium system, Tai-1 supports ongoing exploration with helium shows identified at multiple stratigraphic intervals. The drilling at Tai-2 will test one of several targets highlighted for additional exploration following positive results from Tai-1.”

Why drill only one of several? If this is our 3rd drill did we only get 80m?? Why not got down to then next horizon while on site?

“Tai-2, although completed without identifying helium gas, has provided valuable information on shallow trap and seal potential”

“Results from Tai-1 have shown a prolific basin with helium shows identified at multiple levels from near surface to basement. Tai-2 has verified the POTENTIAL for development of newly identified 'Shallow' traps within the Lake Bed Formation......”

Traps = more than one trap. Multiple levels. Why didn’t we go deeper?

“The well targeted continuation of a 2.2% helium show identified in a sandstone interval at 70.5m in Tai-1: A high-grade gas show which potentially indicates free gas in the subsurface. Wireline logging of Tai-2 demonstrated continuous clay over this interval, SUGGESTING that the reservoir in Tai-1 pinched out against clay, which provides both vertical and lateral seal.”

I don’t get the pinching out. Seismics showed multiple stacked horizons. I would have expected gas if not at 70m then 500m! Why would they in effect have moved the rig keeping so close to Tai-1 where they had shows and now nothing. It’s the same seismics...

Ok......

“Current seismic data does not accurately resolve trapping styles at a shallow depth. Helium One is therefore reviewing several alternative low-cost geophysical techniques to test over known structures in the Tai area, before deployment over a wider area in the basin.”

Hence the ‘SUGGESTION’...

So they have to ‘re-measure’ before deployment of ‘water drill’. I thought it was disappointing that we didn’t get a discovery in the shallow traps. The data indicates ‘we were unlucky’ ...’pinching’.

If, however, we have data on Tai 1 as per RNS in shallow surely the next ‘water drill rig’ should be drilling Tai-1 shallow to get a discovery?

Then in first Tai 1 RNS....

“Petrophysical analysis indicates no free gas in the uppermost thinly bedded Karoo sands associated with helium shows.”

I don’t have CONFIDENCE that there is enough free gas above the 130m seal or the other structures hold free gas at this location. This is my interpretation having reread the RNS’s. I understand someone else can read it and have a completely different view especially if they are more knowledgeable.

Hi Tom,

I refer to my previous 3 posts here where I called out concerns on the finance.

That was reiterated by DM in the interview with Katy at 4mins:30sec from memory where DM said ‘we have £10m left’.

If they have £10m left then that means they have spent all the IPO cash!

That means they have re-appropriated some of the £10m funds, probably £3m for continued ops and working capital under a new heading ‘phase 2’.

For me, I know I ramp with my £5 target but I have always caveated that on multiple discoveries coming together and still believe it will but I also don’t mind saying it as I see it; else what is the point of a BB; folk don’t make investment decisions based entirely on posters opinions.

The last interview was more about what wasn’t said than what was said imo.

The water- drill is a bridge as I see it to grab some discovery before year end but I am not sure about those clay seals containing free gas above the basement. DM clearly is optimistic. Remember discovery and appraisal are two different things. I hope he’s right though.

What happened to Mitchell’s opt in option for equity payment for drill 4?

Did Tai-1 + Sidetrack + Tai-2 = 3 drills and the new coined ‘phase 1’. It’s not clear.

When will we have the 3D’s?

Are we securing a bigger rig for the deeper Karoo?

What are the other on the shelf targets. Itumbula was mentioned as one what are the plans. What’s phase 2 and how much will it cost.

I could go on but it’s speculative and I trust that DM will make this clear soon and deserves a chance to do so. I will, however, drop IR a line later with a few questions just so he is aware of investor concerns.

However, operationally I don’t think they know themselves just yet what the next best move is.

The interview IMO was an early heads up. It was a holding interview. They still have loads to process.

This was always going to be a two year journey. It’s still early days. I expect them to raise, well everyone does really, it’s just a question of timing and if you get it right the asset will dilute the raise not the other way around. That’s the other juggling ball for DM.

DM said he doesn’t like wasting time. Not spending time wisely is the biggest folly by chasing after the wind! It’s better to take stock and have a clear strategy for ‘phase 2’. Keep the erstwhile good comms in place so investors are on side knowing what phase 1 and 2 clearly means and how that will be financed within the constraints of confidentiality.

Not sure if that helps or not but it’s where I am atm. A little bit of purgatory! but I am sure all will be revealed in a week or so.

Good luck with your investments,

Usual caveats

Trek

£5

Hi crawshaw,

Those very small buys are usually divi scrip buys, we don’t have any yet or MM moving stock to fill orders, balance across books. You see it on lots of stocks. On DCTA have seen 10 single trade buys in one day! Also on ARB (from 5p) there were loads of single digit trades before it went nuts. The opposite can also happen of course but they are not PI trades other than the odd finger trouble.

On ONC I posted that there were 39 trades of 331 shares within a second. They were I am prett6 sure part of a liquidity scheme that the MM’s can post.

Usual caveats

Trek

RVO,
Thanks, I will dig out the note.

You have to order out to Jan 22 to get a price cheaper than Aug 21. That’s a quite a bit of pricing pressure especially over the holiday period where you would expect energy consumption to be less.

That also translates into higher highs on a stand-alone basis for TGA 4 months out!

Like someone has mentioned here before. I don’t think ‘city analysts’ have run the numbers over TGA yet. For sure we would have seen some pf decarbonising which given the volumes here have had a pretty good chance to churn.

That said looking at the companies carbon offset spend in their presentation and other initiatives around employment and community I am very comfortable with this investment.

I think it’s a bit ‘high horse’ for the West, the biggest polluters, having had their economies grow successfully on carbon to then deny cheaper energy growth in other economies that need a leg up and investment so they eventually have the wherewithal and income to decarbonise. Oops, don’t mean to get political as I am not. It’s just a point that often gets lost in translation. We can of course all do more.

Two more buys for me today. If one thinks £5 is still cheap why wouldn’t I pay the ATH at £2.92 and look forward to my divi discount.

Good luck with your investments

Trek

Water rig. I guess it’ll look like this using cement rather than bentonite for the casing.

https://youtu.be/2I4yrhaISQM

Pretty light and manoeuvrable, no pad used in this one. Can hit some shallow targets pretty quickly and cheaply. Well they have to as we are now eating into the £10m!

Lake beds and Red sandstone shouldn’t be a problem.

Be nice to bag a discovery before Christmas!

Trek

£5

I have posted earlier about the costs. We were funded for 2/3 well campaign with an option of 4th well.

It looks like the sidetrack has counted as a drill and that with the shallow drill SEEMS to be 3 wells at least in cost terms. IMO the costs for the sidetrack should have been shared by Mitchell’s. I could be wrong but I can only go by RNS which indicates they have spent the cash for the ‘stage 1’.

“· Company well financed with £10m to advance the Rukwa Basin towards discovery”

They are now re-appropriating the cash that was intended for appraised and 3D’s at least in part for phase 2 expo. Obviously that leave a gap when we get to appraisal.

From previous RNS’s

“‘The three well exploration programme remains fully funded from the Company's EXISTING cash resources’

The £10m has been earmarked for...

· Appraisal well drilling: £2.4 million
· Enhanced well completion: £0.5 million
· 3D seismic programme: £3.8 million
· Feasibility Studies and licence fees: £1.2 million
· Additional operational contingencies, working capital and expenses: £2.1 million”

So now we have by my reckoning, even with cheaper wells a £6m gap. Whilst there is no rush to fill it now, we’ll quite frankly the appetite wont be there until they embark on the next drill. They will need to box clever and time a placing early next year.

The working capital will see us through and the £2.4m +£0.5m will kick off the next drill. They have two more targets on the shelf.

One can’t say this one was a mistake or not because with drilling you don’t know. Hindsight is irrelevant you have to learn and move on. DM has really gained a huge amount of knowledge and experience from this. It was always going to be a min 2 year period. I’m still in. No complaints.

Those with cash and time could BTFD and derisk on the next rise.

Usual caveats

Good luck with your investments

Trek

Imo this one’s next.

Trek

BCB,

We share quite a few stocks.

One copper play that you may not have come across yet is PXC. USA, few shares, ‘fully funded’ recent placement. Potential sulphides at depth which could mean a porphyry system. Tier one resource potential. They expect to mine next year! I am in big at 75p. TP... if sulphides come in next week or so could rerate +£1 and the all the way up to £8.

They have an ADR program next week using up to 30% of UK listed stock. BAnk New York Mellor are dealing.

Another copper is CCZ. I think you may have looked at it. SP on knees. 1.8p and they just raised at 2.3p.

Then there is a coal play. TGA, South Africa. It’s probably the most misplaced spin off of the decade! It’s significantly undervalued! Trading on a pe of less than 2 with cash on books and will pay a divi of 30% of FCF. That’s like 25% in cash! It’s making 63% of its mcap each year! Bonkers rating!

Because it’s coal it’s not loved by the ESG police but it’s funding significant carbon offsetting and sells coal to nations that would otherwise be energy disadvantaged. It’s ok for the west to claim the moral high ground having benefited from a fossil fuel industrial revolution! Lots of jobs dependent on them and they help folk out of energy poverty. Price of coal is also at ATH and rising. Here’s a paper on TGA....

https://stockspinoffinvesting.com/thungela-resources-buy-the-toxic-waste/

Risks are pretty obvious, tax, currency exchange rate, SA politics, price of coal, regulation, covid etc but they have several pits. It’s now my biggest position.

The last company presentation was top notch. TP £6 quite easily imo. Not the same potential upside as many other plays but much lower risk and I am buying now sub £3 to lock in divi.

Trek