Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
Agreed L3 - we are at a stage now where the primary concern (particularly for shareholders) is reduction of debt. Based on POO since H2 then we can be sure that there will be some reduction - unless there have been issues that have yet to bring themselves to the forefront.
To me the Magnus deal felt like a "one step back two steps forward" kind of deal, particularly for the SP as the initial outflows should be more than offset in the medium term, which should see the SP make some reasonable gains provided POO holds.
As you mentioned it would be nice to get an update on Kraken and see when we can expect full steam ahead on the production. But as always it's a waiting game.
GLA
Fernan, E121 - thanks both for your figures.
Fernan - so you're saying that at POO of $70 then ENQ will see approx $160M of FCF from Magnus in 2019?
For me the main takeaway is that this deal is very complex and its little wonder that the market is unable to price it appropriately just yet with so many moving parts. Thats why to me the year-end RNS will be important to potentially shed some light and also show the market that the company is beginning to deliver FCF.
Is there any way in which you can share spreadsheets on this site for modelling purposes? It would be nice to compare and contrast figures.
GLA
Drewky et al - Acting as devils advocate here but what is the probability that the development license does NOT get granted?
Or is it a case that we are so advanced in the process and with the Zubs co-operation that it is more a case of when and not if? I understand that these things taken time, particularly when the Government is involved, but my fear was that the longer this take the more chance there is that the license gets offered to a "bigger player" who is able to offer something better than we are able to?
Like everyone else on here who has persevered I want to see the license ASAP so that we can start planning for actual monetisation.
GLA
I agree Squif - which is why my biggest concern if is POO falls below $65. That does not mean that we would survive but it doesn't provide too much of a buffer.
With POO currently just above $77 I'm hoping that we can maintain above $77 for the foreseeable.
Assuming we do hold above $75, what are your views on the amount of FCF at the year-end?
GLA
A positive RNS before the year-end and a change in market sentiment (at least ensuring POO holds firm above $75) and no reason that we shouldn't see those levels again at the start of the year.
The key drivers for me are:
- Ensuring Kraken production gradually ramps up
- POO holding above $70, although I would prefer a slightly higher level than this
GLA
That's the million dollar question. ENQ have not been too helpful in disclosing this in the past. The only thing you can do is look back at old accounts and look at the total expenses versus average boepd. There's much more complications to this I know but in very lay terms that would give a ball park.
Worth seeing if anyone else has a better idea without going into the minute details?
Poleaxe - agreed.
The main decision is whether you are willing, and also able to, take up the RI and invest further funds into the company in the hope and expectation of a future rise in SP. If POO plays ball then this looks like a good bet going forward.
GLA
Morning MO, chilts
I have not kept touch with tanker movements recently. As an update, when was the last tanker? And do we have a rough idea of the output from Kraken currently?
Plus am I right in saying that we cannot expect more than 40k boepd until 2019 once all work is done?
Cheers
GLA
"In fact, they cost you about the same as buying the ex-rights shares."
Based on the current price owning 7 shares at 42p and purchasing 3 shares at 21p gives a weighted average price of 35.7p. Is that where you see the SP falling to? I can see some potential drop in the very near short term but nothing as significant as falling to that level. However if I knew exactly what was going to happen then I wouldn't be here in the first place.
GLA
I agree L3. Also 20,000 is a round number in terms of shares bought and so it is more likely to be some form of reward or share purchase bought on his behalf.
Given the RI coming up I am a little surprised that one of the directors hasn't made a c.£50k (say) purchase to give them eligibility to scoop some up at 21p.
I'm more interested in the £98k purchase near close of play.
"I'd imagine we are pretty rare to have survived the downturn with our level of debt."
I agree Romaron. Which is why now that we have come through what I believe is the most difficult spell that we can now look forward to a period of deleveraging and taking advantage of opportunities such as the Magnus one. It doesn't always help the SP though when (like you say) the deals are overly complicated.
Romaron - I completely agree. These companies are taking on such large projects that it is often impossible to get a return in the short term because the market has nothing to price in until first oil is hit or production begins. The "skill" is to pick which ones are on the cusp of hitting those milestones so that you can cash in when the news comes out. I am still very much a rookie when it comes to this.
You used Hurricane as an example. This is a good example of one that could offer a very good return in the next 12-24 months once they hit key milestones. I am erring more towards 2019 for them as opposed to this year. However a very attractive stock. Similarly SDX.
GLA
Do they believe that interest and losses on hedging are going to outweigh the debt reduction payments that will be made? With the additional amounts to be paid in October I cannot see why it would still remain at $2.0bn. More like $1.7-$1.8bn in my eyes.