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RoJo still trying to convince you that there is a meaningful risk of dilution. Same old nonsense that he has been peddling for ages now.
As mentioned previously, Aminex has the free carry, covering all development costs through to production.
According to the Annual Report issued in April, Aminex’s base running costs currently stand at $1.58m. Aminex also has sufficient cash to cover these running costs through to the end of this year.
They then have a $3m funding facility in place with ARA on remarkably favourable terms, which should cover those Aminex base running costs from end of 2024 through to first revenues which are expected by mid 2025. Plus, about a year and a half of financial cover as a contingency in case of any delays to first revenues.
More than covered then! Risk of dilution here to cover running costs or development is close to zero.
RoJo says: “As for your assumption that large revenues will be produced - we simply don't know how much”
Actually, we do have a good guide. According to our company stockbrokers:
"Therefore, as a point of reference, we note two potential value points that we believe the market may consider when deciding how much value to recognise should the 2Tcf be confirmed:
1) Extending the plateau of 140mmscf/s for 20 years, would result in an increased average annual FCF of c$25mm/year, and an approximated asset value of £175mm (~4x the current market cap), using a simplified 12% discount on FCF in perpetuity model. We note that in this case only 1Tcf of resources will be utilised in the 20-year period.
2) Theoretically, increasing the plateau to 250mmscf/s for 20 years would effectively exploit almost all of the 2Tcf of gas in this 20-year period. This hypothetical case, in our estimate, would generate an average annual FCF of about $40mm, representing an approximated asset value of ~£275mm net to AEX (~6x the current market cap)"
So, Free Cash Flow for Aminex of somewhere between $25m and $40m if the 3D seismic results were 2tcf. Obviously, they were higher than that.
Finally, Free Cash Flow is the money that remains after paying for items such as payroll, rent, and taxes, and a company can use it as it pleases. So our revenues should be considerably higher than the figures quoted.
I’ve already explained why the chances of a placing before production next year are close to zero. Then, when in production, they will be generating tonnes of cash and so there should no need for any placing.
The cash will be piling up!!!
Having Aminex as a listed entity gives ARA various options to monetise the asset.
With Aminex increasing in value, the profit on their ~30% share of Aminex looks likely to cover all of ARA’s development costs and give them a big fat profit on top.
Exactly Crusty - the assumption being that any such Ops Update would include details of rig contract issued.
After all, Erhan Saygi, General Manager of ARA Petroleum Tanzania has said in the last week that “We are ready to launch work immediately to bring this onshore development project into production”
Iinteresting you mention Friday FOMO Crusty. The last Ops Update the company issued was last day of a month and it came at 5pm.
Before that, they had a stray one on 12th of the month, but the ones before that…
2nd of the month
1st of the month
1st of the month
So, 3 of the last 5 Ops Updates were on the 1st or 2nd of the month. 1 on the last day of the month at 5pm.
So, a good chance of news today or Monday. Or, are they building to a whopper of an update a bit nearer next month’s AGM?
Not long now regardless
That is a blatant attempt at scaremongering by RoJo.
Aminex has the free carry, covering all development costs through to production.
According to the Annual Report issued last month, Aminex’s base running costs currently stand at $1.58m.
Aminex has sufficient cash to cover its own running costs through to the end of this year.
They then have a $3m funding facility in place with ARA on remarkably favourable terms, which should cover those Aminex base running costs from end of 2024, through to first revenues (which are expected by mid 2025).
That leaves about a year and a half of financial cover as a contingency in case of any delays to first revenues.
Risk of dilution then is close to zero then.
Hi Diagnostic,
Some thoughts on valuations. Note all figures are unrisked. Note also that the two different Shard Capital scenarios I’ve extrapolated out from, consider a) just greater resources than base case and b) greater resources and production rates than base case:
“As the company’s stockbroker, it may be helpful to use the Shard Capital’s figures to derive valuations based on different scenarios. They published this research note on 29th Feb 2024: Is there a “big-picture” change in the cards? (research-tree.com)
In the report, they give an unrisked valuation of 2.8p for a scenario where Aminex has resources of 763bcf and produces at a rate of 140mmscfd. For a scenario where we have resources of 1.7tcf and produce at 250mmscfd they give an unrisked valuation of 4.6p.
Their earlier report from May 2023 (The time has come! (research-tree.com)) had practically the same figures (2.7p and 4.5p respectively). When considering potential outcomes of the – then yet to be confirmed – 3D seismic results, on p.6 of that report, they state:
“as a point of reference, we note two potential value points that we believe the market may consider when deciding how much value to recognise should the 2Tcf be confirmed”.
They then outline two scenarios based on different rates of production. Long story short, they say that 3D seismic results of 2TCF would justify valuations 4 to 6 times greater than the share price at the time of the report – which was 1.03p. So, somewhere between 4.12p and 6.18p.
Obviously, the 3D seismic has confirmed a good likelihood of there being 3.45tcf associated with just the existing NT1 and NT2 wells – and 7.95tcf aggregated including CH1.
If 2TCF justifies between 4.12p and 6.18p…
3.45TCF would justify between ((4.12 / 2) x 3.45) 7.2p and ((6.18 / 2) x 3.45) 10.66p
If CH1 brings us to 7.95TCF that would justify ((4.12 / 2) x 7.95) 16.38 and ((6.18 / 2 x 7.95) 25.57p
So, in summary, the 3.45tcf for NT1 & NT2 may justify a valuation of between 7.2p and 10.66p per share. If CH1 brings us to 7.95tcf, that would increase that to between 16.38p and 25.57p per share.
There are lots of variables at play here – for one of those, you may be interested to know that the Shard figures are based on a presumed gas sales price of $3.9/mscf – probably conservative.
Just a yardstick. I hope this helps