Member Info for Ufufuo

Try not to fight it. It won't hurt as much ;-)

One of Prosciutto’s favourite slogans "Encourage the takeover of Aminex.. Be happy with a 30% premium to market and hope to hell the takeover will secure regulatory approval".

Completely ridiculous!

As mentioned before, recent reports from Aminex’s company stockbroker value the company at 4 to 6 times the share price at the time of the report (1.03p) if the 3D seismic were to confirm 2tcf of gas and depending on scenarios regarding rates of production.

Obviously, the 3D seismic has identified likely gas in place of 3.45tcf for NT1 & NT2, potentially another 4.5tcf associated with CH1 and perhaps as much as 16.38tcf across the license area.

As I have posted previously, you can easily extrapolate out from Shard Capital's figures and work out equivalent figures for 3.45 and 7.95tcf.

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. Ranges depending upon production rates. Those figures are unrisked.

Another related wheeze of Prosciutto’s is try to convince people that ARA is conspiring for Aminex to be sold to TPDC in a fire sale!

This makes no sense whatsoever. At the last AGM, the Board that Aminex gives ARA options for monetisation of Ruvuma.

ARA owns nearly 30% of Aminex. If/when the share price reaches several times current levels, the value of their stake in Aminex would give them back all the money then need to spend on full field development and more.

ARA could have let Aminex fail back in the dark days of the previous Tanzanian government and whilst everything was on hold. Instead, they propped us up with loans.

If ARA and the Aminex BOD wanted Aminex to fail or wanted to engineer the company being bought out on the cheap...

Why the loans to keep Aminex going?

Why do a raise last year to cover costs until production?

Why the more fulsome and positive updates over the last year or so – particularly the very positive 3D seismic results?

Why hire a new PR firm in Feb to get the word out about Aminex (new website already, the X / Twitter account is getting a workout too)?

Simple answer – you wouldn’t do those things unless you wanted Aminex to prosper and increase in value.

Our resident troll(s) want to subdue sentiment but, in the end, the value will out. The license secures the asset. Opportunity to buy in at these low levels may be running out IMHO. DYOR and good luck to all genuine investors here.

Prosciutto likes to cast doubt on Aminex’s future profitability - drawing misleading parallels between Aminex and Orca:

Prosciutto: “Aminex has a 25% interest in Ruvuma so Ruvima would need to produce 487.2 MMscf/d to equate to Orca's 121.8 MMscf/d. Orca Energy Group lost ($0.02/sh) in Q4 and the foreign exchange reserve deficiency was a contributing factor”…“If Orca Energy Group is unable to generate a profit, it raises the question of how Aminex could possibly be expected to do so. Why proceed with a business plan if it is destined for a loss?”

What you need to know:

Orca End of Year Results of 04 Apr 2024: “Total gross conventional natural gas production, including fuel gas, was in line with revised forecasts and averaged 121.8 MMcfd for Q4 2023, OF WHICH 80.8 MMcfd WAS ADDITIONAL GAS.

They only get revenues on the ‘Additional Gas’. The 121.8 MMcfd is a GROSS figure (INCLUDING AMOUNTS BELONGING TO TPDC AND FOR WHICH ORCA RECEIVES NO REVENUES). Using the 121.8 MMcfd is therefore an unfair comparison (and before anyone says it, there is nothing to say they will be able to sell TPDC’s ‘protected’ gas when agreements expire in July).

So, the gas volumes attributable to Orca are about 35% lower than Prosciutto is suggesting.

Then let’s look at that loss of $0.02 per share. Firstly, that is for Q4 of 2023 only. Looking at 2023 as a whole, they had net income attributable to shareholders of over $7million, which equated to A PROFIT of $0.35/share.

SO, THEY DID MAKE A PROFIT FOR THE YEAR. It was however considerably down compared to 2022 ($27.3million). The report explains this:

“Net income attributable to shareholders decreased by 75% for the year ended December 31, 2023 compared to the same prior year period, primarily as a result of the decreased revenue, increased depletion expense, including a one-time accelerated depletion charge in Q4 2023 with respect to costs previously incurred in relation to the 3D seismic acquisition and processing program, and higher net foreign exchange loss”.

More on the fall in revenues…

“Gas deliveries decreased by 15% for Q4 2023 and by 1% for the year ended December 31, 2023 compared to the same prior year periods. The decrease for Q4 2023 was primarily due to declining production from the currently producing wells and reservoir compartments in the Songo Songo field.”

“Revenue decreased by 23% for Q4 2023 and by 7% for the year ended December 31, 2023 over the comparable prior year periods”… “The decrease for the year ended December 31, 2023 over the comparable prior year period is primarily a result of higher TPDC share of revenue as an outcome of decreased capital expenditures and lower Cost Gas revenue”

How ‘Cost Gas’ revenue works…

“75% of the gross field revenues derived from the Discovery Blocks, less processing and pipeline tariffs and direct sales taxes in any year (“field net revenue”), can be used to recover p

More on that depletion charge…

“The depletion charge for natural gas interests increased by 52% for Q4 2023 and by 43% for the year ended December 31, 2023 over the comparable prior year periods. The increases were mainly due to a reduction in estimated proved reserves. Additionally, during Q4 2023 accelerated depletion totalling $7.0 million was recognized on engineering, acquisition, processing and associated costs related to the 3D seismic acquisition and processing program which will not be pursued in the absence of a license extension”

In summary then, because their license is about to run out and they have no clarity regarding if/when it will be extended, they have put most of their planned capital expenditure on hold. That meant they had fewer costs to recover as Cost Gas, significantly reducing revenues to Orca. Compounded by lower production in Q4. Profitability was then further impacted by greatly increased depletion charges resulting from a reduction in estimated proven reserves and $7m of costs for the terminated 3D seismic programme.

So, Prosciutto has given misleading and inflated comparisons of production rates – by including volumes produced for TPDC and for which Orca does not profit from under terms of contract.

Prosciutto then tried to make it appear as though Orca was making a loss on those inflated production volumes – saying, what hope then for Aminex! The reality being that Orca is profit making. However, their profitability has decreased sharply due to factors that are very specific to Orca’s circumstances and not relevant to Aminex.

ORCA - Cancelling almost all capital expenditure because their license is due to expire in 3 months and very, very little progress has been made on that.

AMINEX – Full Field Development Plan approved, Gas Sales Agreement approved, 25yr Development License either 1 step from approval or fully approved – this will unlock more than $100m of expenditure by the joint venture partners (Aminex fully carried for our share)

ORCA – reporting “a reduction in estimated proved reserves”

AMINEX – From end of Feb 2024 RNS “Operator's geomodelling significantly increases Ntorya GIIP to 3.45 Tcf” and “3D seismic reveals considerable upside for Mtwara Licence with total unrisked GIIP of 16.38 Tcf”…and “RPS has been engaged to undertake a revision of their 2018 CPR…with the aim of defining preliminary 1P and 2P reserve estimates. These reserve estimates are expected to increase substantially as phased development and project maturation progresses”

Very, very different circumstances then. Remember, as outlined by Shard Capital, Aminex is forecast to be very profitable indeed.

Don’t forget the $110m in unused tax loses and the $90m loan to Ndovu which together, as confirmed by the Board at the AGM will allow Aminex to have a number of extraordinarily profitable years once in production.

DYOR and you will see that Aminex is significa

Prosciutto likes to try to worry people about availability of US dollars in Tanzania.

Prosciutto's recent quote from Orca report, hoping to worry Aminex shareholders:

"There is a risk that the Company may not be able to convert Tanzanian shillings to hard currencies, such as US dollars, in the future as and when required. It is not known when the foreign exchange reserve deficiency in Tanzania will be remedied, if ever." 1. 2023 Orca Energy Group Annual Report

What you need to know:

On 01st March 2024, Tanzania’s Minister for Finance, Mwigulu Nchemba was quoted as saying that he is confident that the supply of dollars in Tanzania will stabilise once mega projects are operational, easing the pressure of importing necessary equipment.

He said “Once these projects conclude, the scarcity of dollars will be history. We are also focused on enhancing crop production and expanding the value chain to facilitate the sale of more products abroad, thereby increasing the availability of dollars”

Then, on 15th April 2024, The Citizen news outlet reported that “The government is optimistic that the dollar crisis will start to ease from next month when the high tourism season begins. The situation will improve further, courtesy of a projected rise in exports of traditional crops and an increase in gold prices, according to the Bank of Tanzania (BoT)”

If you want a bit more detail, the article continued:

“Tanzania earned $1.3 billion from tourism in 2021, but receipts soared to $2.5 billion and $3.4 billion in 2022 and 2023, respectively. Gold brought in $2.7 billion, $2.8 billion and $3.06 billion in 2021, 2022 and 2023, respectively. With projections pointing to a further rise in tourist arrivals and gold prices, BoT is optimistic that foreign exchange challenges the country has faced in recent months will soon be history. "We anticipate a surge in revenue from tourism beginning this May, coupled with exports of traditional crops such as cotton, sesame and others"

and...

“The government has implemented multifaceted strategies to address the foreign exchange crisis, including reducing dependence on dollar imports for commodities that could be locally produced, such as palm oil and sunflower oil. This involved developing improved seed varieties to reduce cooking oil imports. Additionally, the government waived taxes on solar products to lower import costs, aiming to reduce dependence on the dollars and alleviate its shortage. Reports also listed proactive government measures taken in the previous year, including providing export credit guarantee schemes and supporting local businesses to boost exports”.

So, lots of action has been taken and the situation is fast improving – with data to back that up and assurances from the Bank of Tanzania themselves.

In summary then, the evidence suggests that this is an ever-diminishing risk, and soon to be a non-issue. Beware the scare-mongering troll(s) and, as ever, DYO

Prosciutto is always banging on about negative working capital. Saying a raise will be needed and that Aminex's financial situation is precarious.

As detailed in Aminex’s 2023 Half-Yearly Financial Report (issued 29th Sept 2023) the company had:

Current assets: $6.598m

Current liabilities: $10.206m

Difference: -$3.608m

So, it is true that there was negative working capital. However, the situation is explained in the Annual Report (of 28th April 2023):

P.5 – “A number of claims have been received from Tanzanian tax authorities. Provision has been made for all amounts either ceded by Ndovu Resources Limited or where management determine the likelihood of success through the objection or appeals process is unlikely. However, until these claims are settled, it will remain unclear whether NRL’s objections will be successful and therefore the amount and timing of potential cash outflows remain uncertain. THIS HAS CAUSED CURRENT LIABILITIES TO EXCEED CURRENT ASSETS, BUT MANAGEMENT ARE CONFIDENT THIS CAN BE MANAGED OVER THE COMING YEAR”.

So, the situation is due to provision for disputed tax claims - which the Board did not expect to need to be paid in the period but could be managed if they did need to.

The proof is in the pudding...

Working capital is the difference between current assets and current liabilities – specifically cash and other assets expected to be converted to cash 12 months Vs amounts due to be paid to creditors within 12 months.

The 12-month period from the last Annual Report finishes this Sunday. Fact is, no additional funding has been needed in the period – unless they reveal a loan or something in the next annual report, which is due in the next few days. So, the Aminex Board were telling the truth.

Also worth remembering that G&A / running costs are now very, very lean. The decrease in current assets between the Annual Report of last April Vs the Half-Yearly Financial Report of last September was just $0.529m in that 6-month period.

‘Cash at bank and in hand’ last June stood at $5.036m inc. $1.023m held on behalf of partners in joint operations – so, $4.013m that could actually be used by Aminex.

Aminex has said that the CPR which is in progress will enable them to book reserves. As pointed out by gaslady, if Aminex did need additional cash a Reserve-Based Lending (RBL) loan would be possible. Or, also as pointed out by gaslady, if TPDC decides to exercise their rights to back in, that may result in a considerable injection of cash.

In conclusion, the situation was explained by the Board in the annual report and assurances given that it would not be an issue. With operational costs so lean, unless they need money for a disputed tax claim, we should still have some headroom. If Aminex does need more cash, they should have plenty of options.

It is indeed a useful report. Don't forget that the 2 - 2.5p (or 2.8p unrisked) was based on the pre 3D seismic resource estimates of 763bcf.

As I posted the other day, when you consider the results of the 3D seismic, the valuations should be a lot higher. My post from the other day:

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

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: https://*********************/companies/uk/oil-gas-integrated/aminex-plc/research/shard-capital/is-there-a-big-picture-change-in-the-cards-/43446264-b995-4e0e-9759-571a901f1b1b

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 (https://*********************/companies/uk/oil-gas-integrated/aminex-plc/research/shard-capital/the-time-has-come-/b1acaafa-e70d-41c0-90dd-5827fc37dfc0) 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. other than that, i guess you can apply your own risk factor (considering what you believe the chances are of achieving one of those scenarios)

just a yardstick. i hope this helps.

There's lots NOT to like about Orca as I have posted about on here before. Too busy to dig it out and refresh right now. Will try to later / over weekend.

1/2

Regarding differences between WEN and Orca, there is more to it than that. I’m short on time right now but let’s look at WEN in a bit more detail.

A key difference between Aminex and WEN is the size of the asset. Management estimates currently suggest about 2TCF recoverable for Aminex (500BCF net to Aminex). As at 31 Dec 2022 WEN’s share of 2P reserves was 137BCF. You can try and make the WEN figures sound better because they are reserves but the fact is, Aminex’s share of Ruvuma is much larger than WEN’s share of Mnazi Bay. Also, being a much larger asset overall it will provide revenues for many more years. It seems likely that the CPR for Ntorya will show the asset to be larger still. By contrast, take a look at WEN’s AGM presentation from June 2022. On P.14 there is a graph that shows they expect production from Mnazi Bay to plummet from 2027 onwards. Seriously, it’s ugly.

Another key difference is costs and the lack of free carry for WEN. The following text from WEN’s “Publication of Independent Asset Valuation and Update” from 11 Jan 2023 spells it out beautifully:

“Wentworth has benefitted from the Mnazi Bay production sharing contract's cost recovery mechanism and historic cost pool, having recovered approximately $300 million of historic costs to date;

o on 23 December 2022, the Mnazi Bay JV Partners ("JV Partners") received formal notice from TPDC that it proposes to discuss re-examining the historic cost pool audit for the years 2013 - 2015 relating to seismic, field infrastructure and drilling of MB-4 well expenditure. Joint Venture costs of $45 million (approximately $15 million net to Wentworth) are subject to the re-examination. The Company anticipates, given the absence of recent investment in the Mnazi Bay field, that 2023 production will include significant periods where costs have been fully recovered, leading to substantially lower revenues. Any reduction in the current expected cost pool balance as a result of the audit re-examination is likely to further impact revenue next year;

o Mnazi Bay is at, or close to, peak production and material capex is required to maintain, let alone increase, production. As such, historic revenue, profit and dividend growth cannot be used as proxy for future expectations; and

o M&P is the operator of the asset. All future capital expenditure is dependent on M&P choosing to allocate capital to this asset, in the context of its wider portfolio”.

Also:

• “The value of Wentworth is substantially impacted by the present value of its G&A costs. Historic G&A costs do include the costs of acquisitions which did not complete”.

2/2

Note that the P/E for WEN based on the M&P offer price is actually about 9.5. We should expect much higher for Aminex given the much larder asset. Also, the fact that we will have a number of years of revenues that will be exceptionally profitable due to unspent tax losses (about $105m last time looked) and the $88.3m that can be covered by repayment of a loan that Aminex has provided to Ndovu (wholly owned subsidiary).

Finally, regarding production rates of ~160mmscf/d there have been a few references but here is an example (translate from Swahili): https://mtezamedia.wordpress.com/2022/11/25/mambo-yamenoga-mradi-wa-gesi-mtwara-waziri-makamba-atoa-maagizo-haya-kwa-tpdc/

No worries tradedesk. You are on to a good thing here ;-)

The reduction in percentage ownership was traded for $5m cash plus the $35m free carry (allowing $140m full field development). As edgar says, without it, we wouldn't have been able to fund FFD (not without massive dilution - assuming Aminex could have raised that level of funds). It has also put operations in the hands of a very experienced and well capitalised company.

Whilst Aminex's percentage ownership has decreased, the estimated size of the asset has increased massively - estimated resources have increased from 0.153 TCF to 9.587 TCF (including Jurassic) in the period. That is an increase of 6,266%

Demand has increased significantly. The political situation has gone from awful to excellent. There was no clarity on route to market - now, we have a pipeline being constructed. The price we will get for the gas will be much, much higher. The long term downward trend for GBP Vs USD works in our favour. There was the promise of back-to-back drill but now we have CH1 followed by NT1 workover, followed by ~5 further drill in 2024 (all fully funded). Plus other price catalysts such as GSA and Development Licence (in final stages of approval now) and 3D seismic results for the largest 3D seismic programme ever to have been done in East Africa - and there is a 3rd party already contracted and working on the associated CPR.

Regarding timing for the drill - with SCIR essentially out of the way and with the GSA expected this month, I expect they will have everything they needed to crack on. They have received two lots of kit on site in readiness for CH1 drill and NT1 workover. The 3rd to arrive on site in the next ~2 weeks. That suggests a late Q4 2023 or early Q1 2024 timeframe for the drill.

I am confident that Aminex is going to do very, very well from here

Nice to see more positive affirmation that Tanzania is the place to be these days...

"Tanzania Continues to Claim Top position as One of the Best Investment Destination"

"The strong success is credited to the Government's continued efforts to create a favorable business climate and Tanzania's return to international arbitration"

"ABUJA, Nigeria, April 13, 2023/APO Group/ -- The Tanzania Investment Centre (TIC) records show that Tanzania has garnered a whopping $1.2 billion in FDI in the first quarter of 2023. It further shows increased investment by 52.4% from January to March of 2023 compared to the same period in 2022, owing to an improvement in the economic climate and as a result of current mega-infrastructure projects undertaken by the Government. The investment is directed at 93 projects that is expected to create no less than16,400 jobs."

"The strong success is credited to the Government's continued efforts to create a favorable business climate and Tanzania's return to international arbitration as a result of modifications to the Tanzania Arbitration Act (R.E. 2020)."

https://www.africa-newsroom.com/press/tanzania-continues-to-claim-top-position-as-one-of-the-best-investment-destination?lang=en

Good for sentiment. Good for the economy. Good for gas and energy demand.

Thanks for that Haggis. I thought this one in particular nicely illustrates the upward trend that has been in place since March 2021: https://ibb.co/0DwQgbf

Let the trend be your friend ;-)

On the same point in my post just now, I said "All the usual caveats for resources Vs reserves."

Yes, there is a difference in terms of where the assets are in the development lifecycle. The key point is unchanged though. The figures illustrate how vast Ruvuma is estimated to be. This will result in many, many years of additional revenue when compared to competitors with smaller asset bases. It is as simple as that.

Trying to take people down a rabbit hole on definitions of assets is just obfuscation.

Anyway, really must dash

edgar, you get it. Precisely. At 8.236 TCF, Ruvuma is around 20 times larger than Mnazi Bay (0.423 TCF) - and so will provide revenues for many, many additional years (the %age interest has no bearing on that). All the usual caveats for resources Vs reserves.

Other differences such as more than $100m of losses to be offset and monies to come in as repayment of the $90m loan to Ndovu etc will also reduce the tax burden and so increase profitability.

My interest in Aminex is also because of where it is in the development lifecycle. We have all the excitement of seismic results, flow test results, about 6 wells to be drilled etc etc to look forward to. Sure, our competitors could do stuff like that too but we have it planned and paid for with the free carry (the balance of $140m of development over the next 18 months).

So, yes. The main point that sets us apart is the size of the asset - again, 20 times larger than Mnazi Bay! The number of major share price catalysts (particularly multi-well drilling programme), all covered by the free carry are also important to me as a shareholder. The factors that will reduce tax burden / increase profitability for a number of years are icing on the cake.

Got to run. Busy day today

No RoJo, his/her assessment has not been correct. They predicted the company would fold. The farmout would never happen. There would be no resumption of operational progress, etc, etc. All incorrect.

Farmout complete. Cash in the bank. Free carry and revenues coming on stream in a few months, Aminex looks in good health. The share price has started to respond (but has a long way to rise still) - so wrong (sorry I mean misleading) on that too.

The asset is enormous. The forecast net revenues are very, very significant. The future looks very bright.

Sorry about that

Not born yesterday. Goodnight

That made me laugh smudge! You can be sure that if you met these people, they'd be the sort that wouldn't say boo to a goose! They spend all their time online. Thinking they are brave and clever for trolling. It makes them feel better about the inadequacy of their lives in the real world. Keyboard warriors hiding behind aliases. Probably convinced themselves that they are real 'bad guys'. Pah!!

Nobody with any sense holds money in an investment they don't believe in and spends hours a day online berating that investment. It only takes half a brain to see straight through these people.