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I agree there could be risk to the completion of the deal if there was to be a takeover of SCIR by another party.

IF a company were to come forward and IF that takeover could be agreed before the transaction was completed. Not likely.

Not sure how many companies would want to try to do a company takeover to grab a share of an asset, when that asset is in the process of being acquired by the operator. Stumping up millions to have a share of an asset where the entity running operations absolutely hates you! It would be a bold and dumb business decision, I think.

What risk exactly?

Aimster, you said

"I agree with Jacktrade. They cannot drill ch-1 until the deal is completed. What happens if they hit a billion barrels of the black stuff."

The implication being that SCIR might then want to back out.

For reasons highlighted below. They won't and can't. So why would ARA wait?

It is highly unlikely that ARA will wait for further levels of TZ government approval of the deal to acquire SCIR’s stake in Ruvuma.

1. A major step in the approval process from the Tanzanian authorities is already complete - The Tanzanian Fair Competition Commission ("FCC") has granted its unconditional approval for the transaction and issued the Scirocco with the ‘Merger Clearance Certificate’.

2. Scirocco cannot afford for the deal not to go ahead.

a. They have already taken a loan of £1.614million from ARA. Additionally, they have said “It should be restated that the Ruvuma expenditure is now being funded by APT under the terms of the disposal and will continue to be funded until completion of the disposal.” If Scirocco were to try to renege on the deal, they would need £millions just to pay ARA back the monies already loaned.

b. SCIR themselves state that it must “fund its obligations to avoid default within the Ruvuma joint venture” and that “there were no guarantees that any such funding would have been secured, which may have resulted in genuine risk that the Company would have been forced to relinquish its interest in the Ruvuma Asset for little to no value”. Even if they could pull it off, with a MCAP of only about £2.5m the dilution would be off the scale if done via equity fund raise.

3. The assets are already huge. The SCIR Board won’t be swayed by 3D seismic results. Ruvuma is not in line with their stated strategy. About 5% of shareholders tried to stop them by calling an EGM and they failed. The Board has had to defend its case vehemently and it would be beyond ridiculous for them to do an about turn now.

4. Legality - a communication from Scirocco on 13 Oct 22 stated: “The documentation governing the disposal is legally binding between the Company and ARA Petroleum Tanzania Ltd (“APT”) and once all the conditions precedent have been fulfilled, the disposal of the Ruvuma Asset to APT will complete. There is therefore no legally permissible way for the Company to renege on the disposal to APT”

ARA will press ahead because they know SCIR won’t want to change their minds. They also know that SCIR can’t afford to walk away, and it would be legally difficult if not impossible for them to do so. The Tanzanian authorities are putting pressure on ARA to deliver gas from Ruvuma without delay – I’m sure that if needed, they will be giving the necessary assurances that the remaining government approvals for the SCIR stake acquisition will be forthcoming.

I'm sure some will. Some won't. How many? We'll never know. One thing we do know though...for anyone that does want to invest in a focused way (i.e. not counting Shell and Equinor) in oil and gas in Tanzania via a UK listed company, I believe Aminex is now the only option...

M&P - Listed in Paris
Orca / PAET - Listed in Toronto
Songas - Tanzanian

Good point, well made ICB

Great news! Yet more evidence that this Tanzanian administration really wants to get the Ruvuma project moving and into production as soon as possible. Can you imagine how long this would have taken under the old administration!?

Much more steady news now. Evidence of government support and ability to move faster is being demonstrated again. Very happy

SCIR had very limited cash and couldn't afford to pay their share of development costs for Ruvuma and so had to take any deal on the table.

Aminex have cash in the bank to get to production and all anticipated costs for Full Field Development covered.

It’s worth bearing in mind that Wentworth estimated a maximum gross recoverable 2P reserves for Mnazi Bay of 423.3 BCF .

For comparison, Aminex’s latest estimated gross resources for Ruvuma are 9.587 TCF.

Aminex figures are estimated resources rather than reserves as they still need to be proven, etc. Even so, the Aminex figure is 2,165 % larger. That's not an insignificant difference. So, the size of Aminex’s asset should demand a much higher price. Even after you take reserves Vs resources into account.

It certainly is. Translation of the TPDC tweet..

"Signing ceremony for additional production and distribution agreement (PSA) ruvuma-mtwara nursery"

"Ministry of Energy, TPDC, ARA Petroleum and Ndovu Resources sign Supplementary Agreement on Production and Revenue Generation (PSA) Ruvuma-Mtwara nursery"

IT'S GAME ON! MARCH DRILL IF NOT BEFORE

Regarding the negotiations, ARA Petroleum Tanzania are leading the negotiations on behalf of the JV partners (currently APT, Aminex and Scirocco. Though SCIR are selling their stake to APT). APT is part of ARA Petroleum, a multi $billion Omani company. They have huge clout and nous and so we are in safe hands. The prices negotiated will be for the Ruvuma PSA as a whole, not different per JV partner.

Hope that helps

Hi email,

Regarding potential price at wellhead, there are some numbers out there to guide us...

the last AGM presentation says that 2020 average gas price ranged from $3.41/mcf -$4.34/mcf.

That’s the 2020 average – before the recent surge in global gas prices! Since then, we have had this article: https://www.thecitizen.co.tz/tanzania/news/national/tanzania-in-a-new-initiative-to-attract-oil-gas-investors-3859686?view=htmlamp

That article says:

“Dar es Salaam. The government of Tanzania is readying to amend the Model Production Sharing Agreements (MPSAs) of 2013 to loosen conditions in the oil and gas sector…The changes will take into consideration the global trends in trade, fuel prices over the past decade and estimates for the next decade, the institutional changes in Tanzania and current legal system, including the Petroleum Act of 2015, which is said to be unfavourable to investors.”

So, I now think we should be expecting to achieve at least the top end of the average price paid in 2020. Probably more. If we get $4.5 then that would equate to $60m per annum net to Aminex when at 140MMcf/d. The 60MMcf/d at start of production would equate to about $26m per annum net to Aminex.

Not bad after years of $0 revenue.

Hope that helps.

Agreed Haggis. Volumes are low as people are waiting for confirmation of exact spud date. To me, if it stays as Nov or is Dec then that will be seen very positively. Jan ok. Feb would be a bit disappointing.

If people were fully confident that we will spud in Nov, the share price would be rising now faster than it is. So, yes, a degree of uncertainty is priced in.

In addition, the Russian invasion of Ukraine has driven a desire for Europe and others to find other suppliers of natural gas and has put Tanzania firmly on the map as a future energy hub and potential supplier of choice

BREXIT (then MINI BUDGET) – The pound has been on the slide against the dollar since the Brexit vote. The recent Mini Budget has loaded fresh pressure onto the beleaguered currency. First revenues from Ruvuma are potentially only 12 to 18 months away. With the Aminex valued in pounds and pence, revenues in dollars mean a higher value in pounds.

COVID – resulted in the death of President Magafuli. If this had not happened, I am certain we would not have seen so much progress on the ground and Aminex’s future would not look so bright. Then, the end of COVID resulted the start of the commodities boom (including for natural gas prices).

RUSSIAN INVASION OF UKRAINE – Pushed up gas prices up further on fears of supply disruption – Russia being the world’s largest gas exporter.

People will have different views on all of the above events. One after the other, they have dominated our news for years now. Many people are weary and see these as endless headwinds to global economies, stock markets and livelihoods (regardless of views on media portrayal, etc, etc).

Without in any way ignoring the disruption and or suffering caused by such events, it is interesting to reflect and consider the fact that Aminex has been a beneficiary of all of these events. The ultimate hedge against global challenges it would seem! Who knew?!

ANZANIA has managed to save a whopping 52 billion US dollars (about 121tri/-) since 2004 when it started using natural gas for generating electricity, according to the Petroleum Upstream Regulatory Authority (PURA).

Authority‘s Director General, Eng Charles Sangweni, revealed this during the visit of the PURA’s board of directors to the Ntorya area, a conventional gas development area which is operated by ARA Petroleum Tanzania in the region.

Ntolya gas field exploration, acquisition valuation and data collection started in July and ended on 0ctober 10.

“We believe that with the availability of natural gas in this area, we will involve supply gas directly to the Madimba Gas Processing Plant via pipeline and supply gas to Wananchi for domestic use,” he said.

He assured that the government was continuing to invest in infrastructures so that the natural gas could reach to large market within and outside the country, citing neighboring countries such as Kenya and Uganda as potential market.

On his part, member of the board, Mr Harry Kejo Kajato, said during their visit they learned about high technology and equipment used during data collection which is different from previous technologies, noting that the move would help to strengthen exploration of oil and natural in the country.

https://dailynews.co.tz/natural-gas-saves-121tri-in-power-generation/

Hi Crusty. It is true that some posters show a little over optimism regarding likely timing of positive events and share price gains. I think we are all in agreement that the onward trajectory will be up. By a significant amount too.

I can understand why people get excited and proclaim a bright future. Afterall, despite the fact that Aminex is now in a good place, compared larger companies / diversified investments / etc, this is a high-risk investment (micro cap, operations in Africa, etc) with the promise of commensurately high rewards. So, when I hear people saying they only expect a relatively modest rise in the share price, I always think they are nuts to hold a higher risk investment with expectations of only modest returns. Why would you do that!?

Now, I know that's not what you are saying. It is clear that you also expect the share price to rise significantly from here. It is the just over optimism of some posters that you caution against.

Your balanced view is always helpful. Perhaps the over optimists are a counterweight to the trolls and extreme pessimists and, to an extent, vice versa?

Yes Cperkin. In the last year, Aminex is up about 85%. AIM is down more than 25% (I know we’re not AIM but good for comparison due to size of companies). Aminex is pushing up relentlessly against the flow of the wider markets. Just the beginning

Too excited....forgot link!!

https://habarileo.co.tz/tpdc-yaanza-mchakato-kuzalisha-gesi-asilia-ntorya/

Wow!!! What a find. Thanks GL!

This article from a couple of months ago said production in 18 months (so by Feb 2023). That was quoting the Director General of TPDC.

It seems they are heaping further pressure on the JV partners to get Ntorya into production. Based on the interview you've posted, it seems production might be even nearer. Absolutely fantastic!

Very, very exciting