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The full year report from June last year said:

"The work programme and budget to the end of 2021 anticipates a gross JV expenditure of approximately US$23 million, with Aminex carried entirely for its 25% interest. We expect to see the acquisition of the 3D seismic, prespud activities for the Chikumbi-1 well, negotiations of the commercial terms for the development licence, and the application for a further 1-year licence extension."

Obviously, we've had the license extension and that was for 2 years, not just one. The seismic is underway but news of "negotiations of the commercial terms for the development licence" is still pending.

That was all in the work programme "to the end of 2021" hence I am hoping we should hear something on that soon.

Completely agree that getting the GSA in place will probably take some time. Agree also regarding enterprise value.

The $40m per annum however is net to Aminex. So, that would be all ours.

However, we don't know how quickly they will be able to ramp-up to the 140MMcf/d that would be needed to generate that revenue. I remember seeing a graph that showed they expected to do so pretty quickly but that was from quite a while back.

Apologies, I see you were responding to Maverick, not to me! :-)

I'll get back in my box and back to work

Morning Crusty,

So you think that when negotiating the price at which we will be able to sell gas from Ruvuma, the backdrop of strong global prices has no bearing at all?

I disagree.

The estimated $40m/annum is based on Kiliwani prices. If the price and therefore the estimates increase, that can only be a good thing.

Hi nmuk, next news we are expecting:

KILIWANI NORTH REMEDIATION PLAN – the plan to remediate and get back into production. This had been held up due to a protracted tax dispute. That was resolved last year, and we had confirmation on 18 Nov that settlement monies had been received. As the stated blocker is out of the way and they have said that they know what the options are to remediate, I expect news on this soon (a plan at least). To be back in production would obviously be hugely significant.

RUVUMA GAS SALES TERMS – something they advised was on the list as a near term deliverable – so could land any day. Will the Omani’s have been able to negotiate better terms than Aminex did for Kiliwani? Particularly with the backdrop of strong global gas prices. What might that do the estimated $40m revenue?

NYUNI LICENCE AWARD – we know this now has all approvals apart from the new Energy Minister. We also know that the plan is to farmout. If we get a cash injection from a farmout and can parallel run operations on Nyuni with Ruvuma (and perhaps Kili), this would put a rocket up the share price.

RUVUMA SEISMICS UPDATE – any results are probably a few weeks away but who knows. We might get something to say how the operation is progressing before we get results. Given the size of the assets in the same basin just the other side of the border, the results could be very pleasing.

Hope that helps.

Indeed. I am pretty sure there is no leak. It is just that Aminex is so staggeringly undervalued + so much news due in 2022...that triggered some buying

Well, new comers only have to read through the posts of the last two days to see why Aminex remains monstrously undervalued. Hopefully, for their sakes, they will take the time to do that tiny bit of research. It might make them a lot of money ;-)

No leak in my view. Just people buying as things are finally happening on the ground and there is plenty of news expected in the coming months.

Hi Crusy, you have a point. To me though the article is merely saying that the share is grossly undervalued and will be worth a lot more. As part of their rationale for this, they are explaining that the company should soon be generating approx $40m per year in revenues and that, at a SP of 1p, that would equate to a P/E of about 1 x earnings.

It is fair to point out that we don't have those earnings yet and that P/E is not relevant to Aminex right now.

That said, we know where we are. I'm interested in where we are going / direction of travel. Likely future revenues and how those should underpin a much higher share price are of course highly relevant in that regard.

Hi Crusty, nice to hear from you. Sorry to hear that your Christmas was COVID affected.

Not my words but from the Phoenix. If you look, earlier in the article, they make it clearer that they are talking about p/e when producing $40m per year.

"With the shares trading in Dublin at 1 point 2 cents, the whole of Aminex's equity is currently capitalised at only 40m, which is bewildering given that the company could deliver a potential $40m annual cash low in just two years. This puts the shares at just over one times price-earnings multiple"

A slightly odd way of stating things but clear enough what they mean. Anyway, as you say, plenty of progress planned for this year and, when that materialises (ok, I'll save you the bother...'if') then I believe we can look forward huge share price gains.

(part 3)

It would take a lot to go wrong for these shares not to be worth significantly north of their current paltry one times p/e multiple rating. The 105m development programme is scheduled to get under way… including the third development well, the so-called Chikumbi -1 development well...It could not only prove up the existing Cretaceous gas field, but possibly also discover an additional potential 1 trillion cubic feet of gas in the lower Jurassic sandstone zone.

In these circumstances, Aminex's shares could only be described as grossly undervalued.

(part 2)

In addition, there is an adjoining existing gas processing plant, the Madimba facility. It has a processing capacity of 210 million cubic feet of gas a day, but is only processing 70 million cubic feet of gas a day, leaving the facility with spare capacity of 140 million cubic feet of gas a day. This gives Aminex the opportunity to develop its adjoining gas field to avail of this capacity without any additional capital expenditure and it can also link into the gas pipeline. This latter has the capacity to carry 800 million cubic feet of gas a day but currently only carries 100 million cubic feet of gas a day, so Aminex's planned 140 million cubic feet of gas a day could be easily facilitated and it might not just be for distribution to the capital city as there is also, 20 miles away, a Dangote cement plant that could covert to gas power if it had sufficient supplies.

The provides a most favourable background for Aminex

On top of this, the state agency- Tanzania Petroleum Development Corp (TPDC) - prefers to control and distribute all gas inside the country and, accordingly, pays gas producers $3 per thousand cubic feet at well head. This is not a bad price and removes a significant element of risk associated with costs of gas processing and pipeline distribution. In the recent agreed $105m farm-out deal with Oman's Sheikh Mohammad Al Zubair, the Zubair Corporation has committed to fully fund the drilling of a third discovery well that should not only prove up the already discovered Cretaceous age reservoir with an estimated 753 billion cubic feet of gas, but will also penetrate the considerably lower Jurassic reservoir, which could contain 1 trillion cubic feet of gas.

There are also five other producing wells and the overall plan is to produce 140 million cubic feet of gas a day in two years.

This Jurassic prospect is in addition to the gas already discovered and leaves Aminex with a fully carried 25% stake, resulting in a potential $40m a year cash flow from its onshore Ntorya licence.

With the shares trading in Dublin at 1 point 2 cents, the whole of Aminex's equity is currently capitalised at only 40m, which is bewildering given that the company could deliver a potential $40m annual cash low in just two years. This puts the shares at just over one times price-earnings multiple, although Aminex has also identified other significant prospects that could potentially yield up to 7 trillion cu potentially yield up to 7 trillion cubic feet of gas.

Repeated disappointments can disillusion weary investors. After all, the third development well on the gas discovery was meant to be drilled last September, but Bhattacharjee decided to avoid any risk and wait until a fully funded development partner arrived on the scene. Aminex got its free carry with the Zubair Corp deal

Zubair (through its Eclipse Investment subsidiary) already owns almost 29% of Aminex and, as a result of the farm-out deal, has 50% of the Ruvuma fi

Some waking up to the value here PoC? Well, in case they are still not sure, here are pertinent extracts of an article in The Phoenix a couple of years ago that someone else posted a while back. It has been a wait for the reasons I outlined the other day but the fundamentals and the prospects are the same...

(part 1)

Aminex has farmed out the development of its gas discovery in Tanzania with a $105m development deal. wherein it is fully carried through to full production and looking at a potential distributable annual $40m forecast flow in two years. The stock market has, however, responded in a contradictory manner, with the share price falling steeply from the 7p it hit two years ago in March 2017, just after it succeeded with its second successful gas discovery well in its onshore Ruvuma gas field. The shares are at just 1p.

This is hard to explain given the two successful discovery gas wells, with a third appraisal well about to be drilled onshore, followed by a fully funded six-well development and a pipeline development programme. Indeed, Aminex shares appear to be incredibly low risk.

The shares have been overstimulated at times and in 2007 hit a whopping 45p on foot of a discovery in shallow water offshore Tanzania, adjoining Songo-Songo Island, where the so-called Kiliwani North gas field was ultimately developed. This never achieved what had been projected and has since been closed down, although the immediate area is being appraised with a view to bringing it back into production. This could be done at low cost given the existing gas processing plant on the island and the already fully-connected pipeline all the way up Tanzania's east coast.

This latter has, however, not been on the agenda for Aminex or its CEO…who focused on Aminex's big onshore gas discovery on its Ruvuma licence block in the south of Tanzania, just north of the Mozambique border. Not only has the group drilled two successful gas discovery wells on the block, with the first in 2014 flowing sustained gas of 20 million cubic feet a day combined with 139 barrels of oil a day and a second successful discovery well with 17 million cubic feet a day.

However, given the extent of the farm-out deal and the update available on the company's finances in the annual report, it is clear that Aminex is now in a safe position. All the work and all of the cost of upgrading and developing the discovered gas field in Tanzania have been outsourced.

Prior to 2015, it would have had little or no value and has being regarded as stranded gas as it is not big enough to warrant the building of a very expensive LNG plant to export the gas from Tanzania as the country had no internal gas pipeline network to distribute the gas.

The Chinese, however, funded a big 400- mile. 36 inch gas pipeline all the way up the east coast of Tanzania to the capital Dar es Salaam, where there is a huge energy shortage.

Absolute pleasure SQ320. Glad it was useful. Whilst not a realistic valuation per share as it ignores costs of production etc etc etc it is an interesting way of showing the size and very approximate value of the asset. As you and Chris say, the multi bagging potential is certainly there.

I hope you can finish up very soon blackgold - that sounds brutal!

Ok. Was obviously too tired. That’s for all of Ntorya. Final part of the equation as you mentioned…Aminex’s 25% share would be worth about 31.7p.

Right, early night tonight! :-)

Small typo…should have read as “ 1mmbtu is equal to about 0.973MCF (thousand cubic feet)”.

The rest should be correct!

Hi SQ320,

Sorry for the delay in responding – have been flat out with work.

I understand that for Kiliwani, the contracted rate Aminex can sell gas is $3.00mmbtu at the wellhead. As 1mmbtu is equal to about 0.73MCF (thousand cubic feet), the rate would be equal to about $3.083/MCF.

1.99 trillion is 1,990,000,000 thousands! So, the value would be the latter figure multiplied by $3.083.

That would value 1.99TCF at $6,135,170,000 or $6.135Bn. With 3,770,684,842 shares in circulation, that would give a value per share of $1.627 or about £1.2.

However, note that in the 2017 HY report it stated that “Due to a higher than specified calorific value for the gas and an advantageous effect of the sales contract's indexation allowance, gas has been sold during the reporting period at approximately $3.27 per Mcf.”

That would increase the value to about $1.726 or £1.27 per share. As you say, the real value is not as simple as this, but I think the answer you are looking for is more like 127p!

I’m doing this towards the end of a long day and I’m low on caffeine. So, apologies if I’ve got this wrong!

As you mention, the 1.99TCF is the estimated mean risked recoverable gas. The estimated unrisked amount is estimated at 5.42TCF. For those not familiar with the terms:

From investorshub “Unrisked reserves are those which have already been developed by drilling and production and thus have a very reasonable certainty of being produced. Risked reserves are either probable or possible reserves depending upon the amount of uncertainty involved and basically represent poorly developed or undeveloped oil & gas fields”

Also, remember that the 1.99TCF figure is for Ntorya only, not the whole of Ruvuma. The gross mean unrisked GIIP for Ruvuma excluding Ntorya is 3.074TCF (see slide 5 of Corporate Presentation Feb 2018).

All the best

Good to see signs of life on the BB :-)

Those are some scars Tanzania. It has been quite a journey hasn't it! I am sure that you will have a few million reasons to smile later this year ;-)

edgar, that's good to hear. Predicting with any real accuracy is obviously an unrealistic ambition but I if we are keeping P/E ratio in mind then it is more likely that those guestimates will be achieved. I agree with you about the past price action being informative. Also about the reduced risk and lower percentage owned; though obviously the resource estimates have also increased quite a bit. So we have a smaller amount of a larger pie!

blackgold, I think that transaction will be interesting. I don't know enough about what pressures SCIR may or may not be facing that could affect what they would be willing to accept. It would also be a price potentially pre seismic results, gas sales terms, CH1 results, etc. So, you'd expect a lower price until some of those things are ticked off. As a floor value though, yes, it should be a guide. One to watch for sure.

I am looking forward to the seismic results. I know there are differing opinions about what impact that will have on the share price. Ultimately though, if it suggests that the asset is say 50% bigger, then that significantly increases the likely longevity of Ntorya as a producing asset. That must factor in the valuations of brokers and prospective buyers. So, it would surely underpin a more sustained rise over time. The flow rates from CH1 and how quickly they can get to forecast production rates will obviously be hugely significant. We should get news on gas sales terms fairly soon and that too will be very interesting. In the end, putting takeovers aside, it comes down to how much gas is there, what rates can we produce at and what can we sell it for.

I'm also hoping for positive news on Kiliwani at some point in Q1 - at least a plan to sort it. I hope we might also get the Nyuni license granted early this year so that a farmout can be concluded and we can start to enjoy parallel operational activity. A dizzying prospect!

Something else I'll be watching for closely is news on gas power plants. Financially, I think Tanzania threw the kitchen sink at the Julius Nyerere dam and I believe that put gas power investments on hold. I believe the next gas power plants to be built are Mtwara and Somanga Fungu. News on those plus some more updates on the gas pipelines to Uganda and Kenya would also be very encouraging. The gas hungry $1.9Bn fertilizer plant too. Perhaps some of these things are chicken and egg and they want to see the results of seismics and the CH1 drill before committing further?

Anyway, there is hopefully plenty of news and operational progress to look forward to.

The share price reached ~7.5p during the NT2 drill in 2017. Some years prior it reached more than 40p.

We all know that the share price had become very depressed due to the shut in of Kiliwani North (and therefore loss of our only source of revenue) and a lack of any operational activity for Aminex (and competitors) for nearly 5 years. This was mainly driven by the behaviours of the nationalistic President and his government. Including a fearful Energy Minister that thought it was safer to do nothing than to risk upsetting the President, protracted PSA reviews and a Tax Revenue Authority that was taking an unduly aggressive stance towards foreign natural resources companies.

So much has changed. A new internationally focused and business friendly President. Changes to key government positions to reflect that change in outlook including new Energy Minister. Farmout completed to a very well capitalised partner. Operational activity back underway. Aminex's tax dispute sorted. A clear and fully funded roadmap to significant revenues.

The market has not caught up with these developments.

Oil & gas stocks typically have about a 17x price to earnings ratio. Over time (next 2 or 3 years), I think we will see Aminex recover to about 9x or 10x forward earnings ($400m to $450m MC…or around £335m MC) - much the same kind of P/E as WEN currently trades at. That would equate to a SP of about 9p.

I can see us surpassing that value as we approach the deeper target for CH1. Regardless of outcome, I expect there will be volatility after that but with the following 2 years including a likely 5 further drills and the start of production from Ntorya, there should be sustained interest in the shares.

That doesn't consider potential progress at Kiliwani, farmout of Nyuni, discovery of oil at CH1, etc. Conversely it doesn't consider another unexpected change in President or policy, another global crisis affecting ARA's plans, etc.

So, looking at it in the round and accounting for some cooling off following a 'lots of gas but no oil' scenario for CH1, I think we should be hoping for 6p plus by the end of the year, so 10 times current share price. Not unreasonable when you consider that we are priced not much higher than when the farmout and Aminex's future seemed to be in the balance. Also considering everything that has changed in Tanzania and the plan and prospects for the company.

It will be hard for some to believe until we have seen more progress but, when this starts to move, I think it will rise very rapidly.

Best of luck to all LTH

Hi Pepsi3, nope, I bought just over £12k to add to my holding and not sold any since.