focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
What the market doesn't understand (and WEN s/h wouldn't yet appreciate) is the value of Ruvuma to AEX. We sold 50% of Ruvuma essentially for $40M. That doesn't mean our remaining 25% is worth $20M. It means our 25% with a free carry is worth cash flows of $40MM p.a. for 20 years (assuming field production of 140mmscfd. The farmout enables those cash flows to occur.
Back of envelope DCF model, with a WACC of 10%, the present value of those discounted CFs is about $500MM. A high wacc is offset by no upfront costs (ongoing expenses included)
Our valuation will take a big discount on that number because of all the risks we discuss here frequently: Frontier Market, client demand, ability to pay, drill results, etc.
WEN has cash, which we need. They don't have access to a free carry development that resembles anything close to this, and should be attractive to their BoD (if not their chat board punters).
I said BPC/CERP was *a* model that could be used, not that it’s a good one. However, we need cash, they need growth. There’s a fit. If not that, we’ll need a major cash call in ‘21. To think otherwise is delusional.
IMO, WEN is not buying SCIR’s stake. They’d need $20m+ to buy it and another $30m to pay their bills. $50m price tag is way more than they can afford.
AEX tie up is cheaper and better for both cos.
WEN and AEX more likely to simply merge. You only need to calculate the fraction of shares for one of the sides (ie AEX due to its share base). No cash exchanged. BPC and CERP provides the model of how it is done. That deal advised by Gneiss.
There's nothing safe (or boring) about business in TZ. Look at Orca's results from last week. Buried in the notes relates to a tax dispute. Instead of going through due process (Orca believed they were in the right), the gov't forced company's bank to transfer $5.3M to them. No recourse, no options.
None too pleased about the timeline for old AEX these days, but if you want 7% yield, buy Vodafone. At least that share has liquidity.
Cash call is a matter of when not if for a non-producing microcap. AEX suggested recently they have an ok burn rate until mid-2021, which is hopefully post-drill. Aside from G&A, they shouldn't have any major expenses in the near-term.
Unless of course, they move faster than expected on a WEN tie-up. The dilution on that deal would essentially replace the need for cash anytime soon. Hopefully that wouldn't happen until post drill either.
Other unknowns are the pre-paid expenses owed by ARA on CH1 preparation (if any). Not counting on seeing owed cash from KN1 anytime soon.
Helium is an interesting play, and hopefully H1 is a huge success, but boy did we overpay for our stake here. Will be lucky to get half our money back from our initial GBP2.55M investment.
OK now that recording is hilarious. At the 23m mark, Roe is asked about a tie up with Aminex. Her voice raises about 8 octaves, says they talk all the time, and would consider a tie-up 'at the right time' and if shareholders are supportive
So, is something being discussed? Absolutely.
If Zubairs wanted to take control of the company, they would not have done the farm-in. They could've taken out 75% of Ruvuma + other assets at a similar cost. Who knows their reasoning, but this way they can spread their control across two companies, each with a different strategy.
Once the dust settles here, AEX will owe us a revamping of this strategy, so we can understand where we're going.
Best option for us here is being part of an RTO. We'd make a nice partner for a new business that needs a public vehicle. With a bit of cash on hand and some assets to sell in future (rigs, Indo), we'd have a bit of negotiating room to get decent terms. Hopefully with a business that is more on-trend than O&G.
I hope too that H1 chooses London (AIM) for its listing instead of ASX. No disrespect to the Aussies, but there's a wider pool of capital in the UK.
Exactly. By no means a tip, but goes to show that Helium as an investment is real, and can generate good returns.
Now, a major helium find right next to Silicon Valley (for use in semiconductors & IT equipment) is an easier sell than discoveries in the Tanzanian savannah. I hope and assume H1 will go over the top in its plans on how to transport any gas finds. A normal gas pipeline doesn't cut it, and Qatar level infrastructure doesn't exist.
If you want a good story on helium, look at a company called Desert Mountain Energy. It trades on the CDN/US exchange with helium rights in Nevada. It had some good drilling success this summer and has 10 bagged in the last 6 months. I managed to get 5 of those before selling out. Only heard about it from doing research on Helium One (you can trade int'ly with HSBC). So, you could say that SCIR made me some nice profits, albeit indirectly.
I see our faithful Executive Chair paid himself $1million last year for his efforts. At least someone is making money from this heap of rubbish.
Nothing here was going to be announced before the national election. Not so much to see who the winner would be, but rather to see the response to alleged vote rigging, public protests, and view of the international community. Four years ago, TZ received negative press for weeks after the contest. Hopefully it's smoother this time around for both the people of the country and foreign investor sentiment.
Just as all commodities companies and FDI decisions in TZ took a pounding when the Barrick Gold debacle became global news, it's great to see the company now chucking money into the country. Hopefully wider TZ investor sentiment continues to improve as well.
https://in.reuters.com/article/us-barrick-gold-tanzania/barrick-gold-plans-to-expand-exploration-in-tanzania-idINKBN2781YJ