Savannah Resources - step by step

Small update on Savannah looking at the new Aarja prospect. Step by Step the team are finding and proving up targets in their large Oman License areas.

I thought it would help investors by seeing the real state of the Aarja mine. Now pretty much a hole in the ground, very little vegetation, a more gentle slow to the NW and steep to the SE.

General thoughts are that it would be exceptional easy to take the shallow slope back and then start extraction of the ore that begins pretty much at surface out of the water, drain the water skimming underneath it. Then extend the pit SE towards Aarja south.

Just imho, but I can see Dogs bone extending closer to the surface, it looks to have a strong gold component as well.

All in All, it looks very cheap and simple to extract, very low risk, with proven and low EIA risks.

Exactly what the Omanis want.

For clarity I do hold Savannah Resources shares.

Falklands, it’s all coming together.

Until this recent drill campaign the Falklands, particular for FOGL was only a place of dreams, expense and not really very much to show for it. They brought DES and its associated licenses to gain a foothold in the Sea-Lion play. They managed to raise a few million dollars, get a couple of good industry experts on board in a number of JV’s, spent 2 years with some unsuccessful 2D driven drills, they then spent  18 months on 3D and acquiring enough data to sink a battleship.

All of this was good, needed and essential, particular for an unexplored new environment.

However none of it actual proved that outside of Zebedee, oil actual existed.

This current drill campaign is therefore the result of years of work and is a defining moment for FOGL.

The drill on Isobel was a resounding success, although it barely reached the main potential reservoir and it didn’t reach Target Depth(TD) it did exceed all expectations and oil samples were extracted that proved good quality, water free, high pressure OIL. Isobel was part of the northern license area and although wasn’t part of the same system as Zebedee was similar, albeit possibly larger and better pressured.

The current drill on Humpback in the south license area, is a completely different kettle of Falklands fish.

No oil has ever been brought back to the surface in the Southern License area, BOR successfully found liquid gas, however the true prize is the black stuff. Not only would Humpback prove that oil isn’t just a myth, it’s rated as containing half a billion barrels of oil, if indeed oil exists there.

The importance of Humpback is not just the half a billion barrels of oil it might contain. If it comes in as a success it massively de-risks very similar plays containing another 1 billion barrels of oil. Nobel the JV operator of the well has committed to a second well, if it makes a discovery. It also opens up the entire southern range, for considerable further exploration.

The impact on Humpback for FOGL cannot be underestimated.

More recent developments.

Humpback was already a mammoth drill, due to take 60 days, FOGL have announced that this will be nearer 100 days now due to complications (enough time to drill 2 holes in the northern license area). A side drill we take place off the initial drill pad and hole.

It also announced that it has $30m left in the bank after the pre-payment of the Isobel and Humpback drills.

So where does that leave us?

FOGL have received more than their fair share of luck. The lack of the Isobel drill to reach TD looks to be a certain contract failure. Premier the Northern License operator  have to make a second Isobel drill the next priority, once Humpback has been finished. A second free drill to prove up Isobel and its reserves will be greatly appreciated by the market and the BOD of FOGL.

The extra 40 days required for Humpback, will be paid for by the operator Noble.

A new drill at Humpback, if the first is successful will require a fund raising to the tune of $30m. However this will be at a much higher share price, due to the successful drill. An estimated MCAP might be $300-500m.

Unlike the last drill, which saw the drill rig move sharply away from the Falklands after just 12 month. The Eirik Raude is on a notice contract until 2018. This allows Premier and Noble sufficient opportunity for many drills to come and more news flow for the FOGL. FOGL will obviously have to raise money to help contribute to thiss(approx. $150m or so), but it’s estimated that until 2018 they will be proving up between 1bn and 3bn barrels of oil. Beyond 2018 and the Ocean Rig Santorini can potential be used for production holes. Both Premier and Nobel have ear marked larger exploration budgets for 2016. Once in production, if FOGL can maintain a good share of the licenses it will be a multi-billion company as exploration firms up the resources, CPR’s and routes to production are finalised.

I have brought some FOGL recently, the potential of a successful drill with Humpback and the culmination of years of work, outweighs the risk. It also falls nicely into the high quality portion of my portfolio. The partners and potential of the resources are really world class, this isn’t a story of an AIM minnow dreaming about finding something amazing after spending a few million on a wildcat drill. FOGL and its partners have spent a 9 figure sum getting to this stage. Due to the depressed oil price and bear market, the share price is massively undervalued.

14-18-2015 round up #OXS #CEB #FOGL #PEL #AFPO

Evening.

A few interesting things happening and a few on the horizon. So I thought a blog was in order.

Lets start with something positive, #FOGL has an important drill due to be announced. Depending on results this might indicate a massive increase in the OIL reserves and wealth around the islands. Logging should be finishing in the next two weeks so news is nailed on. Personally with oil at its current low price, I will be watching but not buying before news, but it should be interesting.

Now onto #OXS, usual fun and games, with an August result unlikely (historically) we are looking more and more at an Autumn/Winter result. Still a firm hold for me, but I am happy to ignore all the rumours and wait.

I have been researching #PEL as promised. My initial thoughts ( and I am only half way through researching) is that the company looks to be a classic rehabilitation candidate. The biggest problems with these, as I've learnt many times is that the market doesn't believe these recovering companies, until its seen the evidence of good profitability in trading statements. The real question might be when will the company release these trading statements, but anyway more work needed from me.
BTW when I mentioned that the company might be being ramped, it doesn't imply anything concerning the companies true potential, just that there is an influx on short-term money that will be leaving the SP at some point. When this happens we normally see either a dramatic decline or a gradual decline depending on who brought the shares when the short-term holders sell. This might well be a long-term hold in the same vein as #AEG, I am not decided yet.

#CEB....Wow..Just Wow on the day that the company announces its AGM, you get not one, but two director sells. One director sell, you can put down to bad luck or unusual circumstances, but 2 directors..

Quite simply for experienced AIM investors, director sells are a red flag. Its very rare for a company to see its SP rise after director sells. When the directors sell, just prior ground breaking news I have never heard that it bodes well.
We will hear all kinds of things from the ramping crew about this as they struggle to sell out. Over the years I've heard all the excuses as to Directors selling, from pension arrangements, divorce, needing the money to put the kids through education, ill health. The consequences for the company though are pretty uniform.

A simple question these directors will have known most things about the company, they will certainly be aware of the potential for any new Indonesian deals. So why sell now and not in 30 days time?
For me it indicates that the Directors were pretty certain (at least in their minds) that large dilution will occur when the deal goes ahead.
I've been accused of not being researched in #CEB, but that's simply not true. I've researched Indonesia and the Philippines at length, producing a PEST analyst on both. The reason for this is that both companies were considered excellent frontiers by Aussie mining companies when the Aussie industries were booming. There is a graveyard of projects left by this Aussie expansion.

Indonesia in particular had some bad experiences and developed a bad reputation for investment. Recently,  last year it declared it was going to pull out of its trade agreements (BIT's) with most countries, including the UK. This essentially removes protection for companies. We recently saw a terrible Mexico auction of its licenses and there is nothing to suggest that it will go much better for Indonesia.
At the end of the day until CEB tells investors what its investment will be, how its funded, what percentage of the deal it will keep (its already given away a chunk of anything) and importantly who will fund the exploration, its impossible to put a figure on the SP and its nothing more than a gamble. One the two Directors selling don't seem to want to take...

#AFPO is another one, where its impossible to justify the SP until we know the profit and figures from any deals. Take the profit and run IMHO.

Be careful out there folks.

Enjoy your summer !

“Where has all the mxo ramping gone from last month. Wait a minute it went to afpo. Another bunch of spiked pi’s , so what stock is next?”

I am not surprised in the slightest but my first post on AFPO and one of only a hand full this year was greeted with insults and abuse…

Was it because the post was incorrect? Well if we look at the “investors” who pumped MXO or reacted rather negatively we might see. On the 13^th of July I posted that the “pump” crew had sold MXO and has moved onto their next target…Funnily enough the same “pump” crew that told me that people selling at 4.5p was stupid, or that I was clueless. Since then they have become rather quiet about MXO and the MXO price has fallen……

They are also the same “pump” crew that have been ramping AFPO and have been selling in their droves whilst pumping away. They have already started the next pump.

So was I wrong?, NO.

So why the response….Maybe in the same way that when you tell a child off for being naughty, their first response is often one of denial. Maybe it’s because they are so incredibly insecure they need to response to every single negative comment. Maybe it’s because they are bullies.

Whatever the reason, if you post anything negative that they deem threatening it’s the same comments.

I am Clueless, It’s down to Envy, I must have made a loss, etc etc. It’s all rather juvenile to be honest. Occasionally you get a true comment about how it’s all about buying low and selling high, where they singly fail to realise that buying low, pumping a share, selling and then watching it fall back is the very definition of a “pump”…

Equally, investors shouldn’t be concerned if you get a negative comment in a negative market. We could all just say positive things about companies, but this would only lead to PI’s losing lots of money. If something is negative then say it’s negative, if something is being ramped then admit it’s being ramped, if it’s positive then say it’s positive. If you say this many times in the hope of changing market sentiment then it’s a problem.

It’s the same mentality of MP’s that claim £500 for a 5 mile bike ride, or investment bankers that sold the rather dodgy CDO bundles, or even the tried and trusted second hand car sales men.

I am more than happy making money in AIM in a rather more moral way.

I actually quite liked the MXO deal, far better than its Mexico licenses and said so (although I also said that I wouldn’t buy any yet).

Equally I quite like the AFPO deal. The problem is that we don’t have a clue how much profit will be made for AFPO, its margins on the revenue might be 2% or 50%! Nor have we heard why these hefty margins are going to be taken by middle men and yet the MOU buyers are happy to buy it?, why don’t they just cut out all the middle men and go straight to where AFPO are sourcing the product?. This will happen if AFPO are not adding any value. We simply don’t have enough information to justify a re-rate of the SP IMHO.

Finally not all investors are part of the “pump” crew some are genuine investors in these companies.

You might want to follow the “pump” crew, however for every “pump” that catches and works, there are maybe 2 or 3 that don’t get the traction.

Let’s see which one gets it this time round, maybe EDL, maybe AVP, maybe PEL,  RMP, AVP.

Enjoy your Summer, I know I am !

Beware Bears Everywhere

In my previous blog http://icebergshares.blogspot.co.uk/2015/07/new-pumping-and-dumping-sentiment.html I talked about a few aspects of life on AIM and briefly touched upon the bear market.

Some won’t believe me, but the last 18 months has seen some fantastic gains in a favourable market on AIM. This has not lasted for the last 6 months and will only become worse…..

It’s difficult for invstors to grasp this, they will always think if they pick the right stocks they will make amazing gains. They will blame poor entry points. They will bemoan the timing of external factors. They will point to the time of year. Everything except realise the truth.

The truth is that the AIM market is on a Bear run. Now I have to quantify this statement, for my own purposes I am looking unapologetically at the exploration and resource sectors.

It’s on a bear run thanks to:

• Global Macro-economic factors.
• Massive withdrawal of AIM funds.
• Rising exploration costs.
• Falling commodity prices.

It will continue to worsen because of:

•          The lowering of potential profits.
•           An exponential rise in failed/delisted companies.
•           Short term continual lack of governance in AIM.
•           Crippling costs of capital.
•           Further degradation in the first 4 factors.

It will still be possible, I am sure investors will have it forced in their face, that some companies will make large gains. Where this happened 12 months ago though, it might only happen in 25% of cases now. In other words a guess from me might be that it becomes 4 times more difficult to make a substantial profit in in the next 12 months.

The only way is (down).

As an appendix at the bottom of this blog I’ve included 3 graphs from Infomine, they show the prices of Gold, Copper and Silver over the last 5 years. It doesn’t take an expert to see that prices are at 5 year lows. WTI oil has fallen back to below $50 a barrel. There are a string of experts claiming that the bottom has been hit in commodity prices and the only way is up. Please pardon my scepticism but I’ve been hearing this for the last 2-3 years. Every few months we get told that production is due to decline and China is going to hoover up all the resources. 

It simple doesn’t happen.

China is growing its internal production capacity rapidly and its demand is slowing down. BRIC’s in general are seeing only small real increases in demand. Coupled with this production is being increased due to a glut of projects(particularly copper) that started life 2-4 years ago in response to the higher prices.

Supply is also increasing due the declining commodity price. This might seem strange, when prices started to fall a few years ago, many projects were put on hold, producers stockpiled ore thinking that prices would rebound. Around 12 months ago Rio Tinto, stopped this strategy and decided to keep cash flow (to allow a share buy back) steady by increasing commodity tonnages.

This has been taken to another level by the likes of Unity Mining that have increased gold ouput by 50%, reducing cost per oz and keeping cashflow growth. This has been achieved by mining the higher grade areas (looking at 8g/tonne).

Oz Minerals another Aussie miner has increased copper production to maintain cash flow. This means that supply will only increase further as commodity prices decline, we have a bit of a dog chasing its tail scenario.

The market won’t price in any kind of rise in commodity prices in the next 12 months and so potential profits and NPV values will be hit.

This will have a consequence for the AIM, particularly within the mid-sized exploration production sector.

Oz minerals also shows the more problematic side of the fall in commodity prices. At its main copper/gold mine, as well as increasing copper production it’s suspended its gold production as it is no longer economical to mine gold.

Wood Mackenzie have recently commented that 10% of gold mines are now operating at a loss with gold at $1100 an oz.  Personally with stable demand and higher supply I think $1000 could fall and a low of $950 or so could be seen. This would put many miners in to a negative cash flow position.

Life is hard for any wanabe explorers turned miners and it’s getting harder and harder.

Good commodity companies can adapt, particularly those without debt. AIM however is dotted with many, far too many, lazy, hyped up companies and it will get ugly.

So what for AIM?

The consequences will be felt by private investors.

I mentioned that the decline set in 6 month ago, around this time the institutional investors started to leave AIM, funding was becoming scarce. Cornhill and a few others stepped up and started to offer more and more placements to private investors for companies that institutional investors would no longer touch with a barge pole. We all know the reputational damage this has caused, so I won’t go over it all again here. It did however help keep a bubble of “normality” for share prices of commodity companies across AIM.

The disparity of AIM over the other major alternative, commodity exchanges such as TSX and ASX grew and grew. Currently a company with a good current explorational asset might we worth $1m on TSX, if it were on AIM and with some pumping as much as $12m. A shell company on the look out to buy assets $350k on TSX and $5m on AIM.

This level of disparity cannot continue.

AIM will always be easier to raise money on than TSX etc , however it’s to the likes of TSX that the larger commodity companies  have come looking recently for good quality JV deals, as its simply far cheaper.

The last couple of months have seen even the private investor funded placements start to become unsustainable. Larger and larger discounts to the SP are more than evident along with higher and higher fee’s charged by the company’s brokers.  Private investors taking part in the placings are making less money, or indeed making a bigger loss.

Over the next 6-12 months, even this method of financing will become difficult for companies. Another problem, along with reducing liquidity in AIM, falling NPV’s, falling commodity prices and falling confidence.

So where does all this leave us?

Most, if not all commodity companies are overvalued by between 20-80%.

Explorers are buying assets, which I freely admit are very cheap at the moment, but these assets require considerable money to develop or prove up, that money will not be raised cheaply and will only get more expensive over the next 12 months.

Some small producers without flexibility and with debt will go under.

Companies will need to be innovative when exploring, they will need JV’s with deep pockets, they will need to costs to production with other companies, when producing they will need to share mill’s, processing, infrastructure all with other companies to gain economies of scale and reduce costs.

Having a world class asset is not enough. It needs to be scalable, easy and cheap to mine, low risk, high grade. The company needs to be professional enough to raise money and frugal with the money raised. Maybe with a bit of luck folks will continue to make some money, particularly if they remember to steer clear of the ramped stocks. Buy after de-risking news, not before.

#NEW, Pumping and Dumping (sentiment trading) and the Bear Market.

Evening folks. Well NEW has started trading again, as expected (as per my suggestion prior trading), it opened down 70% ish. This was not unexpected.

I don’t have too much to say on NEW, if you are looking for a short term sell out then .12 or .13 would be my target. If you want to hold for news then you might well get .3 or even (if its pumped enough .4) on CPR or asset buying news.

The current price looks to be the low point. I can’t see much reason to sell at this level, so I haven’t sold a share yet.

I still hope to update NEW investors on possible response and action, but that’s currently in the investigation process and might well be 3-8 weeks away.

With NEW we still have the unknown, as to whether or not Cornhill sold its shares to the market makers, or lent them the shares. This should be known by the end of Wednesday this week. We also saw incredible low volumes of selling on Friday. This was by far the surprise of Friday. I expected sell volumes to be maybe 2 or 3 times higher…..We also saw the bid being pushed up on occasion, again unusual given the circumstances.

If we look wider, we get nearly 5 year lows for many commodities, coupled with an expensive capital raising outlook. We have the mining majors cutting back and some chronic over supply.

We have lots of uncertainty, re Greece, Iran etc.

To top it all we have the change in pension funds which is seeing record money flowing out of SIPP pensions (many of which have been invested in AIM or small to mid cap stocks).

I know a few peeps are just waking up to this, but I’ve been all too aware for 6 months or so now and have continued to keep t least 50% in cash.

All this has helped to wash away the mud covering many of the more prominent private investors, particular those that earn a living as a full time job. They have suffered.

They also have no sympathy from me.

Underneath this scramble for the left over meaty scraps, we’ve seen investors turn on investors which has, unearthed the rather immoral happenings.

Pump and dumps are very easy to identify, simply look at the history of posters for the last 12 months. Are they still invested in the same stock?, after they stopped pumping the stock did it dramatically crash?.

The last 2-3 years has seen the emergence of “sentiment trading”…..A true sentiment trader will buy in to a stock and sell when they see sentiment disappearing….Its a widely held investment strategy and works.

However when this is applied to small cap, low liquidity stock and the sentiment trader then tries to influence the market through news, ramping (multi posts about “research”, frequent tweets etc) and this is done purely for short term trading gain. Then it’s not sentiment trading, but is in fact pumping and dumping.

It is made worse when folk sell whilst filling social media with this “sentiment based research”.

So where does that leave investors. Well as with MXO, if your looking to invest because of news then there is plenty of opportunity post news. If your looking to invest prior news and sell on news, then be honest with yourself and others about what your doing.

Keep a big pile of cash.

If others are urging you to buy, then assume it’s because they want you to push the share price up so that they can sell.

Maybe put aside a small amount to take a few risks with (but be prepared to lose it all).

Invest in proven quality, quality management, quality resources and a quality team of brokers, nomads and major holders.

A year in the life of the Lenigas Group.

I’ve put together a few facts and figures to show an objective view of how the key Lenigas companies have coped over the last 12 months.

I’ve included LGO and Stellar in this this. The reason being that they are both heavily invested in by private investors and both still have a strong connection (12 months ago they had an even stronger connection)

So I’ve made the assumption that an investor put £10,000 into these companies equally 12 months ago. The table below shows which are good investments and which are not.

All in All they would have made a loss of £730.

 

Company	12 months Ago	Current	Profit/Loss
UKOG	1.15	2.2	1141.304
AFRI	0.46	0.38	-217.391
REM	1.4	0.95	-401.786
LGO	3.6	3.13	-163.194
STELLAR	0.95	0.45	-657.895
SOLO	0.31	0.43	483.871
INSP	1.35	0.49	-796.296
EVO	0.21	0.19	-119.048

 

To be fair to David a loss of £730 is very small when considering a £10000 investment in AIM.

However that loss would be far worse without the Horsehill play….Now we can argue that the Horsehill play was/is a fantastic piece of skill or that it was/is a fantastic piece of ramping on what has so far delivered or proved zero.

This also doesn’t show spikes and troughs, investors could have brought cheaply and sold on a spike, or even brought on a spike and sold in a trough.

Personally I think it will be interesting to see where the above are in a further 6 or 12 months. My thoughts are that REM and LGO would be higher, UKOG and SOLO lower and the rest pretty stable.

Declaration of Independence.

Declaration of Independence.

I’ve decided to produce this, You will get a few folks that don’t believe it, but that’s up to them.

If anybody wants a £1000 wager, I will happily open up my trading accounts and books to them to prove what I am saying is correct.

It is possible to make money (decent money) on AIM without being corrupt or morally bankrupt.

At the end of the day it’s up to individuals.

Declaration of values.

1. I have never taken part in a placing. If I take part in a placing in the future I will guarantee that the shares will be held for a minimum of 6 months. This guarantee will be made to the company.
2. I have never flipped shares, nor brought or sold on insider information.
3. I have never and will never sell a share, whilst talking the share up.
4. I will always be upfront if I have a holding in a company before I talk about the company.
5. I have never and will never “short” a share, naked or otherwise.
6. I have never and will never take or receive any financial payment for any blog or posting undertaken.
7. I have never and will never receive any financial payment for any material written.(I have declined several offers)
8. ALL of the money (and its not much) that I make from the adverts on my blog are and have been, given to charities, including JDRF which is a charity that supports my young daughter.
9. I DO NOT rely on the money that I make from investing to live. It is not my profession (thank goodness)

I say the above, not because I am naive or innocent. Nor because, I am incapable of doing the above. I’ve spent many years working for consultant companies, investment banks, corporate banks as a few folks know. This includes designing and creating trading software, Risk Management and corporate regulatory reporting to the Bank of England (FSA at the time).

I know how morally corrupt companies can be, a few folk complain that things don’t happen due to insider trading etc. It does happen and it happens because they get away with it. ( I remember in my first job in banking, many years ago, being told to add a 1.5% to the standard FX rate(on top of the advertised charges) to customers, except to customers who we had a list of. Those customers who noticed what we did and complained. I was later told those complaints where upheld so they only did it when they thought they could get away with it.

I wonder how many other prominent investors would declare simply standards…….

An interesting quote taken from the Rio Tinto website.


"
Our objective is to safely discover, on average, one “Tier 1” deposit per year. These are what others may call “company-maker” deposits: the largest, lowest-cost resources that are profitable at all parts of the commodity cycle. We prioritise our exploration programmes on a global basis so that we pursue only the most attractive opportunities. We determine priorities in consultation with the product groups. Our decisions are driven not by location or choice of commodity, but by the quality of each opportunity.
Some of our operations, such as Weipa, Tom Price and Rössing, are Tier 1 greenfield discoveries by Rio Tinto where value is still being realised after more than 40 years of production. Since 2002, we have made the following Tier 1 discoveries:

Year	Discovery	Commodity	Location
2002	Resolution	Copper	US
2004	Simandou	Iron ore	Guinea
2005	La Granja	Copper	Peru
2005	Caliwingina	Iron ore	Australia
2008	Sulawesi	Nickel	Indonesia
2008	Mutamba	Titanium	Mozambique
2009	Jadar	Lithium/borates	Serbia
2011	Amargosa	Bauxite	Brazil

We operate the majority of exploration programmes ourselves rather than outsourcing to others. This ensures that we retain management control over our performance in the areas of safety, environment and community relations, as well as corporate governance. It also means we can keep the exploration programme focused on only those targets that are important to Rio Tinto. We will, however, partner readily with smaller exploration companies if that gives us access to attractive opportunities, tenure, local knowledge, or operational skills that we do not possess in-house."
http://www.riotinto.com/exploration-154.aspx


It really helps to underline both the rarity and importance of Rio Tinto teaming up with Savannah Resources on the Mutamba Titanium deposit.


Rio Tinto considered/consider this to be a COMPANY MAKING Tier 1 find for them....


They will partner with smaller exploration companies, but only if they have operation skills that they do not possess.......This speaks more highly of Savannah and their team than any ramping by any blogger on AIM.


WELL DONE.

icebergshares unfortunate events

Quite a disappointing evening, I hoped that I would be wrong when I tweeted that a single tweet might be unpopular.

Unfortunately I wasn’t with over 50 replies, and some rather not nice private messages.

1.        “ It won't make me popular but beware of the two Cornhill pumps #ceb #afpo a few placing shares in both comps being offloaded while ramping”

Quite why a simple tweet asking investors just to beware prevoked such anger is interesting. I didn’t say the companies are over valued, I didn’t say the companies were bad investments. I simple stated one aspect that I thought that investors needed to know/research before investing. Indeed in a follow up tweet I said that just because a company is being ramped while placement shares are being offloaded , doesn’t make that company good or bad. No, certain ego’s felt threatened and out came the insults.

I deliberately didn’t name any names, or make anything personal, as to be honest that’s not me. I care more about the research that folks need to perform and should do on shares, that research should include the brokers, nomads of companies and how money might be raised.

Quite often when this happens the companies are actually quite good/even very good investments, as these are actually easier to pump. The problem is more, that the crew’s move on to the next big thing and the market then becomes flooded, leading to a fall in the share price.

Two or three years ago, companies used YA, Darwin, Bergen to raise cash, investors realised that this killed share prices, as they offloaded into any hint of a share rise for small percentage gains. Now a new way of raising cash is used…

Each share is dealt with differently, but it’s clear that some folks have brought into a placement and flipped, or brought into a placement, ramped the share up, started shorting and then sold the share back down again (why not make money on both the up and down sides of the spike).

Again I won’t name investors, but the fact that, CEB, AFPO, SER, NEW, TEA, RRR all have either Cornhill as their broker or Beaumont as their Nomad, can’t be a coincidence can it? And when we have both of them together, such as with NEW we get some of the worse greed and corporate activity known on AIM.

This piece hasn’t come out of nowhere , I’ve been posting for a few months that investors need to research not only the company but the companies, supporting that company.

I do hope that those folk that seemed to take everything so personally last night, carm down a bit. It all reminds me of the bad old days on the BB’s when a single voice who dared questioned anything got shot down in flames.

Money does strange things to folks.

BTW I am fully aware that we have various (investment) groups on Twitter that seem to take everything personally. For information only I am not with any of them and couldn’t careless. The only thing that I want is a playing field that’s as level as possible for everyone.

Savannah Resources – Joint Venture of the Decade.

I’ve been a fan of Savannah Resources since the company was first created, as such I have a reasonable sized holding in the company.

http://icebergshares.blogspot.co.uk/2015/01/

Above was my last blog at the start of the year.

For the world’s largest company to consider a joint venture with a small minnow on AIM is mind blowing. Its often talked about on the BB’s but is rarer than a hen laying golden eggs.

Savannah Resources have achieved this.

They have only achieved this due to the very high professional standards the company demonstrates and the expertise and experience of the management team and BOD (including of course David Archer).

A few nicely hidden bits of the agreement are that Rio can buyout Savannah, but only for a multiple of all the money that SAV have already invested.

Scoping to be completed hopefully 2015 earns SAV a 20% share in the combined JV.

A pre-FS gives SAV 35%

A full DFS gives SAV 51%.

The full JV seems to be “Rio Tinto's affiliate of the three areas suggests a combined potential contained ilmenite content of between 140 and 170 million tonnes with a further 10-15 million tonnes of contained zircon and rutile.” This gives us a combined resource value of around $2billion for the RIO licenses, with approx. a further $1bn (very conservative) from the SAV licenses. Total (conservative values of $3bn).

The aim is produce a mine in the near short term with approx. $200m of revenue’s per year. The cost of the mine will be low and 50% of this cost will be paid by Rio Tinto. Along with this Rio will buy everything that the min produces at commercially available prices…

One of the biggest barriers and risks to "wannerbe" miners are the funding uncertainties and selling your output when the mine is actively producing. Due to this many miners have DFS’s for their exploration areas which are mothballed.

The current JV effectively cancels out these risks. Any mine where 50% of the costs are being picked up by the world’s largest mining company will not struggle to get project finance.

Today’s announcement really does confirm that Savanah is on course to become a mid-cap producer with a £100m+ Mcap. I’ve already said that I held in 2013 – all the way through 2014 and will still be holding in 2016.

I’ll leave the sentiment plays-flip flopping and P&D’s to others.

Quality Shines though and even if it’s not seen by all PI’s has certainly been seen by Rio Tinto.

Well Done.

UKOG – The magic dust fades away.

I’ve written about UKOG over the past year. So this is just a very quick update, which even if one person stops and thinks will be worthwhile.

If there is so much oil just waiting, all over the Weald to gush out of the ground, then why hasn’t the plethora of drills over the last 20-30 years found much?

The answer if we are to believe David Lenigas, is that new technology and extraction techniques now make it possible to squeeze it like a sponge and for the oil to flood out.

The new technologies that he’s talking about, are of course not particularly new as they are used elsewhere in the world, not least in the areas mentioned in the “Independent Reports” that have been commissioned by UKOG. These new technologies concern the ability to naturally frack existing fissures in the rock and lateral extensions to wells, allowing for far greater horizontal pay zone extraction.

Lateral extensions are used extensively at Wytch Farm in Dorset in similar geological formations to those targeted by UKOG. They stretch miles out to sea in an area where lateral extensions will have no impact on people’s lives. They generate on average, a few hundred barrels of oil a day per a drill.

It is important to understand that the reason that Wytch Farm is productive is that it’s a natural collection point for the oil that has migrated from the Weald i.e the movable oil.

Even if UKOG is allowed to drill large laterals under the rich homes of Southern England the output is very unlikely to meet the more movable oil found at Wytch.

The only way that UKOG will be an amazing company, is if the new technology talked about can materialise oil out of rock, Star Trek like in transporter beams…

Have a good weekend.

Open letter to Beaumont Cornish, New World Oil and Gas’s Nomad.

I tried speaking to you yesterday, but unfortunately I was told that you could not speak to me, due to internal, self imposed rules.

I wanted to raise with you a number of concerns and potential breaches of governance that I feel might exist with a client of yours “New World Oil and Gas” (NEW).

In a recent RNS concerning the open offer, which you approved they issued the following statement.

 “The current cash position of the Company (as at opening of business on 8 June 2015), excluding any funds owed to the Company pursuant to the Al Maraam SPA, stands at approximately £290,000. Based upon the current rate of spending and in the absence of raising any funds pursuant to the Placing and Open Offer, the Directors expect this balance to last for no more than three months…..

….If the Company and Cornhill Capital are unable to identify or agree on such steps, the Board may be faced with no alternative but to commence winding-up of the Company.”

It clearly says that the company has a very unhealthy financial position that will cause it to go bankrupt within a matter of weeks (maximum 12-14 weeks).

It is clear that this has been known to the company for quite a while and that the funds sought from April’s placing were needed to prevent bankruptcy. At no point until after the shares were suspended was this made public to the shareholders.

The below is taken from the London Stock Exchanges own rules for companies, which I am sure you are aware of.

“General disclosure of price sensitive information

11. An AIM company must issue notification without delay of any new developments which are not public knowledge which, if made public, would be likely to lead to a significant movement in the price of its AIM securities. By way of example, this may include matters concerning a change in:

 its financial condition; “

 

So it’s very clear that investors were mislead when buying prior to suspension by incomplete but known information on the company’s financial condition. Investors were also mislead when asked to vote in the placement as this didn’t have this information. NEW and yourself also failed to inform investors of a material change in its financial condition.

 

The following also taken from the stock exchanges clearly details where responsibility of this lies.

 

“ensure that each of its directors accepts full responsibility, collectively and individually, for its compliance with these rules; “

 

The directors must accept responsibility for this.

 

http://www.londonstockexchange.com/companies-and-advisors/aim/advisers/rules/regulation.htm

 

The below is taken from the nomads responsibilities, which is linked above.

 

“MONITOR TRADING

OR3 – The nominated adviser should monitor (or have in place procedures with third parties for monitoring) the trading activity in securities of an AIM company for which it acts, especially when there is unpublished price sensitive information in relation to the AIM company

In meeting this, the nominated adviser should usually:

 use suitable alerts or other triggers to alert the nominated adviser to substantial price or trading movements. This can be satisfied via the broker

 contact an AIM company where appropriate if there is a substantial movement to ascertain whether an announcement or other action is required, liaising with the Exchange where appropriate

 consider the necessity for arranging relevant press monitoring, particularly when there is material unpublished price sensitive information in existence “

 

As soon as the exceptionally large volumes started as a Nomad you should have noticed and requested suspension of the share price.

Did this monitoring happen?

Did a request go to the LSE?

When did these things happen?.

 

Finally we come to the open offer itself. There is considerable confusion between brokers as to who qualifies for the open offer. Many brokers are offering the open offer to unsettled holders, however the offer document and the RNS that was released, clearly talk about only settled shares taking part in the open offer. I am sure that you can appreciate that its impossible for me as an investor to accurately judge whether to take the financial risk of subscribing without having full information about who can actually subscribe. Any clarity you can provide here would be appreciated.

I am sure you are also aware that the correct documentation is also not going to the potential subscribers.

 

I am sending you this email in the hope, but not the expectation that you will respond. However I am also sending a copy of this letter to the London Stock Exchange to investigate as a matter of urgency the issues raised.

NEW, Will the Nomad perform it’s legal duty?

NEW, Will the Nomad perform it’s legal duty?

Another week, another monumental cock up by the NEW board of directors.

It’s difficult to believe how badly they are actually getting things.

The latest RNS confirms that at the EGM investors were mislead about the BOD’s pay and loan arrangements.

Despite swearing blind that they would issue an open offer, underwritten to the tune of £1.5 by Cornhill at .05p a share. They have announced an open offer at .09p a share to raise £3.5m.

Also apparently they have to raise £3.5m to prevent the company from going under, despite being happy with £1.5m only 2 months ago.

They seem happy to pay £750k to Cornhill, despite the fact that its Cornhill who needs the shares, due to their own scheming and greed.

On top of all this, the BOD themselves don’t want to/haven’t got the confidence to buy shares in the open offer….

But the above is only the backdrop for the real story.

Will Beaumont Cornish actually perform its duty? 

Let’s be clear about this, the duty of a Nomad is to ensure that the company meets its requirements to the London Stock Exchange.

New World Oil and Gas are clearly stating in an RNS that only registered holders of shares (750m of them)  can take part in the open offer.

The London Stock Exchange are equally clear, ALL holders of NEW shares, whether settled or unsettled have full rights and can take part in the open offer(common guidance is at least 2000m of these shares).

Brokers are equally unclear. There is one broker who says that unsettled shares can take part in the open offer. One broker who says that they can’t and more alarmingly one broker, whom I have x million shares with who can’t tell me either way and can’t tell me whether the shares are settled or not, because they can’t reconcile their own internal share situation……

The Nomad MUST act.

They have a legal, licensed duty to ensure that NEW comply with the guidelines and rules of the London Stock Exchange and the Board of Directors are NOT.

I will certainly be ringing the Nomad on Monday and writing to them(for evidence) to ensure that the NEW open offer does not go ahead in its present form.

On a brighter note. The LSE statement that unsettled shares should have all the rights attached to settled shares, must surely mean that a 10% holding of unsettled shares should be sufficient to hold an EGM?

The Board of Directors will be hiding behind Jersey Law, but my understanding is that London Stock Exchange Rules trumps this and hopefully the BOD can be kicked out to do a job they are capable of….(I’ll leave any suggestions for this to readers).