GKP v AFREN.

Having invested in both in the past, currently I am in Afren and not GKP, but have been thinking for a while about the GKP bond raising that happened just over a year ago..

For those not familiar with it, GKP were fast running out of money and had to issue bonds to meet short term liquidity requirements and for 12-18 months of further exploration. It was very much a do or die for GKP with a real chance of it defaulting on its existing bonds, if no new money was found.

Fast forward 12 months and Afren finds itself in a very similar situation. It has a few advantages, much higher oil production, larger range of assets and income from oil sales. But to be fair we are in a more hostile environment for oil producers now than 12 months ago, with lower revenues and vastly squeezed margins. At the time GKP was valued at the £1bn mark, currently Afren has a Market Cap of £100m.

Now I appreciate that it’s difficult to compare two companies like this, so to be honest I am not going to even try. However one fact does stand out, Afren is producing around $100m dollars of oil a month where as GKP was around $25m.

I think the main consideration is that this is quite a normal predicament for these kinds of resource asset heavy companies. They generally work out OK for shareholders.

Both companies are sitting in good positions for existing and immediate new shareholders, GKP has decided, to sell up. It’s done it nice and early before cash flow makes it seem like a bargain bucket selection. The share price has responded appropriately and you can almost guarantee that any price paid will be a minimum of 50% above the shares closing price today in my opinion.

Equally with AFREN, the selling by the risk averse institutions has created an opportunity for those prepared to take a little risk to make a nice return of 150-300% if decisions pan out how they should.

#BCN – We don’t want David.

#BCN – We don’t want David.

Thankfully its now fully in the open, Bacanora and Rem are not on each other Christmas card lists.

Or I should say Colin and David. My understanding is that Colin’s relationship with Kiran is pretty good.

But lets go back awhile, when BCN first listed on AIM, many will know I was a firm supporter of them, I admire the company greatly and really do prize their professionalism. As always I spent time researching, trying to talk to the BOD, the Nomad, advisers, asking questions about the admission document etc.

After a few email contacts it became very evident that some of the comments being made by David were not consistent with those coming from the BCN corner and that a rift and frustration with David could be seen back then. I certainly won’t say who I spoke to nor who said what, due to strict confidentiality in correspondence but I came to disbelieve David and have never invested in a David company since. I also believe he mislead the market and continues to do so over AFRIAG but that’s another blog….

Since then, thanks to the likes of Doc, David has been seen to have lied on various occasions, particularly when it suits him to ramp his companies or boost his ego.

So back to the latest move, David trying to force himself on BCN, there is a name for people who try to force themselves on others but…..Anyway the question is, is this a good thing?

Well if we look at the share prices of the two companies we can see that they are both down, pretty similar amounts and similar in general to the market. So there certainly hasn’t been any kind of “Dave” effect in that region, nor a poor effect from BCN.

Has Dave managed to attract any big hitters or investors into the project…..No

If Dave is on the board will he be able to do much…..No he wont be able to vote on any REM related happenings due to clear conflict of interest.

So why would BCN want him on board ? A question I find it difficult to answer, David is good at attracting smallish investment into companies (i.e less than 10m), but has not got a good track record when things get serious. Will the large players pay more attention to the “worlds largest lithium deposit”? No quite the reverse they will look at David’s role in companies dating from Lonhro to now, his success and failure, his censorship by the nomads (and his firing of the ones that do this) and they will run a mile.

BCN asked REM to be an investor in the project, BCN to maintain working control and REM to provide the funding. The contracts were drawn up to reflect this, BCN remains in total control. All was happy until David became greedy and wanted to up his stake. He didn’t want to pay BCN a fair share and instead went down the route of buying BCN stock. This deprived BCN of money it needed to progress the projects. BCN’s response was to seek money from the same source as David on AIM. Since this time David has sat on the side, complaining about how slow BCN are, spending large sums of money on his own surveys and reports. Duplicating the efforts of BCN.

BCN’s response to all this has been simple. We will concentrate on the projects were we have the most control and REM have no control…. Essentially David has been such a pain in the arse that its screwed up REM’s share of the projects. No surprise there then. He’s signed contracts that have restricted REMs control, pissed of his partner and now is looking for a way to get what he wants.

The problem is that this isn’t going to get David what he wants, its’ all about his ego. All it will do is make Colin more determined to only advance the BCN projects. The largest lithium project in the world is not going to be all mined straight away, it will be extracted piece by piece over many years, so why would BCN not start with the areas they will get the most profit from…..

Quite a few investors have complained at the lack of news coming out of BCN, however BCN is really just entering the high diligence state of the project, this is the point where it’s important that they don’t just produce crap (pay attention David), but they produce top quality, unassailable reports to attract both funding and partners. Many many explorers fail at this stage and it really differentiates the bad companies from the more professional ones.

BCN does not need more exposure, it doesn’t need better PR, it doesn’t need a board member with the utter contempt of smaller private investors. It needs time, less distractions and a bit more money to progress a world class resource in the way it needs progressing. If they get this the SP will respond in time or when the market recovers.

If David is voted onto the board, you will get leaks, pumps and dumps, a lot more dilution and a company that will become a leper to the “real” world outside AIM and the cowboy “funders” will be the only partners.

#votenotodave. Let’s keep what little decency there is on AIM.

OXS PART 2 After the cataclysm.

OXS PART 2 After the cataclysm.

Sorry folks forgot this bit when I was writing !

Forgot to add an important point, a few folks will think “just a short term rise, it will fall back when the PI’s sell on RNS !”.

Normally this might be true however if a large award is made, it will certainly be a ground breaking, if not world record award from Uncitral. It will be a major financial news story in many countries, appearing in countless national newspapers, Bloomberg etc.

This exposure will almost certainly guarantee interest from many bespoke funds, investors and arbitration specialist investors who wait for a de-risk event before investing.

Us AIM PI’s will very quickly become very small fish in a very big pond, make sure you maximise how much they have to pay to eat you up !

Oxus Gold #OXS Known unknowns and unknown unknowns

Many will known that I’ve been a following for awhile in OXS, the advantage of buying back in the autumn  or prior this is that you could have picked these up at 2p or so. For those that have, a little de-risking is certainly going to happen when the SP hits 4p (or around this figure).

We saw a sharp rise last week when in the matter of an hour or so the MM’s raised the Bid 2.7p to 4p. Volume kicked off and the SP is now in the high 3p range. Quite a few new investors have climbed on board and unknowns and rumours abound in the chat forums.

In past Blogs such as http://icebergshares.blogspot.co.uk/2015/02/oxs-whats-being-arbitrated-over.html I have mentioned briefly about what’s at stake.

Why the rise ?

Well we know they  got rid of Darwin…..Note, they got rid of Darwin, not the other way round, there is no way that Darwin could back out of the contract they signed and it would be legal madness to try and force Oxus to backout for the sake of a single monthly drawn down. The most likely scenario is that OXUS simply didn’t need an extra month’s money, said they wouldn’t be using it and so asked Darwin if they wouldn’t mind closing a month early. Darwin obliged as they can’t force OXUS to draw down money.

Its my opinion that on Thursday a very large 5-8m order was placed, this was filled by a mixture of RAB shares and open market shares. With the Uncrossing trades at the end of the day simply the MM’s tallying up with each other (or passing on the RAB shares).

Known Unknowns

We know that RAB are selling, we know they have been doing this for many years, not a breakneck speed but steadily, with a view to de-risk. We know that the Manager of the RAB fund has brought over 1m shares and has not sold them, he continues to hold. We don’t known how many shares RAB have left, nor do we know RAB’s intentions for the convertible loan note.

We know that somebody has been buying the RAB shares when they come on the market (and It’s been pretty clear its not private investors). This was more notable in November but is still there imho).

We know that the panel are due to make a decision any time at the moment. We also know that Pierre Tercier hired a new arbitration assistant at the beginning of January to help him with his arbitration commitments, we also know that his only real arbitration commitment is OXUS. It is currently unknown as to the exact date of any judgement.

 

Unknown Unknowns

 

This is a bit of a fun bit, we have lots of rumours circulating on the Internet. These are all Unknown Unknowns because we haven’t yet had any real evidence for them.

Firstly, The judgement has been communicated to the two parties, however public disclosure needs to be agreed before any official announcement can be made.

Secondly, the award has been moved to Washington, this imo would be impossible, the case will only be concluded in Paris, I can’t see any Uncitral precedent that allows for the case to move to Washington, nor does the BIT agreement allow it imho. However similar cases have within days of a large judgement applied to the Washington courts for the forced selling of assets. It would be a natural move and I wouldn’t be surprised to hear that this has taken place in the release of any RNS.

Thirdly, a last minute settlement by the Uzbeks to the order of $350m.

Lastly that a takeover bid for OXUS GOLD is to be announced in the coming days in the region of 15-20p.

Known Knowns

This is a big case, it’s a potential record breaker for Uncitral and has the potential to be the largest pay out at the Paris Uncitral courts.

It will be a reputation/career maker or breaker and its significant that although Lamm (Whites best international arbitration lawyer) is leading the advisers, she is not the official representative of Uzbekistan, this has been passed to a much younger more inexperienced employee who will be talking and arguing directly to the arbitration panel.

When I received correspondence from Tim Hart this week, he ignored by mentioning of the Oxus Case. Tim is not shy about coming forward concerning his past successes, so this might be telling.

Finally only 2 cases that I can find have every had more than 8m spent on them by the claimant, funded by a professional funder, gone the distance and failed. It really is unusual for a case to fail at this stage now.

Good Luck and hopefully my next blog can talk about how Oxus will spend the multi hundred million award they have just received.

#ROSE quick update

#ROSE quick update

 Sorry for grammatical mistakes, my fingers are frozen, but I want to get this out.

Today’s RNS has been woefully misunderstand by the market, so I thought I would put up a quick Blog on the subject.

Bad news re Paradox but not totally unexpected. It would have been great to have utilised the paradox hole and this was always the plan for the company to meet its aim of production in H1. That the hole is not sufficiently usable is a pain.

The copper project, is a none issue in my opinion. ROSE is not a commodity explorer or miner and all of these assets should be offloaded over the coming 24 months.

Now on to the all important Mancos drill. This was a less than 50% COS and to be honest I want very hopefully that it would hit enough oil reserve to be economical vertically. For me it was all about the lateral drilling and I just wanted to see sufficient vertical pay zone to allow for that. There was always the chance (20% or so) that it would be economical vertically as a few holes are in that region.

I spent a great deal of time studying the Mancos and Paradox geology and existing drills over the summer. If we compare the findings from the hole to the existing high calibre/high producing drills in that area we get a similar arrange and size of pay zones to the Rose drill.

The BOD have clearly stated that they will be producing in H1 (I am hearing May), initial thoughts as mentioned above, are that this would be from Paradox, however given that Paradox is no, it must mean they know they will see production from Mancos. There isn’t time to drill a second hole, so this must be from the existing Mancos drill. There is no doubt that the hole has flowed.

So what are we looking at ? This is only my opinion but my estimate is that this hole is around 2000 bopd when laterally drilled and 250-300 bopd from the vertical.

I might be proven wrong, but this is the figure I get from similar Mancos drills. So will ROSE be producing 2000 bopd by end of H1 ? very possibly. With further drills likely an MCAP of £150-200m would be supported, given current oil prices.

Rose has suffered from the fall in oil price and rightly so, it could have been a total bust if the Mancos drill wasn’t so successful and could have fallen to .5 to .8p. It hasn’t and with the stabilisation of the oil price now is the time to buy into ROSE.

#OXS Whats being arbitrated over……

#OXS Whats being arbitrated over……

I thought folks might like to actually see what Oxus Gold says has been stolen from them by the Uzbeks. A figure of between $500m and $1.2Bn is massive for a gold explorer/miner isn’t it?

Well we have two license areas being arbitrated over, Amantaytau and Khandiza.

Amantaytau.

This is a large mining open pit operation. Situated next door(40km) from the world’s largest open pit gold mine. Back in 2011 it was only recently started, producing 50,0000 oz’s a year, The plan was to increase this to around 300,000 by 2015. Current gold price over this time of 1200-1300, average costs per oz where around $200-250, giving $1000 a profit per oz, so 50m a year profit, rising to 300m a year now.

Total reserves of 2.5m oz rising to 7m with the then current increased exploration program, with an estimated 24m oz of gold and 480m oz of silver contained in the site in recoverable state. The world’s 10^th largest goldmine is 29m oz’s, so you can see the global scale of Amantaytau.

All before it was seized by the Uzbeks, when they realised that the price of gold had shot through the roof.

On the picture taken in 2014, you can see the large vehicle depot, with many diggers, dump trucks etc (when you zoom in) and the very large processing centre.

Amantaytau is a fully functioning operating and highly profitable mine, with massive world class gold reserves, Oxus spent over $80m on the site. Amantaytau (AGF) should be pretty easy for a minimal value and I can’t believe that even Tim Hart has given it a very low valuation.

Khandiza

This was at the feasibility stage and is a multi commodity resource. With a JORC of 1m tonnes of zinc, 500,000 tonnes of lead, 125,000 tonnes of copper, 62m oz of silver and 176,000 oz of gold.

Current price of zinc alone is $2000 per tonne so $2bn.

Grades were generally very very high and highly profitable.

Total potential resources in Khandiza where around 5m tonnes of zinc, over 2m tonnes of lead.

Analyst of the 2014 picture seems to show small scale mining has started in Khandiza, which is very surprising, or maybe not….

Estimates for Khandiza by OXUS for the arbitration range from $72m to $588m depending on how they want to value it.

There is little doubt that Khandiza, if mined would provide an mcap of $1bn to any company.

With both of these two resources, it’s clear to see just how world class and huge they were. Nothing really on AIM at the moment compares and it’s certainly not a silly inflated award being sought in the arbitration. It’s also difficult to see how the Uzbeks could value both resources together at a value that wouldn’t endow OXUS will a multiple multi-bagger from its current level.

#OXS – must be there now.

 

The news is out, #OXS have cancelled a facility with Darwin to provide funding each month. Just to remind folks OXUS GOLD have no other assets except an arbitration case worth something between $500m to just over $1bn.

Company guidance in RNS was that a judgement should come in 2014. Now about to enter the 2^nd month of 2015. The company have taken the decision that they do not wish to continue having access to a funding facility.

This can only mean that they expect a decision very shortly. AIM companies are not to known to shy away from dilution if it means the wages are still paid.

A question though, “If you were the CEO of a company with a sizable holding and you thought the arbitration was going to be unsuccessful, would you try to get as much money as possible into the company or would you say, no you don’t want any more money thanks”.

Or to re-phrase the question “If you were the CEO of a company with a sizeable holding and you thought the arbitration was going to be success, would you try and limit dilution as much as possible”.

It is still my belief that Ms Stern has submitted, or will submit a pointless minority decision and that OXUS will or have won. Remember OXUS will get the decision 1 week prior to it going public.

Finally if Darwin thought for any second that the arbitration was unsuccessful, they would be selling their holding hand over fist atm and the SP would be markedly down…..it isn’t.

Happy for anybody to make a reasoned argument which isn’t positive for the RNS.

Risk and Enjoy.

#SAV – in the Savannah bee house

Well as promised I have just had a wide ranging chat with David about Savannah and a variety of things.

Firstly impressions, David does come across as a high integrity, focused, straight Aussie. Happy, friendly and relaxed. I’ve used the term bee house as that is exactly the impression I get about Savannah. It has its queen bee and an army of workers who know exactly what they are doing, where they are going and how to get there. Along the way it produces honey (Market Cap value) from the very best flowers(resources). Seriously though the work that is going on at the company is mind blowing,the attention to detail, the planning, from the population and social studies in Mozambique to support any planned development, to the detailed analyse of drill targets in Oman.

Moving on to general aspects.  David confirms the company is well funded. I do get the feeling that funding is a little prickly, however it’s done. In the distant future (my opinion), David has confirmed that funding will be looked at with a variety of options, but they haven’t started examining them yet as its too far way. We talked about the appointment of Pedro Couto as the new minster in charge of mining in Mozambique, how the ministry has been very friendly and is very impressed with how Savannah is conducting itself and how its progressing projects.

We touched on the share price and how it’s lower now than at the start of 2013 and discussed reasons for this. One of the reasons as mentioned by David is that the Savannah broker has mentioned short selling on #SAV stock, which did push the SP down. (This surprised me as #SAV is a small stock..) I won’t go into this too much, nor my thoughts on the subject, but it has evidently stopped.

Big plans in place for 2015.

Starting in Oman.

Very heavy news flow for the next 6-8 weeks. I raised that 56m @6.2%  copper was one of the best I’d ever seen,  David backed this and mentioned that it was  the best he had heard of as well. He fully expects this to be repeated when drilling starts very shortly. This is really quite an achievement considering his past experience in copper production and shows the high commercial achievability of the project.

Savannah are looking to expand the block 5 JORC as quickly as possible with the new drilling with high grade copper intersect, higher than the average for the current JORC.

The potential for Oman and the current licenses are vast.

Moving on the Mozambique.

The aim this year is to continue to grow the Mozambique JORC, David talked about making it the same size as Base’s JORC but with a higher % of THM. The JORC should increase by around 400%.

They could have gone with a higher JORC in December with a lower %THM cut off, but decided against that, wanting only very high grade, near surface, dry deposits in the JORC.

Lots of preparatory work going on in Mozambique during the wet season to keep the teams busy before further exploration work and expanding the JORC takes place in Q2.

Final thoughts.

I did express disappointment about the JORC release on the 31^st of December 1.5 hours before the bell closed… David responded that it was unfortunate and understood this, the reasoning behind it is that he had promised to shareholders in RNS’s that it would be 2014 and he tried his very best to keep his promise. Although not happy about the timing, imho it at least shows a level of integrity and that blood and guts will be spent adhering to any timeframes in RNS’s going forward.

Savannah will keep showing the rest of the exploration sector on AIM the right, professional way of conducting a company in 2015, it will see a major ramp up of resource values and sizes and we will see Savannah starting its journey from an early stage company to value that really lies just below the surface.

It’s a journey that I will take part in and I can easily promise that as I held shares at the end of 2013 and 2014 I will also hold them at the end of 2015. Short term, medium term and long term, the company can only add value from this point onwards.

#xxx - 3 multi hundred million jorc's......MCAP less than 5m.

I've watched, I've waited, I've been a good boy now I am going buy.
The biggest share holder of a company with a multi hundred million dollar gold JORC that is currently being upgraded.

A multi-hundred million dollar copper JORC, which is currently being upgraded.

A multi-hundred million dollar Heavy Minerals JORC comprising Titanium Oxide, Ilmenite and Rutile, which is due to be enlarged over the next few months.

Over £1.5m cash in the bank.

All for an MCAP of less than £5m all achieved in the first 18 months of the companies life. I've been waiting to top up and although this isn't my main top up, I certainly intend on buying half a million shares on Monday morning to add to my current holding, the price is simple just to low.

In my last blog i said about wanting to talk to David, We have both tried several times, but when i was free, David was in Italy, when he tried ringing from Italy I was travelling, but i will try again this week coming.

Once this has been done my intention is a more significant blog update.

Still the chance to buy at this level is really just a bit to strong to resist a very quick bounce back to 4p before any news seems to be on the cards.

Savannah the truth is out.

It certainly wasn’t received well initially by the market, but then I am not sure what entered David’s head to release the information on a half day of trading between Christmas and New Year.

But whats done is done and we know need to look at the info in more detail.

I know many wanted a much bigger resource than this to be defined, however we need to think about the strategy that Savannah has undertaken. Its picked a few shallow strip holes near to roads and infrastructure, its concentrated on higher grades of HM. It’s taken the view that smaller and cheaper is better and either more profitable and or easier to sell.

This is a strategy I completely endorse in the current climate, there are plenty of high cost high profit projects currently shelved. Low cost, straight to profit operations are much more in style and will likely receive funding.

We have to remember that we could easily times the current JORC by 5 or 10 if we SAV wanted to and given a bit of work, particularly with some of the larger strandlines. It could be that David wants to farm out the license piecemeal, or that he want to see Savannah as a producer.

Regardless of all this, we have learnt for more from this Maiden JORC than we have seen before.

Extraction is to be dry i.e JCB digging shallow, dumping in trucks before going to a centralised processing unit, no crushing needed, no engineering of pit walls, no underground plans, nice cheap and simple, with extraction and therefore profit starting at day 1 from surface.

Extraction costs are $1.5 per tonne, processing and production costs are $50 a tonne for HM concentrate.

In total my calculations give profit (underline profit) of $97m for these small simple initial pits. This takes into account CAPEX etc. If we times the area or JORC by 10 we get nearly $1bn profit from this license all easy low cost hanging fruit.

Production could take place within 3-6 months of Environmental sign off and DEA. Initial capex would be around $8-10m and would add $50m to Mcap.

I think we need to understand that David does things his way, with is not the AIM way. He’s earnt the right to do this by creating mid-sized mining companies from nothing in the past.

I’ve not mentioned anything about Oman yet, I think it’s an amazing setup, but not for this blog today.

Happy new year all and enjoy.

#OXS OXUS GOLD , Risk ?

Thought I would right this at the start of 2015, NYE was a hell of a ride for ARMS, even though I was only there for 1 hour, two trades with a 100% profit and a 20% profit.

ARMS can teach us a few things, not all arbitration results have a suspension period, 300-400-500% rises can easily happen on AIM (even in just half a day). MM’s can play the good old auction trick(something they played on ARMS to freeze out most buyers until the SP had doubled). All this on just a $173m award win.

So back to OXUS, I noticed something was afoot yesterday when I at 9am I put an order in for a small top up of 200k shares from some of my arms profit. Broker said “NO” £2k max at 2.14….I then tried my second broker who said he could go to ISDX and get £2k at 2.2 but that was the most he could get.

It became very obvious that stock was very very tight…and that any upward pressure would result in a sharp upward correction. Which unsurprisingly is what happened when it rose very quickly on small volume, to smash intraday highs and closing highs over the last 12 months.

So what do we know, don’t know and can address?

I’ve taken a little flak in the past for concentrating on mm and L2 behaviour on OXS, as “it’s all irrelevant until the result is announced”. This isn’t something I subscribe to. As per above and as per my posting on the forums on the 30^th this was something easily anticipated, if not to quite this degree.

So our mass seller (probably the distressed RAB) stopped offloading, preventing the only real source of shares to the market. What we also saw was larger and larger bids 500k- 1M even on the bid seeking any shares. We don’t know why they stopped selling though.

We have the BOD saying that they expected the result end of 2014, we don’t know when exactly the result will be.

We have a BOD who extended the drawdown arrangement by 6 months to cover the decision, an extension that only has 2 months left on it.

We have ARMS, that proves that arbitration decisions can come at any time and where I have no doubt that people who made a lot of money in ARMS due to the decision will be looking for similar plays, such as OXS. The profit in ARMS would be enough to buy every single share on OXS, we don’t know how much of this money will flow into OXS though.

So where does this leave us?

Well ARMS received 100% of the money they sought which for OXUS would be $400-1.2bn.

There won’t be many shares available even before a result until at least 4p so further rapid rises are very much on the cards.

It could be that RAB have stopped selling, not because they have run out of shares, but because they have been advised otherwise.

What I do hope is that any new holders have a little bit of patience, as although a decision could come on Friday or next week, it might take a little longer than that. Arms with considerable debt and cash problems and a win against somebody where getting payment will be difficult, rose to 50% of the arbitration result. For OXUS that would give 40-50p.

The auctioning trick by the MMS close of play on the 31^st was very telling, buying anything worthwhile can be difficult sometimes I wouldn't be surprised to see an auction first thing Friday.

Good Luck and Happy New Year.

BUY-HOLD-HOPE  

#SAV Savannah Resources – one year on.

Savannah Resources has managed a fantastic 12 months. Just over 12 months ago Savannah had finished its first scout drilling on its only license area, but with no results. It had a good BOD and shares in ALO but everything else was pure potential.

I have already written 3 blogs on SAV and am very conscious that I don’t want to keep repeating my thoughts.

Well we have drilled nearly 200 holes now, only weeks away from a JORC resource estimate for Mozambique, having confirmed 2 indicated resources areas and 2 more strong possibilities in the strandlines and the southern zone. The geology has firmed up, the understanding of the alluvial deposition. Grades have been getting better and better, good depths, all shallow at surface.

The Oman has been added giving us a tremendous mid-tier low cost copper potential in a established part of the middle-east. We have multiple license areas and multiple projects.

An expanded team has been put in place, we have or will have soon, multiple JORC’s.

This is against a background of explorers in AIM where underachieving has been the norm, where exploration has added very little value to most stocks.

So where does this leave us. Well grades in the JORC zones look to be around 4 to 4.5% on average which is very good news. Importantly it’s obvious that Mozambique is a low cost surface strip scenario, drag down the channels, layering at depth, transport to a centralised processing area, concentrate sludge from dry extraction and take along the railway that’s a few hundred yards away to port and to customer’s ships.

There really isn’t anything that can go wrong with it. A small pilot plant can be produced or higher cost multiple extraction sites.

I’ve put the latest diagram alongside a diagram I produced nearly 12 months ago and tbh the areas are very consistent. David’s plans are running perfectly to schedule.

I would be more than happy for the JORC to be delayed now until the first half of January. From next week onwards, volume falls of a cliff, we have sellers cashing in money for Christmas, combined with folks who like to sell up over the Christmas period to hedge against anything bad happening.

Private Investors are more concerned with family matters and the busy holiday period and so are less likely to research etc. It is truth be told, a very bad time to release news.

This might be a difficult thing for short term traders hoping that SAV bounces back, but for anybody who is prepared to wait a few weeks a delay in news is essential.

Going forward I would really like to have a chat with David if time allows to discuss how the company will move forward next year, plans for the company and a view on how 2014 has gone.

Keep in your minds the fantastic job that David has done, the journey at breakneck speed that Savannah is currently on, the potential of the resources and the overall risk strategy. Combine that with David’s track record and I hope most will see that Savannah Resources is not like most AIM (waste a fortune) explorers.

Savannah Resources SAV – Lifting the veil of uncertainty.

Well I’ve been waiting to do an updated blog on SAV for a few weeks now, but wanted the uncertainty to slip away before commenting. I also wanted confirmation that Bergen has been cancelled and what it had been replaced with. (Before going further I still have the 4p shares I brought a while ago, but haven’t brought any since then, nor sold any.)

Today has finally provided that with a few updates from Savannah. Savannah resources has swapped from a Bergen monthly facility to a large share placement. From December onwards this will be much better, however the price to get the placing away at 4.45p has caused a decent pullback from the 6p highs (currently around 20% down from there).

It did become rather obvious this week that shares where flooding the market and being offload, no doubt some of the placing shares being pre-sold into the high.

I do have a feeling that the Private Investor market was played to some degree to enable a spike to “get the placing away” more easily. We will have more pain to come when we approach the 8^th of December and the meeting that will approve the second bunch of shares (15m).

However once this has been done from, mid December onwards, the company should start to see a very strong revival in its share price upto the 10-12p that the money, licenses and news justifies.

A placing was always going to happen with the cancellation of Bergen, SAV is committed to spending over $2m in Oman over the next 24 months as a bare minimum, as well as this we have further exploration of Mozambique, JORC and economic assessment and the administration and wage costs to cover. We also have the initial block payment for new Block 4 in Oman. All in All my thoughts before the placing was that SAV needs approx. $4-5m over the next 24 months. Based on this, the current placing should see SAV through to around June next year.

Mozambique.

We are approaching the 2^nd week in December which is when the results should be released for the final 3^rd drill. This includes the anticipated higher value strandlines.

www.icebergshares.blogspot.com/.../savannah-resources-sav-excellence.html

I have talked a lot about the strandlines etc in various posts, blogs and tweets, including above so will not mention too much here. I still believe firmly that the Heavy Minerals are part of a multi-billion resource with outstanding world class potential.

Once the results are known a JORC possibly in the week before Christmas is very possible, else David might deem it better timing to wait until after the new year, personally I would prefer him to wait until the 7-8^th of Jan to maximise market potential.

After this time I am hoping that SAV discuss a final round of drilling and economic scoping study for delivery March-April time. This would open the door for a partial sale to a Big Player to take Mozambique forward and fill the coffers with enough money to get Oman into the production stage.

 

Oman.

The latest acquisition in Oman, does take Savannah Resources into the top league for Oman mining. For those that have followed SAV since David took over and changed the name, the strategy has been widely discussed by David. It’s to become a mid-sized 1bn+ MCAP value copper producer with an interest in other metals. Mozambique arose due to a once in a lifetime opportunity and was the catalyst that split SAV and ALO, with David wanting to take advantage of the heavy mineral prospects to give a quick boost to a copper producer.

SAV is now the majority owner of licenses in this part of the most prolific Geological copper zone in the Oman. Zone 4 gives it several more potential mining prospects and an old copper smelter. It also gives it Silver, Zinc and Gold metals alongside the copper.

The plan has always been to have one, possible two, central processing areas, with several satellite open pit mines to produce cheap, near surface copper ore which can then be trucked to the processing sites. Due to David’s pedigree most can see SAV having up to 10 or so open pit producing mines by 2018 and maybe 2 or 3 by 2016. Money is readily available due to project partners and the Oman contacts.

To sum up.

SAV is not your day dreaming commodity explorer, drilling deep holes, moving from prospect to prospect looking for the next big drill grades to pay big salaries from diluted raised monies from suffering investors.

It’s owned and run by managers and directors who have a proven track record in delivery results and creating companies. It doesn’t blow its on trumpet or talk up in anticipation of placings. It doesn’t pay it’s directors even enough money to buy a pint down the local pub.

It will be, over the course of this decade, the fast growing mining company on AIM, in my opinion. It needs to be fed cash (which the BOD is trying to limit), but is essential in meeting the fast paced strategy. The proving up and partial selling of Mozambique next year will mean the end of the dilutions.

The placing shares will be fed into the market pretty quickly, or kept for 6-12 months, both scenarios will occur.

The best thing about the current deal and today’s news  though is the removal of uncertainty that has now been lifted and the market can start to price in the excellence that Savannah is both delivering and will deliver in the future.

It would have been worse if the Bergen deal were cancelled, but no money raised, or if only 200-400k were raised. Thankfully yet again David has shown that he is both flexible and intelligent in the way he runs SAV.

Rose explanation

I spoke a few words about Rose on my last blog which seemed to have hit a few nerves.

Above we have the break even thresholds for US shale, San Juan Mancos is in this and is the 4th cheapest at $53 a barrel break even.
This is break even, which is not the same as extraction costs, capex costs etc, as this includes taxes, interest etc.
These break even costs are for the whole mancos region with none conventional wells with laterals. Its quite possible that Rose will come in cheaper, but quite simply we don't know and nobody does until we have at least drilled a couple of holes and got some good figures.

This is where we get the differences. I know that in a previous blog i mentioned that Rose BOD had mentioned a cost of $18-20. Personally i think this was likely to be a pure extraction cost and it could be a mis-quote or the BOD just not clarifying exactly.
Regardless of this we are left with uncertainty and this is what the market doesn't like, it will prescribe the worst case which is the area average of $50-55.
This is why the price of oil currently at $77 is important, but isn't as important as the direction of the price of oil.
When i made the comments yesterday its important to note that i only gave a price that I would have to be silly not to buy at.
This wasnt a prediction, just a wish.

Rose still has an amazing business model, its copying multi billion companies, with good acreage, excellent personal, tight strategy, good revenue raising. All at an early stage. Lots of good news to come, Spuding of Mancos etc.
However we need the pressure value of falling oil prices to release the SP. It will happen, but we will also have a lag between it happening and the SP responding.

Round up of #ECR #HER #SAV #ROSE #UKOG #OXS

Quick round up.

Not had time to post or say much recently so have taken a quick 30 mins to catch up on a few things. Overall for me its still a waiting game to investing, happy to keep a nice cash pile to take advantage of seriously silly prices.

#ECR still waiting on the administrators, Paul and Stephen have had a couple of years to plan and arrange something, question is have they ?

I have brought a few of these at .19, current MCAP of around 6m would indicate that Mercator has not been priced in, given the advancement of Itogon. A very safe buy for 3 months, looking for a .30 or so sell.

#HER no Oz minerals update yet for Guam, but they still on track for production come 12 months time. Patricia still on a wake up list. Again at .24 to buy it’s a safe 3 month target of .35, 6 month of .5 and 12 month of 1.3 or so. Again I have a few of these at .29

#SAV I won’t make any friends by saying that JORC is likely end of Jan and not Dec. Equally I do not believe that Bergen have finished with SAV yet. I do still have a very clear target of 8p by end of jan and 12-14p with a clear path to production of Oman. Again I still have a holding in SAV which I brought at just over 4p.

#Rose, this is really struggling at the moment. Average cost per barrel of production is paradox and mandos is likely to be around $45-50. With the current price in the high 70’s rather than above $100 we have seen any potential profit halved. This however isn’t Roses main problem, its main problem is the concern that  the price will fall further to maybe $60-65 in which case the economic case for extraction becomes difficult to make. When the oil price increases above $85 we will see a sustained increase in rose imho. A second play for rose will be the spudding of the mancos drill which could well see a healthy rise in the SP. Currently not in rose, but would be at sub 2.50 or when mancos looks ready to be drilled.

#UKOG, no surprise to see it back at .5. Enough said really.

#OXS Waiting game must be nearly over now. Win or lose we will know soon.