Good afternoon
China market with big recovery, as government announced heavy tax cuts to bolster the economy.
I guess this also helped European equities and metal markets in London today. Initially, Italian bonds have been very strong - but selling off as the day progresses, as irresponsible Government keeps pushing an irresponsible budget…and teh same happening now to stocks as well.
West African Resources - announced more excellent drilling results from their M1 highgrade underground deposit, but also extensional results, extending the resources deeper down. The results could/should add another 1 year of underground production…potenbtially we now get close to 5 years at 250.000oz production p.a. …and I am assuming also arround 550 US$/oz AISC! But firm numbers will need to wait a little…new resource estimate in 1st Quarter 2019, as well as firming up of costs. Before that, we should see more drilling results, and announcements on planning progress, and fiirming up of debt-financing. Even so the company could potentially get 100% debt-financing, I am sure, that this would come at a price. But the extremely robust nature of the development, and strong interest from financiers, should limit any additional equity at say 50 mill$.
At least as important as the new drilling results below the exsting resource, the company announced first drill results from a parallel lode, just 180m from the main lode: 2m with 128g; 5.5m with 15.5 g; 8m with 6g. Early days - but potentially very exciting, as so close to the planned development! It´s completely beyond me, why someinvestors have been selling nearly 4 mill shares today…this stock is just sooooo cheap!
Strike Energy - not so good news from them today! A few things: Friendly takeover announced for UIL Energy, a 13.7 mill$ gas explorer with assets immediately adjacent to STX´s promising, Western Australian asset. Some resources already exist, and the acreage would certainly increase substantially in value, if STX´s exploration well, planned for March 2019, delivers what the company expects. Strike is very bullish on their asset - so the takeover makes a lot of sense strategically. Any larger company to get involved would prefer to have the acreage combined.
Secondly, and I admit, that this is a little disappointing, the company has announced plans to raise capital. Details to be announced. We all know, that STX needs additional funds, to drill the Western Australian asset, as well as to continue development of the Cooper Basin asset. I would have hoped for an even stronger share price before they would do the placement, potentially, following more news on Jaws No1. We know, that gas is flowing - but it´s early days, and another 4 weeks would have given us a better understanding of Jaws already. But then I guess the board had to follow good governance, and provide for enough capital to at least fulfill commitments - in this case, to drill one well at the recently aquired West Erregulla Gas Project. So…a touch disappointing for me to see more dilution of us long term holders - on the other side, if we are right with our hopes for JAWS No.1, it does not really make a big change, whether nbew fudns are being raised at 11ct or 16ct - the difference is just a small part of the company, and the potential valuation would still be fantastic, if they prove commercial flow rates!
have a nice evening
WS
WS
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