Good afternoon
European equities managed another rise despite the US being on holidays today, as did the metals. Gold is holding above 1580 US$ without much action. Chinese stimulus always helps!
Germany was just stagnating in the last Quarter, and I think the outlook for the 1st Quarter 2020 cannot be positive! There are very few things happening here in the moment which can lighten up the confidence!
Enviromentalists win an injunction against Tesla´s new factory to be built, near Berlin. The forest these guys are knocking down is a monoculture, and has very little to do with nature…Shows us that red tape is becoming a big wall in Germany!
Strike Energy - exploration update out today. We will here it from the devil´s mouth on Friday - so just quickly: The company sees a realistic case ( best estimate ) of 1.6 TCF on fully owned properties in the Perth Basin. They will excchange seismic data with Beach Petroleum, which is good and will save costs for everybody. Also, more seismic is planned on STX´s behalf. I think the JV-partners are clearly seeing the path to commercialisation being either LNG , done themselves, ore filling up the North West Shelf LNG project. I think none of the above really surprises us - even though a number has been quoted now for the ( hopefully ) most realistic estimate of 1.6 TCF, which would be massive. But the proof is in the pudding…What is perhaps new, is some good news re the Copper Basin asset PEL 515, which forms part of the large acreage position STX have there, outside of the Jaws project. Beach Petroleum has been a very succesfull oil & gas producer in the Cooper for many years, and they are now targeting drilling in the Westeros area, which is immediately adjacent to Strike´s PEL 515 just south of it. If Westeros should replicate the success BPT has had in the Cooper, it would add substantial value to PEL 515. Anyway - the real story remains the Perth Basin for now, and unfortunately, the mood for these type of assets currently is a bit depressed because of terrible LNG prices. I am very curious to see STX´s presentation on Friday!
Sheffield - big, though not completely unexpected, but definitely bad news here today: The strategic partner search has been paused, the company has significantly cut running costs, and is looking at lower-capital alternatives to develope the Thunderbird Mine!I would say - a classic case of the news following the share price! Obviously, no corporate buyer, or private equity investor has ofefred enough to keep the board happy. The ultra-low share price certainly did not help for somebody putting up a 150 mill$ price tag to something, which is trading at just under 50 mill$ for 100% in the market! I still believe in this project, though…will be interesting to see, whether serious interest can be generated here. Inm hindsgight, it was probably wrong advise to employ UBS inevstmentbank here to find a buyer - probably too small a project to get their A- or even B-team going?? Not sure…In any case, it did not work and that´s a pity for a project, which the world most probably needs in a few month time. I fear all we can do is stick with the company and hope for better times! The share price certainly does not reflect a realistic valuation. I think it´s very positive, that NAIF as well as Taurus ( who have been doing a large amount of due diligence on Thunderbird without any doubt ) - are standing by the project. It is normal for teh recipient of a large financing to incure some form of payment on a firmly offered amount, if that amount is not used. I understand from the announcement, that Taurus is giving up on this from the End of March on, which is very fair and supportive of them.
SFX have 12 month cash burn left - I hope that this will be enough time to drive them into stronger waters!
Neverthless, have a nice evening!
WS
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