Headlines
• Aminex (LON:AEX – 1.30p) – Expected Better: Overall, we believe that this management team have delivered on the promises of the portfolio that previous management teams haven’t, and this fundraising is a not a fair reflection of the approach that it has taken hither to. In this respect, given that shareholders have waited so long, and cash flow is imminent, we believe the timing and structure of this fundraising is unfair to existing shareholders who have seen the Company through to this very point, and as such, we expected better from the team.
• In Brief:
o Eland Oil and Gas (LON:ELA – 26p) – Operations Update
o Faroe Petroleum (LON:FPM – 71p) – Got Brasse in Pocket
News Items
Aminex (LON:AEX – 1.30p) – Expected Better
Last week, the market was informed that management had undertaken a fundraising to raise up to $25.4mm, with the majority being already provided by and new shareholder, Zubair. Just when the long suffering equity holders can see light at the end of the tunnel and value rebuilding potentially within sight, the Management team conduct a fundraising that effectively forces them to invest again or risk being diluted further.
We believe that the Company owed it to the pre-existing equity holders to at least steady the ship with the advent of regular cash flows before the start of any financing. As it is, the full value of hasn't been reflected, and a dilutive fundraising has been undertaken.
In short, we expected better from this management team, especially as there was no urgent need to raise the funds at the point at which they have, with cash flow imminent. We wish to be clear, while further funding might have been required, doing it before the cash flow had been established and this better reflected in the market capitalisation, the failure of which is in part due to the Company’s owners’ caution over management’s ability to deliver, albeit based on the performance of the past management teams.
Furthermore, if it was a plan to fundraise, we believe that the existing shareholders should have been provided with the opportunity to invest similarly such that they don't get further diluted, because as it is, this is a shabby way to treat the shareholders, especially after the way in which they have suffered in the past.
Overall, we believe that this management team have delivered on the promises of the portfolio that previous management teams haven’t, and this fundraising is a not a fair reflection of the approach that it has taken hither to. In this respect, given that shareholders have waited so long, and cash flow is imminent, we believe the timing and structure of this fundraising is unfair to existing shareholders who have seen the Company through to this very point, and as such, we expected better from the management team.
In Brief
• Eland Oil and Gas (LON:ELA – 26p) – Operations Update: Today's update is a reminder of the distance that the Company has travelled since its listing in 2012. We believe that this has been a happy confluence of the right executive management allied with an excellent operating team, headed by Pieter van der Groen. Since that time, the executive team has changed, and we have been concerned that the Company may have lost direction. While the loss of Castro from the Eland team has weakened it, it continues to stay the course, and we believe that this will be reflected in time to come with the closing of the discount between the implied vale of its asset base, and its market worth.
• Faroe Petroleum (LON:FPM – 71p) – Got Brasse In Pocket: today's news of successful appraisal well provides further confirmation of the potential of Brasse, which provides a nice adjunct the recent run of dry holes. We believe that investors will be pleased with the way in which the Company is shaping up, and while with respect to Brasse there is still a long way to go before it can be deemed a commercially viable discovery, this appraisal is at least a step in the right direction.