what % chance of merger going ahead?, page-22

Mrposhman,

"Tangiers has agreed to provide Jacka with a $2.5m loan facility to assist Jacka’s funding in Q1 2014. This facility with Tangiers replaces the previously announced convertible facility that Jacka was seeking to put in place. Interest on the loan facility is payable at 12% p.a. on amounts drawn." (http://clients2.weblink.com.au/news/pdf2%5C01474006.pdf)

I assume the $2.5m loan from TPT replaces the convertible note facility you're talking about?

I also would assume JKA will need to start the ball rolling on Tanzania soon. That isn't cheap. Costs quite a bit for 2D alone but I'm not sure what their siesmic size obligations are so it may be a mere 100kms, or 350kms even which would be expensive.

The big question is, if they really don't need the cash like you suggest, why is the board all for this takeover?

Kastin,

The combined entity would have around 333m shares, so a MC of $100m at 30c. As for the company being considered huge for that MC size without any producing fields, I tend to disagree. They'd have 2C proven resources and near term production is in the pipeline. Not to mention you can't just look at the MC and think its huge simply based on face value (not producing and a lot of risk). The upside is enormous hence why it is so high. If there was a company targeting some mammoth 20b oil field with a CoS of even 15%, I'd expect to see its MC at over a billion alone. The upside would be massive.

I think if this goes ahead and the SP increases to say 30c, I'd dare say you could put half and half to the Morocco well and the rest to Aje and HW3 price appreciation due to the funding risk being eliminated. People can value those assets on a much more derisked valuation.

I also think if the Morocco well fails, you would value the company at more than $40m for several reasons. They'd have progressed with HW3/Aje and also have a nice sum of cash in the till. Around $28m or so by my rough calcs (provided you don't subtract HW3 and Aje costs) so unless you value the other assets at $12m, I doubt the MC will be a mere $40m (12c - or 5.6c for JKA now)