How many more times are they going to put off the mini-frac?! Reading the most recent announcement today, it seems it will take at least another 'few months' (as quoted from the ann).
As frustrating as the lack of progress is, there is no efficient way to reduce any sizable GRKOA position as there is simply not enough volume to support the selling.
So, let's say about 3 more months before the mini-frac, we won't be looking at any compiled and analysed data before late February to early March. Cash position is very weak (a one-for-one grant won't help if you have barely any cash to begin with), and any placement at these levels will cause severe dilution (GRK will need a minimum of $12M-$15M to drill the next two Blanche wells).
Frustrating though it is to be a shareholder right now, there are options going forward. PTR have confirmed (verbally, speak to management to verify) that they are exploring options to develop a consortium with other geothermal explorers, and GRK was specifically mentioned as one of several options. From here, funds could be pooled, inhibitive cost barriers could be overcome, a resource could be demonstrated, and the necessary larger JV partner could be enlisted.
Basically, my point is we are in a bad situation and the company needs rescuing by a larger partner. The diversification into desal is encouraging, as lower-grade thermal resources are good for distillation, though the move (coupled with the mini-frac delays) smacks of management hedging what may be an uncompetitive project.
What does everyone else think? These are some of the questions I would ask at the AGM (I am not attending), but if anyone has any answers, they would be appreciated.
-Can GRK provide provide SP returns without a financed drilling campaign, and does management have a concise strategy to achieve this?
-How will they be able to raise the funds (minimum of 60% of current market cap) without excessive dilution?
-Why is the company expanding into desal when they do not even have the resources to develop their 'flagship' project?
-Why are scarce funds being spent pursuing Ortahaza, a liability that has limited scope and suffered distinct failure?
-How does GRK intend on competing with the other companies who can nearly certainly offer cheaper electricity to Olympic Dam?
-Have GRK been pursuing rig options, and will it be better to purchase a rig rather than lease it?
-Where is the World Bank Insurance? Are difficulties being experienced in obtaining the refund?
A bit of a rant here, I know, but the company just aren't performing. The O.D project does not look that good, is still at the highest-risk, totally unconfirmed stage, and they still cannot deliver a simple hydraulic mini-frac.
I'm going to continue to hold for sector bullishness, mini-frac hype, desal advances, and government grants, but unless the story changes (particularly regarding PTR or any major oiler), will want to reduce my holdings by at least half.
If anyone has a conflicting view it would be appreciated, with my view on GRK (as an investment) continually darkening, even whilst the sector gains traction. Is there hope for GRK on the short-term horizon?
GRK Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
