A surprising but well welcomed ANN. Of significant note is the 30-year term signed with the Zimbabwean government.
Admittedly, I was expecting the previously mentioned carbon offset program to be more related to Carbon Capture Technology as @ammie reminded us of from the original Cluff farm-in deal 'Invictus and CEA will also investigate the options for mitigating carbon emissions from the project including Carbon Capture and Storage (CCS) or similar solutions to align with Zimbabwe’s strategic objectives.' This option may still be in the works however does require decent infrastructure and therefore capital outlay. Let's walk before we run in this instance.
I am thrilled to see IVZ making ties with numerous government departments... this is further reducing the risk that government will pull something shifty on Scott & Co. These governmental ties plus solutions IVZ is providing for the country will once again significantly boost the sentiment that the locals have towards IVZ. The beneficial effects that IVZ will have on the country are growing by the day... boosting the industrial economy, energy security, reducing petrol prices, water security for the local communities in Muzarabani, an increase in government revenue... now the company is will protect and fostering Zimbabwe's indigenous forests. IVZ is becoming more engrained in the future development and prosperity of the country, lead by Scott a Zimbabwean national. Damn Scotty is good...
Invictus was awarded 3 of the potential 5 Gazetted forest areas, Ngamo, Gwayi, and Sikumi. Two areas that we obtained are the largest of all 5. All 3 obtained are located in Matabeleland North with the other 2 located in their own distinct areas. The invitation for International Tender began on the 1st Feb 2022 and documents related to the tender can be found here:
Reading over the documents the following information can be extracted: - Forestry Commission’s contribution to the partnership will be forests and expertise while the partner will bring in expertise and financial contribution. - Bidders must clearly state: Their financial offer to the Forestry Commission, Their experience in REDD+ projects and carbon trading with a verifiable track record, at least one (1) international reference site of any REDD+ and carbon trading project outside of bidder’s home country, Proof of funding and, Corporate Social Responsibility to surrounding Communities as provided by in the REDD+ guidelines. - To commence the project within one year of the offer by FC.
IVZ must have undertaken significant efforts toward making the bid. Makes complete sense that we have created a separate division, MFCI, as this endeavor did seem demanding. Still don't want to detract from the main play here. The evaluation criteria for the bid were based on:
Looking back to the IVZ ANN released today, there was a paragraph that caught my attention - 'The status as a full lifecycle carbon neutral project will also enhance the ability to finance the development of any discovery and broaden the range of potential financing options and lenders.'
The bid was made when IVZs prospective resource was still only 8TCF. In the ANN, the company states that over Scope 1 and 2 there will be an estimated 15 million tonnes of emissions produced. By being awarded the NGS REDD+ offset program, IVZ will generate over 30 million carbon credits. 1 carbon credit equates to one metric ton of carbon. So IVZ will have an excess of over 15 million tones of carbon credits. Note once again that the bid was made with only an 8TCF commercial discovery and did not include the 2nd well resource estimates. Yet as the above quoted paragraph highlights, in a world of tightening capital surrounding the O&G industry, having such excess carbon credits provides a significant drawcard for lending facilities to get aboard future development. Remember in the Crux Investor interview, Scott directly mentioned that he has been in conversation with other multi-lateral institutions regarding funding for infrastructure and this ANN now provides a clear and more ethical pathway for such organizations to invest. This ANN could also provide a significant drawcard for top-tier O&G companies to farm in with IVZ... it provides them a further opportunity onto of making significant amounts of money to offset their carbon emissions which is being pressured from their investors. Although as I stated in other posts, I believe that a farm-in deal has already been reached, so who knows the effects here? Maybe in the partnership agreement, IVZ could sell the carbon credits directly to the farm-in partner instead of selling on the open market.
Lets also take a look at the potential revenues that the Voluntary Carbon Market could bring in for MFCI. Researching on Verra's website, the organisation which will verify our Carbon Offset program, it is likely that our program will fall under the Nature Based Carbon Offset pricing. To quote 'N-GEO futures contracts are comprised of Nature-Based offsets projects from the Verra registry – projects that fall under the Agriculture, Forestry, or Other Land Use (AFOLU) categories. Nature-based solutions can provide valuable contributions to biodiversity, but it’s also often considered more difficult to accurately verify the amount of carbon actually offset in nature-based projects.'
I will take the current price of Nature Based Carbon Offsets chart above, however as the ANN mentions the projected price for Carbon Offsets is expected to rise significantly in the future. So we can only look at these figures as the base case.
15,000,000 carbon offset units x US$7.34 = $110,100,000. Of this figure MFCI will see revenues of US$55,050,000 over the 30 years at the minimum. Taking the lower price of the band at 2035 being US$80, MFCI could earnin the realms of US$600,000,000.
Interestingly, the bidding document does not mention any requirement to share profits from the sale of the carbon credits on the Voluntary Carbon Market. Seems to be another ESG measure that IVZ has undertaken to boost our sentiment amongst the government and locals. Bloody onya Scotty!
Another website to explore is Verra, the organization which will verify our Carbon Offset program.
The only question which arises from this ANN is what does IVZ define as Scope 1, 2 & 3? Hoping @7seven7 can assist us with this
IVZ Price at posting:
21.5¢ Sentiment: Buy Disclosure: Held
