Hi guys,
[This post may be a different view of Wednesday's release. I am posting it as speculative. But interested to see what everybody thinks.]
If any were wondering if there was any good news in Wednesday's announcement I will share some observations, purely as I see it, and based on a lot of hours in researching this baby, particularly from the 2 Market Updates this week.
To date most of the posts, since the announcement, seem to be focusing on the steps outlined in Page 1 with many posters obviously very disappointed with the
delay wording. And in fairness when you are sitting on a 20, 30, 50, 60% loss, you will find it difficult to read good things into a report when there is no information about pen to paper deals. Have been there and done that ok!
So as a LWP newbie, since Feb. I would like to share some key points from Page 2 which IMO is why I believe the ASX rated it as Price Sensitive.
PAGE 1
In the 2nd paragraph there is an attempt to acknowledge that shareholders may not be pleased with delays. And then reading Steps 1 – 7 probably has pulled many people up there.
STEPS 1 - 6 I think most of us know this already or have seen it written in posts over the past few months. So no real news for anybody there.
STEP 7 is probably a little bit of “new” marketing information news for most people.
PAGE 2
The delays so far haven't concerned me, particularly, because when I have gone digging and after speaking with industry experts in the US, Europe and Australia I have understood that the POO has slowed everything down for everyone in the industry.
Guys, I felt it was good news that LWP are finally updating the market and communicating with their shareholders re the delays etc. A few of us who have been constantly emailing LWP are certainly relieved.
So moving along …I would like to pose some questions and add some thoughts.
1) Are you aware that LWP are announcing that they have disruptive technologies THAT CAN BE MODIFIED for both deep well and shallow well mining plots?
2) Are you aware that LWP have researched, developed, independently tested and prototype manufactured disruptive technologies for 2 different mining uses?
• Fly-ash/bauxite proppant at ceramic strengths for deep well mining. (Ceramics can be used at all depths but not cost effective in all situations.)
• Fly-ash/bauxite proppant at mined frac sand strengths for shallow well mining.
3) What has happened to the JV in India?
From all my previous research and understanding of the situation, plus the ASX announcements, the Hallmark venture in India was primarily focusing on producing the Deep well mining ceramic fly-ash proppant.
I think, and correct me if I am wrong, at the time of the negotiations and discussions with the Pune/Hallmark venture in 2015 the POO was above $60.00 a barrel.
With the drop in the POO into the $20's, and the move to scale back deep well mining particularly in the US; I naturally presumed that LWP would question the need to move ahead and pour millions of dollars of capital into a JV that may not initially return huge profits especially when most of the big players in the industry were cutting back.
When LWP made the announcement about the delay with the Hallmark JV earlier this year, I assumed that this must be the reason for their delay and they are just waiting for the price of oil to get back over $60 - $65 barrel. This would, of course, return decent royalties and make good profit for its shareholder base and me.
I have made direct enquiries to mining companies in the US and understand that they have all been cutting back on their proppant expenditure and have scaled down some of their mining activities due to the low POO.
4) Did LWP have an ace up their sleeve?
Having read and re-read the whole past history of Ecopropp / Coretrack and LWP I was not surprised at all when I saw the news about a 2nd product on Monday.
So let me run this by you....
With the price of oil being low and mining companies looking for low cost alternatives and variations in resource depth mining ventures, wouldn't it be more sensible for a company, like LWP, to have both a high strength, low cost, small fines ceramic proppant for deep well mining as well as a lower strength, low cost, small fines proppant for shallow depth mining in their product line-up?
If you did have two such products, it could attract a whole new set of JV partners looking at manufacturing fraccing sand proppants and ceramic based proppants.
Guys, I think we are yet to fully comprehend and appreciate just how good these news releases are from Monday and Wednesday.
Most of us are just Mum and Dad type investors and are not mining experts i.e. not Ziggy's and Sean's, so I am not sure that we really can yet appreciate or fully digest the potential content contained in these
2 announcements and as a result are getting a bit edgy about the delay in our investments.
But I believe the ASX has agreed and understood about the potential in these announcements.
That is why I have been posting all those global reports since the Monday announcement over these past few days. I have also found LWP technologies name mentioned in Chinese articles (translated) and of course the other reports you have all seen.
Big OIL/GAS and COAL are now reading and taking note of what the LWP management are presenting. These guys are searching the world market for game changing disruptive technologies to help them ride out the POO, whether it be high or low.
IMO, and meeting the right conditions this has the “potential” to go GANG BUSTERS, but let me say now, before you all think I am nuts and up-ramping that I am very, very aware that a company is only as good as its fundamentals and the management team that is running the operation.
Some of the wording in Page 2
"LWP is also engaged with potential buyers regarding off-take agreements for production from the Indian joint venture facility.
As proppants are often the single largest cost factor in the hydraulic fracturing of unconventional oil and gas wells, negotiations with potential off-take partners are price-driven. Given the drop in the oil price, there has been a trend away from deeper wells to shallower wells. Deep wells require ceramic proppants, however shallower wells can use the cheaper mined frac sand."
Now guys here is a possible answer to the JV. I believe it doesn't take a rocket scientist to do the maths. You don’t pour millions into an operation when the current POO will prevent or hinder profits and royalties. You wait for the POO to rise or you develop alternatives or you do both.
The announcement goes onto say….
"LWP chairman Siegfried Konig said: LWP's proppant technology can be modified to produce lower strength proppants at very low cost."
LOWER...STRENGTH...PROPPANTS...AT...VERY...LOW...COST!
That is a such an important statement. If you are a potential manufacturer, in proppant mining, and find out that you can diversify and modify your plant equipment to produce proppants that will protect your bottom line when the POO fluctuates wouldn’t you want to invest in that technology?
Page 2 continues....
"Those proppants would still be far stronger than mined sand and far more spherical, with increased conductivity. That is why the ASX announcement of Monday 11 April 2016 is so significant to the Company's prospects. At present the most likely place to produce would initially be the Indian joint venture facility."
Guys, IMO I believe the JV is far from being forgotten and there is a con firmer about the future of the Hallmark venture.
"From the time off-take orders are secured, and the plant upgrade subsequently commences, a time frame around 12 months is expected until revenue is generated."
The JV hasn't been forgotten IMO and its move ahead is simply hindered by the present POO.
So from what I have read, and IMO I feel discussions and negotiations are well and truly underway and well into progress which can bring us all exciting future news.
Page 2 finishes by saying….
"We are encouraged by the progress being made and are satisfied with the negotiations that are underway. We will update shareholders on the progress of those discussions and other material developments. We iterate that LWP is well funded to pursue its commercial and operational objectives."
If what I have been reading and researching about LWP in China, India, Europe and the US is anything to go by then LWP would be silly to play smoke and mirror games with the market. We also know that the government R&D revenues will support the bottom line through into 2018.
I, for one, am very pleased to have read these two statements this week.
So would be interested in some constructive comments and thoughts from people. I could be totally off or I am waiting to tick the boxes either way it is another perspective to consider. GLTAH & DYOR
