MRQ (ASX) Cabo Delgado

Originally posted by PICT: ↑

I've decided to bite the bullet and talk about the elephant in the room: Cabo Delgado

I will go over why I feel there is nothing to worry about, as the problems in Cabo will not move South imo

I am not condoning it, I think it is terrible what has happened, but I also need to be realistic about the risk to my investment

A few bullet points then i'll go into it below

Mozambique is mainly a Christian country
Cabo Delgado is mainly a Muslim region
Cabo Delgado is ~2000km north of MRG land on the North East coast
The problems started in 2017 when a cleric came to Cabo Delgado and started to stir things up
The capital of Mozambique is at the bottom of the country
As with many countries, a lot of money goes into the area around the capital and the rest far away gets forgotten about, the UK is a prime example of this, Mozambique is the same. In Mozambique the North was forgotten about, if I remember right there wasn't even a road across the border into Tanzania until recently, it was just jungle.
Gas was found off the north coast of Mozambique, billions of $$ flooded the market from overseas companies without putting enough into the local economy
It became a target for ISIS
Much of the trouble is being run by people coming over the border from Tanzania, many Mozambique "foot soldiers" have stated they would quite happily stop fighting if they had access to a steady job and an income. There are reports of non-African people running the Tanzanians.
I have contacts from when I went to University and some now live in Mozambique, each one has laughed when I asked about the trouble moving South as in their words there is no way it'll happen....

You can see just how far away the Cabo Delgado region is away from MRG land:

I would suggest everyone to read this article it explains a hell of a lot about the situation:

https://www.dailymaverick.co.za/opinionista/2021-05-02-the-transformation-of-mozambique-into-fields-of-straw-and-the-resulting-fires-of-conflict/

From this article, you can see that South Africa has a huge interest in what happens and will not let it move down the country

https://www.moneyweb.co.za/news/africa/leaders-meet-to-thrash-out-security-deal-after-total-declares-force-majeure-in-mozambique/

Now you may think that the North Mozambique is the only gas going to SA, well it's not, there is the Rompco Mozambique to Secunda Pipeline which is already in operation, it goes right past MRG land and would be what the Corridor Development area taps into for supply, before it goes on to SA. This again shows more reason why SA would not let any trouble to move South in Mozambique

https://www.gem.wiki/Mozambique-South_Africa_Gas_Pipeline

https://www.worldoil.com/news/2021/5/17/sasol-nets-361-million-on-mozambique-pipeline-stake-sale

http://www.inp.gov.mz/en/layout/set/print/Exploration-Production/Mozambique-Basin-Discoveries/Mozambique-Basin-Four-Fields-With-the-Highest-Volumes-of-Gas-on-Site

You can take a lot out of this article if you read it in full:
https://www.africanews.com/2021/05/18/total-s-mozambique-lng-project-to-take-center-stage-at-the-france-africa-economic-summit/

Outside of all of this the are many companies that would suffer more if the trouble started to move south, here are a few examples:

SVM - https://hotcopper.com.au/asx/svm/

They are in Malawi which I know is not Mozambique, but it's a hell of a lot closer to Cabo than any MRG land, but more importantly, their route for shipping product is a port in the north of Mozambique

I'm not putting this project/company down in anyway, it just shows the crazyness that people think the trouble will move south and people/other countries won't step in with help to stop it.

Another company prob more relevant is Kenmare https://www.kenmareresources.com/

Now Kenmare is in Mozambique, they are an Irish company, the mine HMS, and produce 7% of the world's supply

As you can see they are also well to the North of any MRG land, you can also see the Savannah/Rio JV area

I'm happy to share research, hopefully, this helps people

You will prob guess that my risk profile for MRG Metals is lower than most, I find the way with spec is to do proper research fully into a situation as sometimes you find gems, and in my opinion, this is one, it's just going to take a little time for people to realise it.

Expand

why put your money into a country where there is even a chance that continuous unrest is likely to remain a problem?

Mozambique with its long borders is an almost impossible country to completely defend against insurgence - too easy to infiltrate - it's the government's fault given that the native population has not benefitted at all from its many resources. Only foreign support and intervention can save it IMO. Mozambique's own armed forces are a joke. Anyhow, it's impossible to forecast how Mozambique's future will pan out except to say the insurgence is very bad news all round and it's never going to help investors.