Speaking of positivesTMT's Post on the 31st of July, after a...

Speaking of positives

TMT's Post on the 31st of July, after a meeting with Mark Smyth (copied below) helps to provide some perspective on the current situation.

Although we are still in limbo regarding announcements, and the share price has been trashed in relation to chaotic world markets, we haven't had confirmation that any of the points raised are actually null and void.

For that very reason I adopted a "wait and see/ chill out" approach over the next 2 months.

TMT's summary is well worth re-visiting.

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Hello all,

Had a meeting with Mark Smyth today – had a great catch up (LOL – I bought the coffee, so don't worry about a loss of your CVI funds!) I confirmed that none of the following is market sensitive with him – none of it is under NDA etc and is freely known by bankers etc.

The things covered off are as follows:

Pensador is a listed company in the US just because of the additional legislative oversight requirements, to make everyone putting money in comfortable that everything can be tracked;

Pensador will be shut down and rolled into CVI by the end of the year;

Minimum price for consolidation of the CVI shares will be 30 cents a share – giving CityView essentially a 12%+ fee for doing the “donkey work” (Mark’s words) – so 88% dilution for Pensadors cash and resource ground;

Clawback expected late this year with confirmation around the October time frame;

Estimated that it will be a $4B company early next year – cash backing at $1.1B to be confirmed soon;

Much is being held off until after the election as things are up in the air until Santos appoints his new ministry;

Firming legal title is progressing well, is a decent chunk of cash working with Lisbon based lawyers ($1M+ to complete legal title for some sites);

$1M debt is to Pensador – CVI undertook some legal work and MS has convinced the guys in charge of Pensador to pay out the figure to them;

Funds are now available to draw down upon for CityView activities from Pensador;

Expectation is that 1M barrels a day will be produced from the CVI/Falcon blocks by 2011 (ie. CVI’s stake will be 20,000 barrels per day) – sums have been done on $85/barrell;

Conrad and Kevin are working pretty much full time from London for Falcon now;

CVI is in partnership with about half a dozen local companies for onshore permits – so will be sitting pretty once these are made available;

Falcon stake is being brought into Pensador, not CVI so whilst it has gone ahead it is not a specific CVI news item – Angolans don’t want to rock the boat with much official news before the election (due to the ministry shake up) and so do not want to make an ASX announcement;

Saw the diagram of the underground imaging (pretty amazingly accurate) clearly showing 3 rivers of oil reservoirs from Cabinda/Congo basin out to the offshore blocks;

Accurate imaging has helped BP to not have a SINGLE dry well;

Oil is above the salt off Angola, however in Brazil the huge reserves are under the salt so it is likely that Angola also has reserves below the salt also (geologists say that it HAS to be there);

Falcon is looking to offload its share because it can't afford the bills that keep coming in from the majors – they keep exploring rather than going into production as a method of playing hardball – hoping that Falcon and others will have to give up the blocks due to not being able to service the operation costs (looking at $400M – was $800M before the CVI team started negotiating with ENI, Total etc);

Pensador is looking to go through CVI as a method to getting the US exchange listing and Western governance – as said our fee for this is about 12% - Goldman and others are now circling as well (I imagine their fee would be higher than ours!);

Full US listing will require a share price of $1-$2 which is the goal; Dubai listing (still on the cards) requires a share price of 75 cents;

Swiss banking money is still coming into Pensador, institutional money will start coming into CVI once Pensador deals etc are signed off – Mark agrees that the share price is low and no-one is coming on board as major holders due to the old adage If it looks too good to be true…";

Aitco/Easy Office money is going into Pensador right now – so still in the game ("not that it helps us very much" said Mark);

Legal title still the most important thing to cover off – without it being covered off, if a find was JORCed up ('discovered') before this is settled, additional social costs would be levelled against the company (ie. The building of schools, hospitals etc as a form of tax) – getting this settled before drilling is complete allows them to avoid the additional costs;

As an Angolan company Falcon does not have to pay these additional costs until production is reached – as such the Falcon shares will be held in escrow with Pensador until the blocks are actually operational (after which the company will be hit with these charges anyway);


Mark is drowning under paperwork right now, with all the legal oversight and oil lease management

So – all in all there is lots happening there.

All the best

Tim

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Now subsequent to all of the above we have established a strategic partnership with Enditrade and have actually secured funding for an oil refinery.

Go figure!!!

Cheers
Nev