I agree the PPSA is very important. However, I'm a bit hesitant to ascribe too much of the low share price level to it. The PPSA has been an outstanding item for over 2 years and the share price climbed to very high levels despite it. The continual delays in signing it have gotten more worrisome over time and per Scott, several forms of alternative funding are dependent upon it being signed. I would probably put PPSA as fifth on my list. The share price is way too low imo, but if I were to speculate on other investors reasons' for not buying, I would prioritize them as follows:
- Unwillingness of investors to purchase shares on market due to frequent below market capital raises at a discount of 25% to 35% (after accounting for the value of free options). As the share price has continued to fall on relatively low volume, the argument that many large investors were participating in capital raises to flip the shares onto retail has grown in likelihood imo. Why aren't the sophisticated investors who participated at 13c, 20c, etc. buying like mad at 6c? The low volume indicates they almost certainly aren't. You could argue that they're waiting for a capital raise but why not also buy on market? The recent capital raises have been oversubscribed with investors only getting a portion of their request. For these reasons, I think there are probably very few, if any, large institutional investors buying based on fundamentals and valuation. This leaves it up to retail to support the share price, many of whom feel betrayed by these below market capital raises.
- Lack of funding
- Many retail investors are over-extended in their Invictus position and aren't willing to devote more money to it.
- Net pay below market expectations (I think market expectations were too high; 35m seems decent to me. The Venus oil discovery in Namibia is one of the largest of the 21st century and only has 84m of net pay but a huge square footage. It's rumored to have more net pay but 84m is the official number in the discovery announcement)
- Lack of PPSA
- Concerns about reservoir quality
- Concern that operational issues (tool failures, sidetracks, etc) will continue to blow out well budgets.
My top two reasons are funding related so to the extent that the lack of PPSA is heavily affecting our ability to raise funds, I can see the argument that PPSA is the root cause of the low share price. This still raises the question of why it's having such a big effect on the share price post discovery since it's been an issue for years. I'm sure there are many other reasons that I'm not thinking of but those are my best guesses. There's some I left off the list cause it was getting too long (such as general sovereign risk, trust in management, etc). Tax loss selling is another big factor atm but is more of a positive feedback effect than a root cause.
The true test will come once the PPSA is signed and we can see the share price reaction. My wild guess is a 20% to 30% bump in the share price upon announcement (this assumes the PPSA is announced in a standalone announcement and not with other significant news). I very well could be underestimating the PPSA's significance though. If I were to ask myself how much of a premium I would be willing to pay on the current share price if I knew with certainty the PPSA would be signed on favorable terms, I would say 20%. I'm fairly confident it will be signed though so my premium might be lower than most people's.
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