London Presentation: it's a Springboard

Assuming the success case and we get a good flow rate then we can expect a very significant uplift in our valuation. Project Icewine will have been transformed from a “Prospective Recoverable Resource” to a “Contingent Resource”. We will have demonstrated a means of getting the oil out of the ground. “Crikey, have you seen what 88e have pulled off” with reverberate around the world’s stock markets.

So suddenly, we will be worth say, 20c or 30c? What do I know? My crystal balls are no better than anyone else’s, but we can be confident that we will be worth a lot more than 4c. The market, that’s us lot, brokers, II’s and everyone else, know this so we can speculate that at some point we will start moving up. Traders will look at us and say 50% Chance of Success? That’s worth a punt. At some point money will start coming into the open market and our sp will start very quickly moving up. It’s not going to be a nice smooth ride, some will get off, some will get on, the MM’s only make money when shares change hands so they will do their very best to test our resolve. It is going to be very bumpy, think “jumble sales with pointy elbows” and “tree shakes”!

“Contingent” means we might not be ready for a full sale of 88e, we still have to prove two things:

1. We might need to prove full production capability, we need to show that the predicted 15x the 150 bopd is achievable. This could mean a third well Icewine #3 or the horizontal drill from the base of Icewine #2.

2. We might need to prove the extent of the oil across our acreage. This could mean a few more wells North/South “along the Dalton Highway” and perhaps some East/West wells either side.

To do either of these two things we need more funds. Dave has done a good job so far. We are very comfortably funded, there is money in the bank for Icewine #2 and any overspend or complication there might be, but not much beyond that.

So Dave’s job now is to think ahead. He is the Captain of our ship, navigating through the market of rocks and sharks. It’s misty and dark, it’s all a bit spooky! He can’t see the best route just yet, but he’s done it before. Will he go for a JV, another II placing or an open market placing? Either way he needs the share price up because that way he can get the best deal for shareholders.

The Market: another placing? It’s better to raise another $20m at 20c or 30c than it is now at 4c. If he waits for 20c or 30c then he will increase the number of shares on issue but that much less than if he were to do it today.

Industry: a Joint Venture? If the SP is at this much hoped for 20c or 30c he will be in a much better position to negotiate.

He can then balance the choice of going to the market or doing a JV deal and get the best result for shareholders.

But if Dave does get some more investment before Icewine #2 then it means that we will not be so reliant on a single success. We will have another bite at the cherry. Our Chance of Success will suddenly be improved before we even get to Icewine #2. That on its own will support our sp!

So the main purpose of the London Presentation on the 20^th February is to explain and publicise to the market what an excellent investment 88e is. Dave wants our share price up. He might spring some news on us beforehand. Getting lots of serious investors with new money is how he is going to do it. We can all wish him luck with that.

Seat belts on. Hold tight. We are go for lift off. It’s going to be very bumpy.

Good luck, Tim

We need some good questions for the day, send them to [email protected]