psi81, whilst I agree with you to an extent the company has to look after the now, and whilst Somaliland could be good in the future (and the deal with Genel was excellent) they need to sort the financing position out now.
Disappointed to lose the benefit of the Genel farmout, but $12m upfront will support the share price now.
At 6.5c the market cap would have been around $25m, and with $14-15m in cash and Age and Hammermet West, I don't see why the share price will be below this and IMO the SPP has now become a lot more attractive.
Sure I'm a bit disappointed as I bought into JKA for the same reasons as you, but Somaliland was always a high risk asset way out in the future, and the company as it is now needs to be able to fund the assets in Nigeria and Tunisia, which this deal has done for them.
Read between the lines and the market wasn't overly interested in the cap raising, they wanted $5m and got $3.9m (assuming the underwriting agreement is watertight) so less than 80% of what they were after certainly doen't sound like an over subscription and therefore an asset sale was essential. I'm content that it was Somaliland as this is probably 3 years from drilling at best. Aje for me is the prize asset and will be the driver for increasing shareholder value in the near term so had to be protected at all costs.
I'm hoping that this cash gives them not only the financial stability to gain debt financing for Aje, the capex for HW3-ST2, G&A costs and a bit left over to particate in licencing rounds.
Its not the end of the world this announcement, its also not perfect but in the circumstances its a good decision and one which certainly makes the SPP attractive again.
Can anyone really see the market pricing their assets at $10-11m when we trade again?
JKA Price at posting:
8.3¢ Sentiment: LT Buy Disclosure: Held
