The ball may be in our court but just depends on the way we take the shot with it. The board and ERM knew quite well many SHERs have stayed loyal to EGO through the crisis we have been through and certainly know that the dust has not settled fully with this transition period and many holders would have a wait and see attitude on how the new EGO performs.
Sure we have a high quality board but still expect high quality decisions to be made and turn this ship around gradually picking up speed. Being between a rock and a hard place through all this still does not mean we have to roll over and play the puppet everytime something happens and the jury is still out on the deal and I think if enough are against it, this deal can still be tweaked a bit to passed in more favourable terms
Management read HC as we know and do take note of the mood here hence the series of Q&A we got from them trying to allay our fears.
The debt side of things through the TOP-UP worries me being attached to the rising SP. Current debt starts at $16.34M with this deal and as I pointed out earlier WHAT IF with a rising SP of a spike to 5c on good news and discoveries and the debt has not been lowered with any repayments and is du for payment, this BLOWS out to an extra $60M in TOP-UP fees alone. Whats the terms for repayment of this and how soon do we pay it back and from what.????
The $17.5 M, Harry was also saying and I agree with him that most would be spent in the 1st 12 mths and would cover until the Tranche 1 is paid and Tranche 2 comes into effect for immediate payments from ALCOA. Im in favour of the LPG stripper while we have the money and max the revenue ready for after the 1st 12 mths of the DEBT and finalise Tranche 1 period. Selling the plant would be suicide, TOO SMALL of output, lack of BACK UP RESERVES, We paid a hard $40M for this 100% overbudgetted costing plant, the FARM $2M, what would be sale price return be for a paltry 10mmcuft output max.???? $10,15,20M $$$$s at best.????? Another case of big money loss to us. If selling the plant IS TOLLING a more profitable option.???? We have not been told.
I see 3 CHEAP drilling options before we think about the very EXPENSIVE Wannamal drills, which will need a deep driller like the Weatherford we had for RG 1 and GGW. Waiting time for this rig could be 12 mths + before we could drill to slot in a time for it. The local DC7 can easily do Black Arrow and Charger, back to back would be nice, these 2 1st before anything else. Oil it may be but at least its cheap drilling and is good revenue coming in.
The numbers have been run over the GGW well looking at the B sands in it and the state of the D sands left in it. Talk was/is for deepening GGW to another known gas zone. Perforate the Bs here which CM was going to do but skipped it to the lesser Ds only. Not an expensive exercise doing the GGW makeover. This is the 3rd cheap option and may need the Weatherford deep driller which in turn while here can do another drill which is 1km north of the plant, this is in process with DMP. This is the Bootine Deeps area and may well be done 1st within the Wannamal 4 targets already picked.
Timing drills will be a cheaper option than waiting for each drill in turn and the transport costs involved getting them here. Such is life with drilling rig shortages and a flurry of beehive activity as more drilling in WA is required. May need to buy our own and contract a crew when needed.
I still see plenty of uncertainty pertaining to the deal being both done and not done whichever way, the risks are there in what next steps are taken and played out as not to laden EGO with further problems of moving forward. None of this has been spelt out as to time programs indicative for a forward move. Id like to see more facts before saying YES or NO to this current deal.
EGO Price at posting:
0.7¢ Sentiment: None Disclosure: Held
