Trading Week, page-26

A crash in what precisely?

The price of natural gas? - NO. Gas is rising off historic multi-year lows. Natural gas prices are underpinned by legislated demand reflected by a global outcry for clean sustainable energy. A crash in the Dow Jones? NO. The Dow has risen steadily since the COVID March lows when there was some volatility and is now trending up effortlessly and seamlessly with fiscal stimulus and election euphoria. A crash in Elixir investor sentiment? NO. The same bullish and informed and experienced niche investors you see here (including me) today had exactly the same views 12 months ago. In fact some have become more committed and have met outside the forum to discuss the stock and its prospects.

Perhaps you feel there will be a crash in share price because the company is perceived as ‘over-valued’. NO. It is widely acknowledged it is extremely difficult to value small gas explorers. We are fortunate because the renowned ‘experts’ that would normally be consulted to make these valuations to the highest industry standards are in fact our directors! The K1 Capital team sat down and talked to the Elixir board so it’s fair to say what you read in the report is authoritative and definitive. The upper range valuation of 43 cents is a very conservative estimate based on the facts on hand now using current gas prices. Imagine what happens to these valuations when gas prices quadruple (likely off such a low base and post COVID demand) and new exploration targets are added to the plans of the company.

In fact contrarian views like yours are quite revealing and useful. They signal that there is still significant blue-sky upside to the share price from current levels because there must be many others who are following the stock from the sidelines with the same negative, cautious view. It is only a small minority who believe it will run to a dollar. The very existence of widespread contrarian views GUARANTEES that Elixir will re-rate to a dollar on forthcoming positive developments.My message to all current Elixir shareholders who regard themselves as ‘true believers’ is we are a very very small cohort of investors who have taken a position at such an early stage in the Elixir story and while the share price has grown to reflect value, the current share price is still wildly conservative.

The Nomgon basin is just the beginning. The first step. There are hundreds and thousands of basins to be explored and developed.