PharmAust strikes Japanese research and patent collaboration

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THE ROADHOUSE PHARMACY: PharmAust Limited (ASX: PAA) has established a joint intellectual property (IP) position with a Japanese partner.

PharmAust explained the partner company is the same, yet to be named, Japanese corporation it had signed a Materials Transfer Agreement (MTA) with in July 2013.

According to PharmAust the joint IP allows it to access to some 80 analogues of PPL-1, which have been synthesised by the Japanese research partner and tested for anticancer activity by PharmAust.

The Joint Patent Application, which is anticipated to be published in March 2015, also permits PharmAust to commercialise the analogues subject to other prevailing IP at the time of commercialisation.

This company believes the collaboration broadens and strengthens PharmAust’s IP position.

“The commercialisation of aminoacetonitriles in cancer, of which PPL-1 is a key approved product for treatment of veterinary parasites, is PharmAust’s principal activity at the present time,” PharmAust executive chairman, Dr Roger Aston said in the company’s announcement to the Australian Securities Exchange.

“Both the current dog trial and the human trial underway in NSW and SA respectively are targeting cancer under circumstances where the recipient has failed all standards of care.

“Success in either or both of these trials will be a key driver for commercial development of anticancer drugs based on the aminoacetonitrile class of drug and in the forging of alliances to commercialise such products.

“PharmAust currently has a Collaborative Research and Option Agreement with one of the top five major global pharmaceutical companies for the development and commercialisation of PPL-1 in veterinary cancers.”

Website: www.pharmaust.com

Irish marketing authorised for ILUVIEN

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THE ROADHOUSE PHARMACY: pSivida Corp. (ASX: PVA) announced the Irish Health Products Regulatory Authority (HPRA) has granted marketing authorisation to ILUVIEN® for the treatment of vision impairment associated with chronic diabetic macular edema (DME) considered insufficiently responsive to available therapies.

The company said the Irish grant marks the 13th country in which ILUVIEN has been approved for commercialisation.

In the European Union (EU), ILUVIEN is currently marketed in the United Kingdom and Germany and is scheduled to launch in Portugal this year.

pSivida declared ILUVIEN has marketing approval in 12 EU countries and is pending approval in five others.

ILUVIEN was recently approved in the United States for treatment of DME, where it is expected to be commercially available by early 2015.

pSivida explained ILUVIEN is indicated for patients previously treated with a course of corticosteroids who did not have a clinically significant rise in intraocular pressure (IOP).

“We are pleased that ILUVIEN has continued to gain marketing approvals in Europe as well as the US,” pSivida president and CEO Dr. Paul Ashton said in the company’s announcement to the Australian Securities Exchange.

“We believe ILUVIEN’s efficacy and three-year duration will make it an attractive treatment option for many DME patients, particularly in the US where the drug has broader labeling.”

pSivida is entitled to 20 per cent of the net profits from sales of ILUVIEN by its licensee on a country-by-country, quarter-by-quarter basis.

Website: www.psivida.com

Fund Raising across the Boards

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THE FUND RAISER: There seems to be enough going on to suggest interest in the resources sector still exists.

$7 million JOGMEC Farm-in gets FIRB nod

Peel Mining (ASX: PEX) announced the Memorandum of Agreement (MoA) executed by Japan Oil, Gas, and Metals National Corporation (JOGMEC) and Peel (CSP), a wholly-owned subsidiary of Peel, has received Foreign Investment Review Board (FIRB) approval.

FIRB approval was the final condition precedent requiring satisfaction before the MoA became effective.

The MoA governs JOGMEC’s right to earn up to 50 per cent of the Cobar Superbasin project by funding up to $7 million of exploration expenditure on the project tenements.

“The final approval for the MoA has been a great outcome for both parties and we look forward to seeing some great exploration outcomes from the work over the coming months,” Peel Mining managing director Rob Tyson said.

“The company has been working with JOGMEC to develop a program of work for the next few months that gives us the best chance of success.

“This includes the commencement of the drilling of targets previously identified by Peel’s work on the tenement package, as well as work to generate additional exploration targets for the scond period of JOGMEC’s Farm-in, which consists of additional exploration expenditure of up $1.5 million to 31 March 2016.”


$1.25M raising oversubscribed

Rumble Resources (ASX: RTR) has completed a placement to Australian institutional and sophisticated investors to raise a total of $1.25 million by the issue of fully paid ordinary shares at 4.5 cents per share together with a 1 for 2 attaching listed option exercisable at 8 cents per share.

The proceeds from the placement will be used to fund the company’s upcoming exploration at the Fraser Range projects in Western Australia.

“We are pleased with the strong investor support received in this round of funding in a tough equity market demonstrating the quality of our projects and management team,” Rumble Resources CEO Shane Sikora said.

“The funds raised through this placement will enable Rumble to continue to systematically explore its Fraser Range projects.

“This will include our maiden drill program at the Big Red project about to commence targeting a Voisey Bay feeder system.”


$0.66M non-renounceable rights issue

Marmota Energy (ASX: MEU) is capital raising by way of a non-renounceable rights issue at an issue price one cent per share on the basis of one new share for every four ordinary shares held.

Under the offer, a maximum of almost 66 million ordinary shares will be issued to raise up to $0.66 million.

In addition, participating shareholders will be issued free, one new option for every two new shares subscribed for with an exercise price of 2 cents per option and an expiry date of 9 December 2015.

The net proceeds from the offer will be used for general working capital purposes and to fund exploration activity, including:

Durkin nickel project: (100% Marmota) (Area 2): Conducting a geophysics review, redrilling prior holes and conducting downhole EM targeting nickel prospectivity;

Melton project: (West Melton 100% Marmota, Melton and North Melton 75% Marmota) (Area 7): Conducting airborne EM, a geophysics review and a targeted drilling program focused on the Champion and Central prospects; and

Junction dam project: (uranium rights 100% Marmota) (Area 6): Drilling water wells and a production well to obtain groundwater data and ascertain permeability.

$25 million via Convertible Note Offer

Resolute Mining (ASX: RSG) is proposing to raise up to $25 million via a convertible note offer.

The offer will comprise the issue of 15 million convertible unsecured notes with a face value of $1.00 each to raise up to $15 million before costs, with the ability to accept oversubscriptions of up to $10 million.

The proceeds will be applied to undertake drilling programs and feasibility studies on the Bibiani, Syama and Buck Reef West projects; advance works on the connection of the Syama project to the main power grid; maintain ongoing operations on current projects; and for general working capital purposes.

Comparative Valuations (Part One)

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GUEST COMMENTATOR: So, how often have you heard a company representative say “we are undervalued with respect to our peers”?

It is a comment I have heard a lot in my time as an analyst, and the company may well be undervalued as compared to its peers -but there often is a reason for this and more often than not the market is correct.

You may notice that I usually include a peer group in my research, with this comparing various metrics of the selected companies.

How I compare companies will depend upon the stage that they are at, including:

Exploration companies, with no defined resources; (Part One)

Exploration and development companies with defined resources; (Part Two) and

Producers.

In this piece I will concentrate on the first two cases above – producers bring a different level of complexity to the process!

You will also note that there is usually a disclaimer, basically saying ‘take care with comparisons’, and ‘that they are to be treated as an indicative guide only’.

This is important – there are a number of uncertainties in these comparisons.

These reasons for differences include, but are not limited to (with all other things remaining equal):

* Location and prospectivity of the company’s activities
* Grade of mineralisation
* Potential size of a deposit
* What other projects a company may have in its portfolio
* Perception of management
* Cash in the bank (when the market realises that a company needs to raise cash the price is commonly discounted)
* Marketing and exposure – there are cases of companies flying under the radar, and thus not getting the exposure to potential investors that would lift their share price.

Exploration Companies – No Resources

Really the only way to compare and rank these companies is by their market capitalisation, or else the enterprise value of their projects. Even then there is room for confusion and grey areas, and as I have mentioned this is an indicative comparison method only and could almost be considered more qualitative rather than quantitative.

The first of these relates to the market capitalisation – this can be calculated in a number of ways:

Undiluted: the market capitalisation based on quoted securities only – shares, escrow shares and listed options.

Partially diluted: as above, but including those unlisted options (and in the case of the TSX, warrants) that are in the money.

Fully diluted: market capitalisation taking into account all quoted and unquoted securities I tend to use the latter case in comparing market capitalisations; however this will vary from analyst to analyst. The second measurement of a company’s value is the enterprise value.

This is market capitalisation less cash (and cash equivalents) plus debt (including convertible notes).

Again this can be undiluted, partially or fully diluted, and gives an idea of the value of a company’s projects.

A way to think of enterprise value is as a takeover price – to take over a company, the acquirer will need to buy the shares, assume the debt and keep the assets.

A recent example of comparative valuations was with Rumble Resources (ASX: RTR).

This was a comparison of companies operating in the Fraser Range. We also cover PLD Corporation (ASX: PLD) which is included in the following table.

Not included in the following table is Sirius Resources (ASX: SIR), which is now a developer having discovered the Nova-Bollinger deposits and also Sheffield Resources (ASX: SFX), whose current market capitalisation of around $100 million is largely backed by the world-class Thunderbird mineral sands project.

The graph I used in the Rumble note is below. Here I have used the undiluted market capitalisation, and also shown current cash positions.

 

You will notice the wide range of market capitalisations. This shows fundamental differences between the companies, even though they are considered as a peer group.

These reasons include, amongst others:

A number of companies, in addition to their Fraser Range properties, hold other properties, although they may be concentrating their activities on the Fraser Range;

Some are operating in what is currently perceived as the most prospective part of the Fraser Range (there is a discussion of the perceived prospectivity of the Fraser Range in the Rumble research note), and therefore may trade at a premium to companies outside of this central ‘Fraser Zone’.

Herein lies a difficulty – how do you value, say, just each company’s Fraser Range projects where a company has other projects?

This is generally beyond the scope of a note, with exploration property valuation being a rather inexact science – it is in effect an educated estimate!

However, what this does show is the relative leverage that can be gained from a discovery – if, say Rumble and Matsa Resources (ASX: MAT) (which has a large, diversified portfolio of projects) both made the same discovery, you would get much better leverage with Rumble.

As a final point, at the time of the Nova-Bollinger discovery, Sirius had a similar enterprise value to that of Rumble now, and it is now a plus-$1 billion company.

Mark Gordon

Senior Resource Analyst

mgordon@breakawayresearch.com

This article first appeared in

Comparative Valuations (Part 2)

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GUEST COMMENTATOR: Breakaway Research senior analyst Mark Gordon continues his explanation of how he compares resource companies.

Exploration and Development Companies with Defined Resources

The next case I will discuss is comparing companies with defined resources.

Here I will look at two recent notes – Anova Metals, a pure gold play, and Avalon Minerals, a copper/iron developer.

The main method I use here is the enterprise value per unit of metal in the relevant company’s resources.

Here again there are uncertainties, and figures need to be treated with care. These include (and yet again are not limited to):

* Do you use the diluted, partially diluted or undiluted enterprise value;
* Either total resources, measured and indicated resources or reserves can be used;
* Do you include resources over all the companies’ projects, or just their key project in the comparison?

I tend to use total resources over the whole of a company’s portfolio on a fully diluted basis.

An example of this below is Chesser Resources (ASX: CHZ), which has 100 per cent of the Kestanalik pProject (12.47Mt at 1.86g/t gold) and 50 per cent of Sisorta (14.55Mt at 0.67g/t gold).

Also equity ownership of a project needs to be taken into account in the comparatives.

Below is the example used for Anova Metals. This includes ASX and TSX listed companies at various stages of development – please be aware of the notes at the end of the table.

Anova Metals Peer Comparison

 

* Papillon merged with B2Gold, with the shares suspended from trading on September 23,
2014 – The EV represents that as of the time of suspension.
*Chesser is selling the 746,000 ounce Kestanelik deposit for US$40 million, or US$53/ounce.
*Gascoyne has entered into a HoA with Monument Mining (TSX.V: MMY) to form a 50:50 exploration and development JV – this is yet to be finalised.

The key things that will effect valuations here include grade, size and metallurgy of resources (e.g. quality and hence economic potential of the resource) and project stage.

In the current market funding is also critical – companies that are funded towards development will trade at a significant premium over those that are seeking funding.

Location can also play a part here, with more remote locations commonly adding to capital and operating costs, and hence adversely affecting project economics.

The above table shows a broad trend of increasing EV per ounce with project stage, grade and resource size, but does show anomalies, however which can be explained.

One clear anomaly is Victoria Gold – it has a similar resource to Midway Gold’s Pan project, however on an EV/ounce value is only at around 3 per cent of that of Midway.

Is this due to the project stage (permitting vs construction), location (Nevada vs the Yukon), some other factors, or most likely a combination of all?

This is something potential investors would need to look at.

Another point raised in the above table is one of companies trading at below cash backing, as shown by Chalice Gold, with a market capitalization of $37 million and cash of $44 million.

In the current market we have seen a number of examples of companies with large cash reserves being valued at or below cash, with no value ascribed to projects, even if the projects have merit.

The same may apply partially to Victoria Gold, with cash of C$32 million and a market capitalisation of C$40 million.

The next case is where a company has polymetallic resources, and below is the peer comparison table as used in our recent note on Avalon Minerals (ASX: AVI).

All points raised above are still valid here – this case throws up a few more factors to be considered.

Avalon Minerals Peer Comparison

 

You will note in the above table I have quoted grades as ‘CuEq%’ [copper equivalent percentage].

This reflects the in-ground value (IGV) of the mineralisation expressed as an equivalent copper grade.

This is calculated by summing the values of each potentially economic metal in the mineralisation to get the in-ground value per tonne of resource, and then calculating the copper grade that would give this value.

In carrying out calculations, for the purposes of an indicative comparison, potential metallurgical recoveries are not taken into account.

This contrasts to the requirements of public releases by listed companies, where metallurgical recoveries do need to be taken into account when reporting equivalent grades.

Here I have used copper as the comparison metal, given that the potential majority of each company’s cash flow (with the exception of Northern Iron) will be from copper.

Another key metric in the above table is ‘EV/IGV’.

This reflects the proportion of the in-ground value of mineralisation reflected in the share price. It is important to remember that the in-ground value is significantly higher than the expected cash flows from a project.

A starting point rule of thumb is that the NPV of a project (which may or may not be similar to a company’s EV) will be around 10 per cent of the in-ground value.

This allows for recoveries, operating and capital costs. Operating and capital costs will also be dependent upon the resource type. For example, bulk commodities will generally have higher operating and capital costs per unit of in-ground value, and hence a lower NPV.

This is particularly relevant to the peers for Avalon, where magnetite is thrown into the mix in a few of the peers.

As can be seen in the above table there is general trend in increasing EV/IGV with project stage and in-ground value per tonne of mineralisation, however again the table does throw up anomalies.

Conclusions

I hope I have explained the rationale and processes behind the peer comparisons and relative valuations between generally non-producing companies in notes that we write.

Some clear points arise from the discussion
* There are general trends in comparative valuations, with increase in value driven with project stage and potential economics of a project;
* Such trends and comparisons are indicative only – these need to be treated with care, and there are usually reasons for the discrepancies and anomalies from the general expected trends in values;
* No two companies are identical, again reinforcing the indicative nature of comparative valuations;
* These methods however are a valuable tool in company and market analysis.

Mark Gordon

Senior Resource Analyst

mgordon@breakawayresearch.com

This article first appeared in

What the Analysts Say

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WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.

Website: www.beerandco.com.au

Company: Argent Minerals (ASX: ARD)

Argent Minerals’ focus project is Kempfield, 50 kilometres from Bathurst in New South Wales, in the Lachlan Orogen.

Its current Resource estimate, of 21.8 million tonnes at 47g/t silver includes 86,000 ounces of gold, while the 15.8 million tonnes of primary ore includes 97,000 tonnes of contained lead and 200,000 tonnes of contained zinc.

The base metals grades increase to the west and Argent’s current drill program is targeting lenses to the west of the current resource, following geological, geo‐chemcial and geo-physical indicators.

Argent has earned a 70 per cent interest in Sunny Corner, which is about 100km from Kempfield, and has an Inferred Resource of 1.5 million tonnes at 3.7 per cent zinc, 2.1 per cent lead, 0.39 per cent copper, 24g/t silver and 0.17g/t gold.

Kempfield VMS no longer a silver project, now base metals focus

Following a geological review, led by Professor Ross Large of the Centre of Excellence in Ore Deposits, with Dr Vladimir David, Argent’s VMS expert, the Kempfield Volcanic Massive Sulphide deposit is now seen as a polymetallic mineral system with multiple lenses.

Under the new interpretation, the early, silver focussed, discoveries are the outer reaches of the mineral system, with the prospect of additional mineralised lenses that are more base metal rich closer to the source.

Argent has already reported thick intercepts grading above 4 per cent zinc + lead, plus silver plus gold.

The current drill program was designed after geo‐physical and geochemical work.

Upside Potential

West Wyalong : 1.4km by 0.8km magnetic low, IP high, with strong copper-gold in sampling and shallow drilling; potential for a significant copper-gold porphyry;

Kempfield silver : 11 million ounces oxide plus 22 million ounces sulphide in the current Resource, can add to the value of the infrastructure for the base metals project; and

Sunny Corner, 100km from Kempfield, has 1.5 million tonnes at 3.7 per cent zinc, 2.1 per cent lead, 0.4 per cent copper, 24g/t silver and 0.3g/t gold.

Website: www.breakawayresearch.com

Company:  Orion Gold NL (ASX: ORN)

Orion Gold NL, formerly known as Goldstar Resources before a name change in 2009, was initially set up to explore and develop the Walhalla Goldfield in Victoria.

Orion now has a significant land package in the Albany Fraser Belt in Western Australia and the Connors Arc Project located 120 kilometres northwest of Rockhampton and lying between the active mining operations of Cracow (+2Moz produced) and the relatively newly‐developed Mt Carlton mine.

The company has a very knowledgeable and experienced board and management with a proven track record in exploration and development capable of guiding the company through the next stages of exploration.

A current equity raising, is expected to raise sufficient capital to sustain the short‐medium term exploration effort at the company’s two primary projects, which will comprise ground geophysical surveys and initial drill testing.

Switch of Focus a Potential Game Changer

Orion’s move to shift its focus from the Walhalla Goldfield in Victoria and to concentrate its efforts on its Fraser Range nickel‐copper‐PGE and gold exploration, as well as its Queensland epithermal gold, is viewed as a potential game changer.

The Walhalla Gold District in Victoria was a significant plus-four million ounce gold producer.

However, like many previous exploration campaigns at Walhalla and other vein gold exploration efforts in Victoria during the past three decades, the ultimate outcomes have been disappointing.

Over a period of several years, Orion (and Goldstar previous to its name change) has conducted comprehensive exploration and evaluation programs here, largely without commercial success, and it is now highly appropriate to move on.

It is interesting to note that it is the current management of Orion that recognised the non‐gold potential of the Walhalla area, particularly nickel, copper and platinum group minerals, and the deal struck with A1 Consolidated in August 2014 retains a defined interest in this non‐gold potential.

Fraser Range Belt has Massive Exploration Potential

Fortunately, due to very good forward planning, the company has been able to acquire extensive exploration tenements in one of Australia’s exploration hot‐spots, the Fraser Range Belt in Western Australia.

Unlike the Victorian Goldfields with its long history of production, exploration will now focus on a mineral belt only 330km from Kalgoorlie which has had very little modern‐day exploration until recent times.

The substantial land holding in the Fraser Belt lies between two of the most significant exploration discoveries in the past decade: The Nova‐Bollinger nickel-copper-cobalt deposit discovered by Sirius Resources (ASX: SIR) and The Tropicana gold deposit developed by AngloGold Ashanti/Independence Group.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

Friday Flashback

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THE WEEKLY WRAP: As the Abbott Government contemplated the latest outburst from Tasmania’s favourite Mistress of Meddling, Jacquie Lambie, over pay scales for soldiers, the Australian share market demonstrated its penchant for Friday afternoons by once again finishing the week in comfortable style.

Surprisingly it was the resources sector leading the way despite iron ore taking a beating in overseas markets on Thursday night.

Rio Tinto (ASX: RIO) and BHP Billiton (ASX: BHP) both welcomed the weekend to be 71 cents and 70 cents higher respectively.

Meanwhile the Aussie dollar hit a four-year low as speculators anticipated a strong US employment report.

The dollar bounced back on Monday Australian after US jobs figures flummoxed the market.

This rally came on the back of the US dollar falling against all major currencies after non-farm payrolls data on Friday night missed analyst expectations with the US economy adding 214,000 jobs in October, compared to forecasts of 235,000.

That’s where the joy ended unfortunately with the share market closing lower dragged down by falls to the big banks, retailers and health care companies.

It was good news for the big miners with BHP Billiton (ASX: BHP) gaining 19 cents to $34.68, while Rio Tinto putt on a healthy 54 cents to close at $61.24.

On Tuesday all eyes turned towards Victoria with the state election looming.

The latest state poll has guaranteed Clive Palmer more time in the spotlight and he hasn’t disappointed by talking up PUP’s chances of securing the balance of power in Victoria’s Upper House and announcing 21 Palmer United Party (PUP) candidates who will stand in all eight Upper House regions for the state election.

In Beijing Tony Abbott avoided making eye contact with Russian President Vladimir Putin as he waited for his shirt fronting opportunity.

The Russians appeared to be not too worried about the entire situation with a spokesman saying there would be very few people in the country who even knew, or cared, who Tony Abbott was.

Back home the Labor Party finally let voters know where it stands on something by announcing it wouldn’t play nice with the Liberal Party’s idea of what constitutes healthy Renewable Energy Target (RET) figures.

It all seems rather petty when the next day China and the United States, the world’s biggest greenhouse gas emitters, agreed on a set of greenhouse gas emission targets.

The agreement may be symbolic, however, as ABC environment online editor Sara Phillips said it, “is just the tonic the stalled international negotiations on climate change need”.

Once again the ball has landed in the court of King Clive, but he quickly returned serve saying PUP would not enter any deal with the Government now Labor had left the negotiating table.

The market was hammered again on Wednesday with any company with any attachment to iron ore feeling the pinch.

No joy in any sector with big banks also taking a hit, which all resulted in the market losing just under one per cent for the day.

Yesterday the market slogged through its fourth loss in a row, losing just under 100 points for the week so far.

And to round off the week nicely Clive Palmer described PUP senator Jacqui Lambie as a drama queen, saying she is focused on her own quest for power.

Proving to the electorate that not all Puppies are cute, Lambie has mase in clear she no longer intends attending party room meetings.

The Big Man laid down the gauntlet challenging his reprobate senator to either challenge for the Party leadership or get on with her job in the Senate.

Who said these minor parties have nothing to add to the political landscape?!

Bionomics to progress clinical trials

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THE ROADHOUSE PHARMACY: Bionomics Limited (ASX: BNO) has announced it intends to accelerate and progress BNC210, for the treatment of anxiety and depression, into further human clinical trials expected to commence before the end of the year.

In January 2012 Bionomics entered into a collaboration, research & licensing agreement with Ironwood Pharmaceuticals, Inc, for the worldwide development and commercialisation of BNC210.

Bionomics and Ironwood have now mutually agreed to terminate this arrangement, however, Ironwood will retain a royalty interest in BNC210 whilst Bionomics has re-acquired exclusive worldwide rights to develop, commercialise and partner BNC210.

Bionomics has received approval to commence a Phase Ib clinical trial in France to be conducted by Biotrial International Limited.

The trial will examine target engagement by BNC210, based on its mechanism of action.

Bionomics indicated it will also make a submission to commence a Phase II trial in patients with anxiety.

Pending approval, this trial is anticipated to commence in Q1, 2015.

“Bionomics is in a strong position to dedicate the necessary internal resources and has secured non-dilutive funding specifically for the purpose of progressing BNC210 into the next stage of development,” Bionomics CEO and managing director Dr Deborah Rathjen said in the company’s announcement to the Australian Securities Exchange.

“Much has been achieved in the past two years in building towards Phase II, including formulation and an extensive toxicology program.

“In addition Bionomics will present on the novel mechanism of action of BNC210 at the annual Society for Neuroscience meeting in the US next month.”

US$10 million in funding for the continued development of BNC210 is in place through the U.S. bank, Silicon Valley Bank (SVB).

The SVB loan will be paid back over a 30 month period.

This special purpose financing will support the planned BNC210 clinical trials.

Website: www.bionomics.com.au

FAR hits second Senegal oil discovery

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THE ROADHOUSE BOWSER: FAR Ltd (ASX: FAR) has claimed a second oil discovery offshore Senegal in West Africa in the company’s SNE-1 well.

FAR said the SNE-1 well has discovered a 95 metre gross oil bearing column with net oil pay zone thickness of 36 metres in Albian aged sandstones which display reservoir potential.

High quality 32 degree API oil has been recovered to the surface.

The SNE-1 well is located in 1,100 metres water depth, approximately 100 kilometres offshore in the Sangomar block with a target total depth of approximately 3,000 m.

FAR has issued notices of Discovery for the SNE-1 well and FAN-1 well to the Government of Senegal.

 

Location of the two Senegalese wells in the FAR 3D seismic area, offshore Senegal. Source: Company announcement

 

“This is another very significant oil find for FAR and Senegal,” FAR managing director Cath Norman said in the company’s announcement to the Australian Securities Exchange.

“Based on preliminary estimates it is highly likely to be a commercial discovery.

“The SNE-1 discovery is a company making event for FAR following our earlier oil discovery in the FAN-1 well.

“The SNE-1 discovery has potential to lead to a large stand-alone development and is an important step forward in establishing an entirely new petroleum province which would be transformational for Senegal.

“It is incredible that FAR has made two very important oil discoveries with its first two Senegal wells.

“We expect to resume drilling on the SNE-1 well shortly to evaluate the deeper Aptian carbonate objective.

“The FAN-1 well intersected a significant gross 500m oil-bearing section which indicates the presence of a prolific oil generating province.

“The SNE-1 well proves hydrocarbons have migrated up onto the shelf area which bodes well for the extensive suite of prospects yet to be drilled in our Senegal blocks.

“FAR looks forward to working with the Government of Senegal and our joint venture partners in finalising follow up appraisal and exploration drilling plans.”

FAR’s initial analysis of the SNE-1 well data indicates:

95 metre gross oil bearing column with a gas cap;

Albian reservoir sands with net oil pay of 36 metres;

High quality oil of 32 degrees API from samples of gas, oil and water recovered to surface;

Operator’s preliminary estimates of the gross contingent resource range from P90, 150 million barrels (mmbbls), P50, 330 mmbbls and P10, 670 mmbbls (net to FAR; P90, 23 mmbbls, P50, 50 mmbbls, P10, 101 mmbbls).

FAR indicated the results of the FAN-1 well and the final analysis from the SNE-1 well will be used to decide optimal follow up drilling locations to determine the extent of discovered accumulations and to evaluate the wider potential identified within the Senegal blocks.

This additional activity is targeted to start in 2015.

Email: info@far.com.au

Website: www.far.com.au

Gold Coast Investor Showcase closer than Christmas

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THE CONFERENCE CALLER: Queensland-based investors are in for an early Christmas bonus with the Vertical Events Gold Coast Investor Showcase to be held at the QT Hotel Gold Coast, Surfers Paradise on 2 December.

The Gold Coast Investor Showcase has been a regular calendar fixture since 2007 and is renowned as a forum for investors to be introduced to and interact with new investment opportunities that may have previously been overlooked.

This year’s program promises to deliver more of the same with its usual array of mining and exploration companies presenting.

However, this year’s Showcase has been opened up to embrace all ASX-listed sectors, providing an opportunity for investors to broaden the scope of their portfolios.

As a one-day event the Gold Coast Showcase affords a relaxed atmosphere, which allows for informal interaction with fellow investors and company executives.

Any serious investor, looking to discover new opportunities or diversify their interests should not miss this opportunity.

Best of all, attendance for bone fide investors to the Gold Coast Investment Showcase is FREE!

If you are an ASX-listed company interested in presenting at the Gold Coast Investment Showcase contact Jaxon at Vertical Events to secure one of the couple of spaces left.

Be sure to ask for The Roadhouse Special Deal! Follow the link below for more information.