Exploration Insights by Robert Tyerman

Altona Energy is seeking approval from Australia’s Foreign Investment Review Board for its multibillion-dollar coal-to-liquids project in South Australia’s Arckaringa Basin.

The London-based company, in which Hong Kong group Tongjiang International Energy holds a 21.4 per cent stake, has a joint venture agreement with Chinese oil giant CNOC to develop Arckaringa, holding a measured 1.5 billion tonnes and an estimated potential 7.8 billion tonnes of coal. The participants hope to convert this into annual production of at least ten million barrels of diesel, jet fuel, fertiliser, ethanol, hydrogen and a range of other products, including electric power sources.

Investment group Invesco holds 18.14 per cent of London-based Altona, which has estimated a possible net present value for the project of £451 million to almost £2 billion, with payback seen as coming in eight to 11 years from first construction. Altona has ceded 51 per cent of the project to CNOC, which in return will pay for a bankable feasibility study and, if all goes well, arrange all the funding.

That could see Altona’s share in the project fall to 30 per cent, but, argues Lambert, the value of that holding could still eventually dwarf the company’s present AIM tag of £31 million. Highlighted by Growth Company Investor last year at 4.1p, the tightly held shares trade at 8.13p and should go higher if the project proceeds as hoped.

            
Forte shows strength
Forte Energy expects new uranium resource figures for its Mauritanian projects shortly and could start producing from Guinea by 2012. Recent figures for Bir En Nar in Mauritania showed ‘outstanding grades’, including eight metres at 2,470 parts of uranium oxide per million parts of rock and one metre at 4,890 parts per million.

Managing director Mark Reilly says the company has identified several potential high-grade prospects at Bir Moghrein in Mauritania, where drilling will start late this year. Forte is also active in Guinea, with a maiden resource estimate for its Firawa prospect of 11.6 million lbs of uranium oxide last year. According to Reilly, the company is working to increase that figure substantially and, if all goes well, could be in production there before 2012.

Forte, which raised £7.25 million last year at the equivalent of 3p, has around £4.25 million of cash left and is likely to spend about half of it this year, comments Reilly. He insists that the company, of which French nuclear power giant and potential offtake partner Areva holds nearly 15 per cent, has no need for another cash call on the market.

Forte shares have fluctuated between 2.6p and 12.25p over the past year. Highlighted by Growth Company Investor at 5.75p last year, they now trade at 10.5p and still offer significant speculative potential.

Gleams of hope
Africa–focused investment group Satya Capital has put £2 million at 35p into Namakwa Diamonds for a 5 per cent stake. Justin Abbott, managing partner of London-based Satya, says the investment concern is backing fully listed Namakwa at an ‘exciting point’ in the development both of the company itself and of the diamond industry, with rough diamond prices recovering strongly from recession-hit lows.

Namakwa, steered by chief executive Nico Kruger, is involved in several projects in southern Africa, including the Kao kimberlite pipe in Lesotho. Satya clearly reckons it has got a bargain by paying less than a fifth of the 181p at which Namakwa was floated in 2007. Bulls argue that the company could break strongly into profit this year if its development hopes are fulfilled.

After bottoming at 15.25p during the past year, the shares now trade at 34p, unchanged from Growth Company Investor’s ‘speculative buy’ comment in January. The signs are that Namakwa's luck could be turning and, though the risk remains, strong-nerved punters might consider taking a few more on board.