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Malcolm Shaw  

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  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]

    I agree in some respects. Management has lost all credibility in the eyes of investors and the market. Having said that, even a market darling like Emerge (EMES) is down from highs of $140 to a current level of just over $20. For perspective, that's an 85% loss from one of the most favoured names in the silica sand business.

    After having read the preliminary economic assessment, I still believe that the Firebag project has the potential to be a significant Canadian frac sand source, but it will take a different market and execution by management.

    The company has been public for far longer than 20 months. ABM was listed on the TSX Venture in late 2006.

    Insider sale filings are readily available on should you wish to review them.

    Like many resource companies, ABM is being left in the dust during this commodity bust cycle, but I intend to follow the project through to the next cycle.

    Best of luck, but for now most will simply view ABM as a capital loss.
    Jul 24, 2015. 10:12 AM | Likes Like |Link to Comment
  • A New Crown Jewel? [View instapost]
    I do still follow it, yes. It's been hard to evaluate how successful the most recent TdF drilling program was, as I haven't seen updated production numbers and the well tests from the company were inconclusive in many instances. The company seems to believe that Puesto Quince is a discovery, but it appears they want to frack the PQX-3 well to confirm that. There may be better reservoir nearby but it will require further drilling. The recent placement that you are referring to was with a relatively new financial backer/investor based in Argentina. Country politics remain challenged. There is an election this October which could bring about some positive change. CWV has been disappointing over the last year, but the TdF acreage remains intriguing.
    Mar 14, 2015. 09:57 AM | 1 Like Like |Link to Comment
  • Firebag River - A Red-Hot Canadian Frac Sand Deposit? [View article]
    Well, you got your answer on February 13th with the release of the Firebag PEA. Clearly the project appears to be highly economic. Sentiment in the oil sector is poor and I suspect that many will write off Firebag as a project that requires too much capex in a company that is just too small to raise it. There are others who will recognize the potential value on the table and will rub their hands together at the prospect of being able to quietly evaluate the merits of the operation while everyone else is too busy wondering where the money will come from. With the labour and materials slack in the region/sector, it's a great time to build a project in Fort McMurray… as long as your time horizon is measured in years at the very least. Real investors are hard to come by these days, which is why good investors tend to make their best decisions in uncertain times, while momentum players and traders are too timid to enter the fray.
    Feb 16, 2015. 03:34 PM | 1 Like Like |Link to Comment
  • One Valeura Energy Insider Doubles Down [View article]
    No need for more capital yet in my view. Valeura needs to complete the 3D on the 100% Banarli license this summer to firm up targets, then drill those targets. That's all internally funded, as is a modest "base" program on the 40% joint venture lands. Perhaps once the Banarli 3D survey is complete this summer, more capital could be deployed, but at this time Valeura is well positioned to self-finance its way to the cusp of what could truly be an inflection point in the company's history. As I've said before, I sincerely doubt that the new play type ends at the block boundary that is less than half a mile from the Gurgen discovery well. Valeura has 15 leads from existing 2D seismic already identified at Banarli… if even 1/2 of those turn into prospects, and half of those again into discoveries, Valeura's fortunes could look completely different a year from now. It's worth noting that the market currently ascribes zero value to the shale gas potential of Banarli, which is substantial in my view… in the order of trillions of cubic feet. If that shale gas potential captures even a hint of market attention, the effect could be impressive. Gas resources in continental Europe are hard to come by and history has shown that when a new European "tight gas" play hits the radar and captures the attention of energy investors, the valuation re-rate can be substantial. Time will tell, but at 1.3x EV/CF by my estimates, VLE is one of my favourite risk-rewards in the market, which is why I'm long the stock.
    Feb 6, 2015. 05:13 PM | 1 Like Like |Link to Comment
  • One Valeura Energy Insider Doubles Down [View article]
    Great summary Kevin. I've followed VLE for years and I think that the recent Gurgen discovery may be an inflection point. It establishes a new play type (3-way closures on the down-thrown side of faults) and I sincerely doubt that play type ends at the boundary between the 40%-owned land they are on now and the 100%-owned land (Banarli block) that starts less than half a mile away. There are numerous "leads" on the Banarli block which are already covered by 2D seismic, but the 3D survey planned for this summer will really set the table for Q3/Q4 drilling. If successful, with recent Gurgen wells doing ~ 3 mmcf/d (500 boepd) per well, Valeura could look very different a year from now. The VLE team did a great job when they were in Libya, sniffing out structures that had been overlooked by prior operators… are they on the cusp of doing that again now? Time will tell. Management has been making efforts to cut G&A recently, though I find that most international juniors have stubbornly high G&A. The good news, as you say, is that G&A is relatively fixed, so as production ramps up, it becomes less relevant on a percentage basis.

    I wrote a brief note on VLE last November ( and a brief update in January (

    It'll be an interesting year. The shale gas option is currently valued at zero. That's usually the case until it isn't. If the market latches on to the upside exposure associated with the shale gas, this 1.5x EV/CF valuation could re-rate quite quickly… especially if there is success on the Banarli license.

    Should see a reserves update in early March. I'm long and I'll be watching closely all year long on this one. Thanks again for an interesting read.
    Feb 4, 2015. 07:51 PM | Likes Like |Link to Comment
  • Meet Fission Energy's New Year's Baby: Triple R Uranium Deposit Weighs In At Over 105 Million Pounds [View article]
    For those wanting to keep track of other names that I write on from time to time, please feel free to follow my blog at the following link:
    Jan 12, 2015. 04:06 PM | Likes Like |Link to Comment
  • UNO - Looking For Uranium Away From The Crowd [View instapost]
    Not much to say there other than what the company has already said. Greenfield exploration is incredibly difficult. It's nice to see that they are getting some alteration in these early holes, but it's very early days indeed.
    Dec 23, 2014. 03:52 PM | Likes Like |Link to Comment
  • Canacol Energy: Successful Shale Oil Test Underscores Compelling Value Proposition [View article]
    In my opinion, CNE's poor performance is 100% due to the price of oil dropping. The valuation at current levels is verging on "shocking". This is not unique to CNE, as it covers the entire sector, domestic and international oil companies alike. It's worth noting that a large portion of CNE's revenue is tied to natural gas contracts, which are not indexed to the oil price. I have a very hard time seeing current levels as anything other than good value over the long term...
    Dec 8, 2014. 11:03 PM | 2 Likes Like |Link to Comment
  • Pan Orient Serves Up A Mixed Bag [View article]
    There's no doubt that it's a positive as it shows POE is able to transact on their assets at valuations higher than those reflected in the market. What more can an investor ask for?

    I think that today's news regarding the farm-out of East Jabung is a welcome development as well.
    Nov 11, 2014. 06:40 PM | 1 Like Like |Link to Comment
  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]
    Those are some great comments. Thanks for that.
    Nov 4, 2014. 07:32 PM | Likes Like |Link to Comment
  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]
    Just a final note blueice... Athabasca HAS received their permits! The receipt of permits coincided with the high in the stock price. Perhaps the preliminary economic assessment will be the next milestone to watch for...
    Oct 11, 2014. 09:04 AM | 2 Likes Like |Link to Comment
  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]

    Your sentiment echoes that of many. Pressure on the oil price has dampened drilling expectations, which has impacted the U.S. silica sand producers, and is a double whammy on a small/micro cap like ABM.

    The good thing about silica sand in my mind is that it is kind of like wheat… there is ALWAYS demand of some sort, and the "weather" (weather being the oil and/or gas prices in the silica sand business) determines times of feast or famine, but make no mistake, you will always need it. The only real question in my mind is one of economics, which a PEA (preliminary economic assessment) should shed some light on in a couple/few months. If it's economic, it is a multi-decadal asset in close proximity to the core of the Western Canadian Sedimentary basin. That's quite a potential prize.

    With that in mind, the value of the silica sand operation as determined by the market at any point in time is irrelevant to me, as long as the company can survive without any excessive dilution while waiting for the "weather" to improve.

    Can Athabasca survive a dip in drilling activity? History would suggest "yes", based on the company's tight share structure and profitable history. I look forward to seeing the quarterly results near month end and perhaps an update on the plan for Firebag. Athabasca does not have fancy offices or high salaries... and with the aggregate business, you're only a few quarters away from being a "just in time" supplier, so there's not too much working capital required unless you are scaling up (in which case business shoould be good).

    Western Canada absolutely needs to increase domestic silica sand supply. Rail border crossings are limited and traffic is heavy. To use the wheat analogy again, it makes little sense shipping wheat an extra 1500 miles when you have access to wheat from a local (closer) source that will serve the purpose.

    That pretty much sums up my thesis on Firebag. A lot of things have to come together for me to be right and management has to execute, but I think that to suggest it's game over at this point has little to do with fundamentals and more to do with which way the wind is blowing right now. Time will tell.
    Oct 9, 2014. 11:57 PM | 2 Likes Like |Link to Comment
  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]
    Amen! Having the sand resource is just a part of the battle. Management has a real test ahead of them. I'll be keen to see how their aggregate business is doing when they report at the end of next month and I hope to see them make moves firming up the commercial value throughout the rest of 2014 and early 2015. A bit of a rout in the markets today. Almost nothing that I follow was spared.
    Sep 25, 2014. 07:20 PM | 1 Like Like |Link to Comment
  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]
    Thanks for the questions blue ice and no_idea…

    No_idea: Yes, we have the same sand supply issues in Canada as you guys do in the U.S. Most of Canada's sand is imported from the U.S., which is one of the reasons that Firebag could be so important - a large, domestic, silica sand source. As for the rest of your questions, most, if not all, should be answered when the company completes a PEA (preliminary economic assessment). The PEA will include estimates of capital costs, operating costs, revenue potential, logistics details etc.

    I would argue that the frac sand project is "free" at this point, depending on your view of the value of the existing aggregate business. I look forward to seeing the results from the aggregate business in the latest quarter when the company reports in about a month.

    blueice: Your sentiments and observations regarding the trading are echoed by many. I believe the current lack of interest (reflected in price and volume) has to do with a few things: 1) The whole Canadian resource market is under pressure, which tends to put pressure on all materials stocks as negative funds flow persists; 2) the market is waiting for ABM to finance in order to build the project, which can create overhang as new buyers take a "wait and see" approach before stepping in ahead of a potential deal (I tend to believe that this is putting the cart before the horse, as a PEA will be needed before the company and market can point to a 43-101 compliant document detailing capital costs, and hence capital requirements); 3) the market is waiting for customers (frackers) to give some kind of official "green light" to the use of Firebag sand… To me, it appears that Firebag sand stacks up well against Brady Brown sand in terms of physical properties, and the industry pumps millions of tons of Brady Brown into frac'd wells in Texas every year, so I'm fairly optimistic in that regard. So far the samples that ABM has sent for testing are literally just washed and screened. With a little bit of additional processing, there's a good chance that the quality can be raised further, but time will tell.

    One last point. I've spent a fair amount of time trying to figure out what sand sizes are used in which formations in Canada, but it's been an uphill battle. One good data point that I did get was from a Montney-focused E&P company. I was told that they pump a 50/140 sand mixture into their wells… that would include ABM's 40/70 fraction and 70/140 fraction. If that's the case for other Montney operators, ABM could be well positioned given the scale and longevity of the Montney play in the Western Canadian Sedimentary Basin.
    Sep 25, 2014. 09:29 AM | 1 Like Like |Link to Comment
  • UNO - Looking For Uranium Away From The Crowd [View instapost]
    Not much to say other than that I hope they are more successful this summer in terms of getting holes down than they were last winter!
    Aug 31, 2014. 09:15 AM | Likes Like |Link to Comment