By Dan Stratful (AFA)
Jacka Resources (ASX: JKA) is an emerging oil & gas explorer in Africa with 2 two key development/appraisal projects - the Nigeria/Aje field and the Tunisia/Bargou field. Both projects are situated in proven hydrocarbon basins and there is near term development potential which is expected to generate cashflow to fund further exploration.
JKA has recently completed a $14 million capital raising by way of share placement which leaves it fully funded for its exploration activities throughout 2012.
Make no mistake that JKA is a high-risk speculative penny mining stock however it reportedly has a management team with a proven track record of developing oil and gas explorers in Africa.
JKA's shares have ranged between 9c and 22c over the last year and there could be further upside yet to come if exploration activities are successful. Africa presents a risky frontier for exploration activities and the shares bring plenty of sovereign and political risk.
JKA's shares have been assessed on a net present value (NPV) basis which provides a value of 35c per share and this valuation does not take into account the exploration of the Tanzanian and Somaliland blocks, additional exploration upside in existing permits and the potential for the further new ventures, meaning there is significant upside if further exploration proves successful.
Both Tanzania and Somaliland are underexplored but are beginning to attract the interest of major oil and gas companies and these countries add further upside potential.
The Nigerian/Aje field could generate first production in 2013, while the Tunisian/Bargou field has benefitted from a 55% stake from Dragon Oil. JKA is also unhedged with no oil price or exchange rate hedging in place which brings foreign exchange risk and commodity price risk.
Status: SPECULATIVE BUY
JKA's shares today traded at 15c
In accordance with the Financial Advisers Act 2008 ("the Act") Sharechat is "Class Advice" and any advice or recommendations contained on this webpage is not "Personalised Advice" as defined by the Act. This means Sharechat does not take into account an investor's particular financial position, financial needs, financial goals, risk profile or asset allocation. Investor's who require "Personalised Advice" should contact an Authorised Financial Adviser (AFA).
DISCLAIMER: To the extent that any of the content above constitutes advice, it is general advice that has been prepared without reference to investor’s objectives, financial situation or needs. Before acting on any advice, investors should consider the appropriateness of the advice and IRG recommend that investors should obtain appropriate financial, legal and taxation advice before making any financial investment decision. The report is based on information compiled from public information and private research. IRG have completed the report on a best endeavours basis and do not accept any liability of loss or damage. IRG suggest that clients use this as part of a decision making process and check key data before making any investment decisions.
Employees may have an interest in the securities discussed in this report.
Comments from our readers
No comments yet
Add your comment:
NZ consumer confidence near four-year high ahead of Christmas retailing
Chorus shares rally after vote of confidence from Milford, ACC ups stake
Green lobby cries foul on draft EEZ oil exploration rules
NZ manufacturing activity grows in November, BNZ-BusinessNZ PMI shows
NZ dollar hits new five-year high vs. Aussie after RBA talks down currency, RBNZ to hike
While you were sleeping Strong US retail sales
Export concentration into China 'a concern', RBNZ’s Wheeler says
Perpetual, Fonterra's largest unitholder, happy to ride out short-term pain for longer-term gains
Love Springs, director Phillip Smart fined $555,000 for using toxic water claims to sell filters
Hallenstein may have to lower guidance if sales don't improve, chairman Bell says