EXR 0.00% 7.1¢ elixir energy limited

Well I’m hoping this post will be a form of therapy for me. I...

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    Well I’m hoping this post will be a form of therapy for me. I now accept that following EXR and the related HC threads has become an obsession - but not one I’m going to give up any time soon. With the share price hovering around the SPP price and without the determination and forward momentum so many of us became accustomed to over the past many months; now seems like a good time to express thoughts about the SPP.

    When it was first announced to the shock and surprise of us all (at least is was for me), I had a sense of dismay. What, why? We are fully funded; incredible momentum, a relentless program ahead; even management themselves had only weeks prior pointed to the virtues of a highly active development program being fully funded, positioned to maintain the rinse and repeat momentum. Lot’s of reasoning that with such large acreage and resource potential it makes sense to accelerate evaluation as much as possible; proving up potential and accelerating prospect of takeover - accelerates value for everyone. Value now is always better than value later. Management saw a door open and stepped through it (that one remains to be explained for me). On many levels these arguments make sense and are still valid - but deep down for me the SPP didn’t make complete sense…more on that later.

    My EXR journey has been the most exciting investment journey of my life - by far. I have been so impressed with Management approach and careful stewardship - only strengthened by subsequent learning of how long NY spent in Mongolia doing the scoping work and laying the necessary relationship foundations for success. I bought in heavily late 2019; attracted by the resource potential, low development costs, and access to enormous market. I watched with dismay as Covid ravaged the marked including EXR; but convinced myself the fundamentals had not changed. The 2c SPP in May of 2020 was the gift of a lifetime and an incredible investment decision; went quite hard but not all out; in any case didn’t matter as scale-back happened and was a function of existing holding (0.75 of existing holding if I recall correctly). One early duster and one discovery only served to reinforce my opinion of the risk-reward profile and Management’s prudent approach to the appraisal of the vast acreage holding. Increasingly convinced, I decided to pick up even more shares in late 2020 at 12.5c, only to watch in dismay as the price immediately dipped briefly below 10c on the back of the “we’ve shut up shop for 2020, see you first quarter 2021” announcement. Again, I easily convinced myself the market was reacting irrationally - the fundamentals still very much unchanged. Then earlier this year we caught fire coming out of the early teens. By then I was convinced there wasn’t another stock on the ASX that had anywhere near the same combination of material value growth-multiplying potential, and chance of success. I think the Chairman described as “eye-watering” risk-reward potential and I couldn’t agree more with that description. My obsession was cemented the first time EXR jumped 3 or 4 cents. I’ll never forget logging into CommSec and seeing a green number in the change column that was more like a number that belonged in the ‘total portfolio value’ column - pretty exciting.

    Throughout this journey for me have been the knowledgeable posters on HC. I’ve posted very little myself, but have read everyone else's posts without fail; Dura, Mustang, Oldy, Hardsy, many others. Of course Lawrence early on definitely influenced me - so many posts I thought were ridiculously outlandish, but deep down I knew there was a credible thread in the potential described. More recently AdPow humour, OP2‘s youthful enthusiasm and of course the extremely insightful and always levelling analysis of WnA.

    I know many others are invested emotionally as I am. When we decline the posts decline and the silence sets in. The recent run back up to 40c brought a flood of comfort, only to come crashing back down to the inexplicable close of 34c yesterday. Nobody’s mentioned the Elixirnaires thread since 17th April! Despite the ups and downs, I’m fortunate enough to have maintained a single digit avg buy-in; and that’s after going all-in on this SPP, along with buying a small additional parcel to round up to the nearest 100,000 due to OCD not allowing me to live comfortably with a shareholding that ended in 83,334. I was happy picking them up the day before yesterday at the SPP price of 36c; only to be further perplexed by yesterday’s closing price.

    I participated in the SPP in reluctant support of the acceleration business case, but it was a relatively easy decision given my low average buy-in and gains so far…..but in my view the SPP was a bit unnecessary at this time; too small institutional portion, way too large retail portion - notwithstanding the very noble stated desire of management to reward retail investors. But the fundamental issue is the SPP just didn’t really add up - it made some sense, but not complete sense; and particularly it didn't jive at all with Management’s narrative in the preceding few weeks. And that’s why we are where we are at - shuffling sideways until something compelling happens. That momentum was lost at a time it didn’t feel like it had any reason to wane.

    It’s the upward momentum that I miss - like a best friend that’s been taken away unexpectedly. I quickly moved up the stairs towards the entrance of the lounge, and at the end was at the front door staring intently into the eyes of the bouncer, certain I would quickly pass the awkward stand-off with a bouncer-defying smirk already deployed, ready to enter and find my seat - only to have that same bouncer not only force me back down the stairs, but all the way down the sidewalk and around the corner! At the end of the day it’s a Management decision that will either look like sheer brilliance in the upside scenario, or a misstep in the worst scenario; but in that outcome we’ll have much bigger things to worry about!

    The good news is there’s really only one thing that will determine our destination - and that foundation was laid millions of years ago in the subsurface. As long as management continue to steward this appraisal in an optimized and thoughtful way - and I have every reason and confidence to believe they absolutely will - our destination is completely at the mercy of drilling results and discovered recoverable resource.

    Cracker could be a duster. I don’t think it will be, but it could. That would set us back a bit, but not a lot; there’s lots more acreage to test. Tens of thousands of acres gives us enormous potential but also a wide range of prospects to test - some of which will not be successful. I’ve worked in the oil and gas industry for 25 years; in the past few decades the average strike rate on economic resource discovery through exploration drilling is well below 10%; but every single one of those wells individually was drilled with a going-in chance-of-success of better than 20 - 30%. All that to say this is a tough game. Both risks and rewards are very high.

    Our risk-reward opportunity is eye-watering and I look forward to the (now accelerated) return of forward momentum after this slightly frustrating diversion…

    At this stage I’m still NSUNYD….

    ….and don’t you love it this post took me so long to write, the share price went up 2.5c while I was doing it….!
 
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Last trade - 16.10pm 29/03/2024 (20 minute delay) ?
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