TIDMPPC
RNS Number : 5272T
President Energy PLC
25 July 2022
25 July 2022
PRESIDENT ENERGY PLC
("President" or the "Company")
GREEN HOUSE CAPITAL MOVES INTO LITHIUM
GROUP STRATEGY EVOLUTION
President Energy (AIM: PPC), the international energy company
provides an update on the first steps made by its new Green House
Capital subsidiary ("Green House or GH") and an update on Argentina
and Group.
GREEN HOUSE CAPITAL
On 28 June 2022, President announced that as part of its stated
objective of demonstrable diversification of the Company's
interests and migration to businesses to which investors will
ascribe higher value, it has become a 75% beneficial shareholder in
Green House, a company intended to be an incubator for/investor in
alternative energy.
Business Model
The business of GH will be to source, seed finance and incubate
early-stage opportunities in the green and/or alternative energy
sub-sector. GH is intended to hold its interest in each business
within a separate special purpose legal entity ("SPV") domiciled in
an appropriate jurisdiction for business efficacy.
Whilst it is intended that GH will initially be seeded by
President in each of its businesses, subsequent material funding
will be determined by the specific needs and characteristics of the
relevant business. GH will consider in each SPV the various
monetization possibilities of the equivalent of farm out, joint
venturing, venture capital / private equity funding or IPO. This
will provide flexibility to GH to both mobilise and/or release
capital in due course. The structure will also facilitate the
ability of the Group to divest itself of any appropriate component
parts to the benefit of President shareholders.
In identifying opportunities, as stated on 28 June, GH will
capitalize on contacts and experience of its and President's
shareholder and stakeholder base.
Lithium identified as first project
The importance of lithium to the global commitment to Net Zero
is well known.
The Lithium Triangle, a resource rich region of the Andes around
the borders of Chile, Bolivia and Argentina is considered to hold
over 50% of the World's commercial lithium reserves. In Argentina,
one of the largest lithium producers in the world, the resource is
mostly found in the Province of Salta - the region in which
President has the Puesto Guardian Concession from which it produces
oil.
President has now entered into a Memorandum of Understanding
with the Argentina State owned company responsible for managing the
energy and mining resources of the Salta Province, Recursos
Energéticos y Mineros de Salta S.A ("REMSA").
REMSA has certain properties that may have potential for lithium
mining and extraction. REMSA and the Company have agreed to set up
a joint committee for selecting areas of a minimum size of 1,000
hectares for prospecting and initial topical exploration to
determine next steps.
Whilst the Memorandum does not guarantee that President would be
able to acquire any prospective areas that REMSA and it identifies,
there is a written understanding that President would have, under a
private initiative process, both first offer and last offer rights
to any areas that the Company wishes after making such initial
exploration and marks a first significant step in the start of
cooperation with REMSA in a Province in which President is already
a major investor and where it has established business and
management structure.
President is confident that the lithium market and global demand
for the metal has long term attractive prospects with the Salta
Province having significant interest from international companies
including the recently announced investment of US$825 million by
Rio Tinto in December 2021 and US$962 million by the Chinese
lithium giant Ganfeng earlier this month.
Lithium, like President's oil and gas businesses, is a
dollar-based business. As such they are shielded to a material
extent by the high inflation currently being experienced in
Argentina, as is further reinforced by the interest of many
international companies in both hydrocarbon and mineral production
in Argentina.
PRESIDENT'S EVOLUTION
It is important to view this announcement in the context that
President has a solid core business and robust trading position, as
referred to in the announcement dated 28 June 2022 providing
shareholders with details of the 2021 Annual Results together with
a 2022 trading update and outlook.
The strategic transition is intended to re-energise President
with the Group evolving into new horizons whilst at the same time
benefitting from its profitable core business which delivered
profits after tax of nearly US$5 million in 2021, free cash
generation of some US$13 million with turnover projected for 2022
at over US$40 million and significant current operating profits,
material exploration opportunities as well as the 28% investment
interest in ATOME.
The intention going forward is that each division of President
will evolve to have its own separate management under the Group
main board. As part of the Group refreshing and re-imagining itself
whilst making use of its current asset base, the following steps
are intended:
1. Peter Levine, the major shareholder and funder of the
Company, has indicated to the Board that on or before the end of Q1
2023 he will step back from his current broader role in the Group
to focus on developing the Green House part of President and deal
making. Whilst remaining as non-executive Chairman, supportive
shareholder and funder, he will work with the directors to
restructure the Board to provide right sized, right ability
management succession that can in the future exploit the potential
of President and continue a progressive pathway for the benefit of
shareholders.
2. Within the next few months, it is the current intention to
propose changing the name of the Group to reflect such evolution
and business philosophy and away from connotations of its past.
3. At the same time the Company will propose a share
consolidation to move away from the penny/micro share image and
mitigating the ability of market investors and market makers to
allow or cause large volumes of shares but with low aggregate value
to affect prices. Details of both this and the proposed name change
will be notified to shareholders later this year.
Peter Levine, Chairman, commented:
"It is fact that the creation of ATOME Energy by President, its
spin out and flotation has been value accretive to President
shareholders. However, the value of the retained investment
interest of nearly 28% in ATOME has clearly not been reflected in
President's share price. Our conclusion is that investors do not
ascribe proportionate value to President's core hydrocarbon
business, which therefore acts as a negative influence to the value
proposition of President as a whole. Green House marks the
commencement of the evolution of the AIM listed President Energy
and emergence from the past whilst at the same time not neglecting
its present core hydrocarbon business
"The progression to a Group with separate business divisions
having their own motivated management and funding capabilities yet
delivering value to the public company shareholders has been
successfully demonstrated by the spin off and listing of ATOME
Energy PLC. ATOME has created for shareholders in President
multiples of the value of money originally invested in its creation
and continues to benefit the Group through its near 28% holding
"The move of Green House into the strategically important
lithium market is a first step. We believe that by the end of this
year there will be other prospective projects coming under the
Green House division
"President will capitalize on this experience and create more
such opportunities within the broader alternative energy
economy
"Nevertheless, for now we must also not neglect the fact that we
are also a traditional energy company, currently with increasing
turnover and profitable core earnings from hydrocarbons. This will
continue to be the case for the foreseeable future, but with this
business unit in good operational shape I personally can turn my
focus to deal-making where I believe can be of most value
"I am energised by moving to have a focused emphasis on the
innovation and deal making I thrive upon. I will remain a major
shareholder and principal funder of President. A new, motivated
Group CEO / Management team at the top of the Group structure will
be put in place before this move."
Contact:
President Energy PLC +44 (0) 207 016 7950
Nikita Levine, Investor Relations info@presidentpc.com
finnCap (Nominated Advisor and
broker)
Christopher Raggett, Tim Harper +44 (0) 207 220 0500
Tavistock (Financial PR and IR)
Simon Hudson, Rebecca Hislaire,
Charles Baister +44 (0) 20 7920 3150
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR"). The person who arranged for the release of this
announcement on behalf of the Company was Peter Levine,
Chairman.
Notes to Editors
President Energy is an oil and gas company listed on the AIM
market of the London Stock Exchange (PPC.L) primarily focused in
Argentina, with a diverse portfolio of operated onshore producing
and exploration assets.
The Company has operated interests in the Puesto Flores,
Estancia Vieja, Puesto Prado and Las Bases Concessions, and
Angostura exploration contract, all of which are situated in the
Río Negro Province in the Neuquén Basin of Argentina and in the
Puesto Guardian Concession, in the Noroeste Basin in NW Argentina.
Alongside this, President Energy has cash generative production
assets in Louisiana, USA and further significant exploration and
development opportunities through its acreage in Paraguay and
Argentina.
It has also a 27.9% investment interest in Atome Energy PLC a
green hydrogen and ammonia producer whose shares are traded on AIM
of the London Stock Exchange.
With a strong strategic and institutional base of support,
including the international commodity trader and logistics company
Trafigura, an in-country management team as well as the Chairman
whose interests as the largest shareholder are aligned to those of
its shareholders, President Energy gives UK investors access to an
energy growth story combined with world class standards of
corporate governance, environmental and social responsibility.
-ends-
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