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So another keep the lights on placing eh? As it happens no although the market has (wrongly) taken it that way. Union Jack Oil (UJO) already had a comfortable cash balance. So why raise a gross £1.4 million at 0.135p?
Union Jack stresses that it is fully funded for its existing commitments, which include the drilling of the Biscathorpe-2 and Holmwood-1 conventional exploration wells, intends to utilise the proceeds of the Placing to increase its interests in existing licences within the Company's portfolio. Union says : "Management are working towards concluding these acquisitions in the near term."
We suspect that it may be looking to increase its stake in Wressle where it will, we are 99% confident, overcome the planning glitch.
Union Jack will be cashflow positive in a material way by early 2018 and is fully funded to that point. The shares are 0.13p-0.15p valuing the company at c£6 million. That does not discount the cashflow potential here and the, now, very strong balance sheet.
We expect a re-rate on the back of news about either the acquisition or victory on the Wressle planning battle. Drilling elsewhere could add further spice. Buy.
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