This morning Keith Hill’s Africa Oil (TSXV:AOI), which is developing oil discoveries in the East African Rift Basin System, said that the company suffered no injury during the weekend’s mall attack in Nairobi. We join Africa Oil in extending our prayers to those who remain affected by the tragedy.
On a much lighter note, Africa Oil has been a big winner for investors as of late. While the company has appreciated approx. 1000% over the past three years, shares in AOI have rallied strongly from a April, 2013 bottom of $5.51 per share, and are now trading in the $8.40 range.
We had our CEO Technician take a look at the chart, and he thinks that if AOI breaks through resistance at $8.50, it could test new highs.
Click to enlarge:
Africa Oil is a Lundin Group company. The Lundin’s are among the most successful mining and energy entrepreneurs in the world. Bloomberg covered the family’s Lundin Petroleum recently, saying it had comparable returns over the past decade to Apple Inc. (Source).
While Lundin Group IR queen Sophia Shane told us at the 2013 PDAC Conference in Toronto that it was Africa Oil’s intention to develop and then sell its assets to a major, the group’s success developing Lundin Petroleum, and others including Tanganyika Oil, give investors additional confidence in the event the company does not sell outright.
Multiple sources have confirmed Africa Oil is hosting a site visit to the company’s African operations this week and next. Analyst site visits, when combined with a credible management team and a good story (all of which AOI has in spades), can generate sufficient excitement to move a company’s share price.
We speculated last year that Lucara Diamond Corp., another Lundin Group company, would perform well following a site visit to that company’s Botswana mine. Additionally, we followed the same strategy with Ivanhoe Mines last month. Lucara is up over 70% since and Ivanhoe Mines nearly 30%.
There are many factors that could influence Africa Oil’s share price over the near term, so we’ll be staying on the sidelines for now, however the site visit, combined with a compelling chart, make the case for a double digit AOI coming soon.
Related: Lukas on Lundin
Disclaimer: This is not investment or professional advice of any kind. These are opinions, and not advice. All figures approximate and all facts to be verified by the reader. Do your own due diligence.