ReconAfrica (TSX-V: RECO) (OTCQX: RECAF) SVP Investor Relations Doug Allen on the Massive Opportunity in the Kavango Basin

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the SVP of investor relations for ReconAfrica, Mr. Doug Allen. Doug, it's a pleasure to have you on. How are you, sir?

Doug Allen: I am great. Thank you very much, Gerardo, appreciate the opportunity to speak with you.

Gerardo Del Real: Thank you for taking the time. The last time that I publicly spoke with someone from the company, I spoke with Craig back in July. I can tell you from the many notes that subscribers have sent in that one, they are extremely appreciative of the share price appreciation. I believe the stock was somewhere around the $0.80 level at the time, and it's currently near the $2 level. The other really almost overwhelming amount of questions that I've received has been about the progress and where we are as it relates to the main event, the big catalyst that we have coming up. And I want to get into all of that, but it would be a disservice to people listening and reading if we didn't touch base a bit about the very successful financing in light of difficult market conditions back in August. I think you raised something to the tune of $23 million, is that accurate?

Doug Allen: It's exactly spot on, Gerardo. And it's an excellent point, because you're correct, it is incredibly important in terms of de-risking the investment case. The fact that we did successfully raise $23 million, and the closing was on August the 20th. I joined the ReconAfrica team in early July and so wasn't able to participate in the last interview you referenced, but we hit the ground running. And we announced on the 4th of August the intention to raise $6 to $10 million Canadian, and in response to demand we had to upsize the size of the issue, Gerardo, not once, but twice.

And as you've noted, we closed on the 20th of August with $23 million gross proceeds. We didn't realize at the time, but we were told after the fact that it was the only successful energy raise in the post-COVID environment in Canada in all of 2020 up to that time. I think there have been one or two successful raises since then, but again, for your listeners, it's a hugely important point that you make in terms of de-risking the investment case. Because in the spring of this year, with all of the volatility created by COVID in the energy markets, we obviously in the spring faced a very uncertain future. For your listeners, it's a huge positive and a huge de-risking moment in the life cycle of this investment case that we raised the money you referenced.

Gerardo Del Real: For people that may feel like the train has left the station because the share price has appreciated well, can you provide a bit of context as to the opportunity? Because even with a market cap just north of $200 million Canadian, the opportunity is absolutely massive here if you're successful. And we'll know relatively soon. This isn't a five-year, 10-year, 15-year until we get to the main event. We're going to know in pretty short order. Can you provide a brief overview of the opportunity here? You have a phenomenal team, you have excellent infrastructure, and you have what I believe has the potential to provide revenue streams for generations.

Doug Allen: Great question, and thank you for that. Yes, in a phrase for your listeners, while they might look at the share price performance since your last interview in July and say, "Gee whiz, I think I've missed it," I would encourage them to do more reading. Because I believe they can and should conclude that they have not missed it at all. One of the new data points that we have that is on our website and I will share with you so you can post it on your website as well, Gerardo, is some analysis by acclaimed geochemist Dan Jarvie. And Dan has suggested on the basis of his geochemistry work that in his view, the basin has the potential to have generated up to 120 billion barrels of oil. And so on any kind of reasonable and even very conservative recovery factor, the opportunity here is enormous.

It is absolutely unique that a company the size of ReconAfrica, which still in a global sense remains very unknown, it's absolutely unique that a company our size has 8.75 million contiguous acres under license. And I would submit to your listeners that the opportunity remains very, very powerful. And to really deal with your second point, since July we bought as you will recall from the first interview, one of the early use of proceeds was we decided to purchase our own drilling rig. The retrofit of that drilling rig was admittedly affected negatively by the COVID environment, and then more recently by the hurricane environment. But all of that happily, Gerardo, is backward-looking. The reality is the rig is now in Namibia, and our goal to spud the first well by the end of this year is intact.

And as you correctly observed, we are only months from being able to establish that the basin does in fact have an active petroleum system. To be explicitly clear for your listeners, our goal with the three-well program, which is as we've just discussed is in excellent funding shape, the goal of that three-well program is not to establish three commercial gushers. The goal is the, we believe, more modest and more achievable goal of establishing the presence of an active petroleum system. But if in fact we do establish the presence of an active petroleum system, then we believe our ability to create farm-out or joint venture structures that will drive value for ReconAfrica shareholders is going to be extremely high. And that is our overarching business strategy, is to create farm-out structures that drive value for ReconAfrica shareholders.

Gerardo Del Real: Before I let you go, I have to share the quote from Bill Cathey. He says, "Nowhere in the world is there a sedimentary basin this deep that does not produce commercial hydrocarbons." Any thoughts on that?

Doug Allen: It's hard to beat as quotes go, Gerardo.

Gerardo Del Real: It's a tough one to beat.

Doug Allen: I should just be quiet because that's a hard quote to top. And there's a quote as well in our slide deck on page 13, which is the fact that Dan Jarvie, the previously mentioned geochemist who used to be the chief geochemist at EOG, he was at Mitchell Energy at the turn of the century and then went on to become chief geochemist at EOG. And perhaps equally as famously, Dan's quote is, "Given the nature of this basin and the tremendous thickness, this is pretty much a no-brainer. It will be productive and I'm expecting high quality oil." As a follow-on thought for your listeners, again, I will share this information with you, Gerardo, so you can post it and they can view it at their leisure. We had the good fortune of presenting to the American Petroleum Institute in Houston last month on the 10th of November. And happily, both Bill Cathey and Jarvie were amongst the presenters in our presentation. Scott Evans, our CEO, presented, and I presented as well.

And the significance for your listeners is, Bill Cathey presented what effectively was aeromagnetic 101 and Dan Jarvie presented what effectively was geochemistry 101. And so your listeners can get a sense of the palpable enthusiasm with which both of these acclaimed geoscientists hold the Kavango Basin. And I guess as a parting thought for your listeners, I believe it's a very relevant question for anyone who is a potential investor to ask themself the question, what do these acclaimed geoscientists see in the Kavango Basin? Why are they involved? I believe, Gerardo, they're involved because they see the opportunity to be on a team that's opening up a new basin. And for a geoscientist, you simply don't get the opportunity to do that very often in your career, if ever, because it brings them professional pride. It brings them professional bragging rights, it embellishes their career. But the obvious follow-on question for any investor is, what does that mean for investors? And I believe to your earlier observation, Gerardo, the implications are potentially quite powerful.

Gerardo Del Real: It's a fully funded drilling program? The status of the rig, Doug, it's there, is that accurate?

Doug Allen: Correct, and the rig is now in Namibia. We're mobilizing it. We're on the cusp of finalizing the mobilization effort to get it from Walvis Bay to the location in northeast Namibia and the Kalahari Desert. That mobilization effort is expected to conclude in the days ahead. And as I say, the key goal of spudding the well before the end of the year we believe remains achievable.

Gerardo Del Real: Looking forward to 2021. There's not a lot of December left, but it sounds like there's a lot to get done. I want to thank you very much for taking the time today, Doug. I appreciate it.

Doug Allen: My pleasure. Thank you very much for your time and interest, and we look forward to staying in touch.

Gerardo Del Real: Thank you, sir.