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Omagine Climbs 10.83% On Anticipation Of Oman Real Estate Deal

Posted by AGORACOM at 1:04 PM on Saturday, September 1st, 2012

On August 7th, Omagine (OMAG:OTCBB) filed a 10-Q for the period ended June 30, 2012 outlining – amongst other things – the results of a recent meeting with the Minister of Tourism.

In the filing, the company stated:

Representatives of the shareholders of Omagine LLC (the Company, Royal Court Affairs, and Consolidated Contractors) met on July 1, 2012 for several hours with His Excellency Ahmed Al-Mahrizi and a lawyer for MOT …

… The meeting concluded with the Minister confirming that he is in agreement with and enthusiastic about the development of the Omagine Project. He also stated that he was entirely satisfied with our project presentation, that he agreed it will be a wonderful project for Oman, that he was completely satisfied with our response to his May 9th Minister’s Letter and that he is agreeable to sign the DA as soon as possible …

… The Holy Month of Ramadan extends from approximately July 20 to August 20 and is immediately followed by the EID holiday celebration (which in Oman is expected to extend through August 31). Her Excellency Maitha returns on July 26. It is management’s expectation that while we may sign the DA in August, given the occurrence of Ramadan and the EID holiday, the DA signing could be postponed into September or even October 2012. Management is optimistic that the Government will soon memorialize its agreement to the Final DA in a signed written document.

With Ramadan completed on August 18th, investors now appear to be anticipating signing of the Development Agreement as shares of the company closed at $1.74 on Friday with higher than usual volume. The shares closed 10.83% higher on the day and 40% higher from the August low of $1.25.

The Company’s updated financial model presently forecasts net positive cash flows for Omagine LLC of approximately $900 million dollars over the seven year period subsequent to the signing of the Development Agreement, with a net present value of the Omagine Project of approximately $450 million dollars.

With 14.3 Million shares outstanding, the current market capitalization of the company sits at $25 Million.

For those of you that are new to the Omagine story, please find enclosed the following profile.  Omagine is an AGORACOM client:

The Omagine Project

The Company has proposed to the Government of Oman (the “Government”) the development of a real-estate and tourism project (the “Omagine Project”) to be developed in Oman by Omagine LLC (the “Project Company”). Omagine LLC was formed in Oman as a limited liability company in 2009 for the purpose of designing, developing, owning and operating the entire Omagine Project.

The Omagine Project is planned to be developed on one million square meters (equal to approximately 245 acres) of beachfront land facing the Gulf of Oman (the “Omagine Site”) just west of the capital city of Muscat and approximately six miles from Muscat International Airport. It is presently planned to be an integration of cultural, heritage, educational, entertainment and residential components, including: a “high culture” theme park containing seven pearl shaped buildings, each approximately 60 feet in diameter, associated exhibition buildings, a boardwalk, an open air amphitheater and stage; open space green areas; a canal and an enclosed harbor and marina area; associated retail shops and restaurants, entertainment venues, boat slips, and docking facilities; a five-star resort hotel, a four-star resort hotel and possibly a three or four-star hotel; commercial office buildings; shopping and retail establishments integrated with the hotels, and approximately two thousand residences to be developed for sale.

The Company’s updated financial model presently forecasts net positive cash flows for Omagine LLC of approximately $900 million dollars over the seven year period subsequent to the signing of the Development Agreement with a net present value of the Omagine Project of approximately $450 million dollars. The Company intends to continually update this model at regular intervals as new facts and information become available, as the development program and design process unfolds and as market conditions require.

Development Agreement

The agreement between the Government and Omagine LLC which will govern the design, development, construction, management and ownership of the Omagine Project is the “Development Agreement” (“DA”). The DA will be the contract between the Government of Oman and Omagine LLC. The Development Agreement has now been approved by all the required Ministries of the Government of Oman.

The Omagine Project and the Omagine DA have received multiple Government approvals over the past several years including at least three written approvals of the project from the Government. In July 2011, after many drafts and several years of negotiations, the Omagine Development Agreement was agreed by Omagine LLC and all required ministries of the Government (the “Final DA”). In September 2011, as requested by the Ministry of Tourism (“MOT”), Omagine LLC registered its new shareholders (see “Shareholder Agreement” below) with the Ministry of Commerce & Industry and, to the best knowledge and belief of the Company and its attorneys, no further barrier to signing the Final DA now exists.

A new Minister of Tourism, His Excellency Ahmed Al-Mahrizi, was appointed on March 1, 2012. Representatives of the shareholders of Omagine LLC (the Company, Royal Court Affairs, and Consolidated Contractors) met on July 1, 2012 for several hours with His Excellency Ahmed Al-Mahrizi and a lawyer for MOT.

The meeting concluded with the Minister confirming that he is in agreement with and enthusiastic about the development of the Omagine Project. He also stated that he was entirely satisfied with our project presentation, that he agreed it will be a wonderful project for Oman, that he is agreeable to sign the DA as soon as possible.

The Shareholder Agreement

In May 2011, Omagine, Inc. and three (3) investors (the “New Shareholders”) signed a shareholders’ agreement dated as of April 20, 2011 with respect to Omagine LLC (the “Shareholder Agreement”).

The Office of Royal Court Affairs (“RCA”), is an Omani organization representing the personal interests of His Majesty, Sultan Qaboos bin Said, the ruler of Oman. Consolidated Contractors International Company, SAL, (“CCIC”) is a 60 year old Lebanese multi-national company headquartered in Athens, Greece. In 2010 CCIC had approximately five and one-half (5.5) billion dollars in annual revenue, one hundred twenty thousand (120,000) employees worldwide, and operating subsidiaries in among other places, every country in the MENA Region. Consolidated Contracting Company S.A. (“CCC-Panama”) is a wholly owned subsidiary of CCIC and is its investment arm. Consolidated Contractors (Oman) Company LLC, (“CCC-Oman”) is an Omani construction company with approximately 13,000 employees in Oman and is CCIC’s operating subsidiary in Oman.

The New Shareholders are (i) RCA, (ii) CCC-Panama and (iii) CCC-Oman.

The ownership percentages of Omagine LLC presently are:

Omagine, Inc.60%

RCA25%

CCC-Panama10%

CCC-Oman5%

Pursuant to the provisions of the Shareholder Agreement, the total amount of cash investment into Omagine LLC by Omagine, Inc. and the New Shareholders will be $70,169,125 and although Omagine, Inc. and the New Shareholders will invest an aggregate of $936,000 of that $70,169,125 before the Financing Agreement Date, 98.7% of such $70,169,125 equal to $69,233,125 (the “Cash Infusion”) will not be invested by the New Shareholders or received by Omagine LLC until the Financing Agreement Date.

The Shareholder Agreement also recognizes the PIK capital contribution to be made by RCA to Omagine LLC as a portion of the payment by RCA for its shares of Omagine LLC. The PIK represents the value to be ultimately assigned to the approximately 245 acres of beachfront land constituting the Omagine Site which His Majesty the Sultan owned and transferred to the Government for the specific purpose of developing it into the Omagine Project. After the DA is signed, the value of the PIK will be determined by a professional valuation expert in accordance with Omani law and with the concurrence of Omagine LLC’s independent auditor, Deloitte & Touche, (M.E.) & Co. LLC.

The Financing Agreement Date is presently projected by management to occur within twelve months after the signing of the DA. If however the financial resources are available to Omagine, Inc., management may choose to trigger the Financing Agreement Date earlier (and therefore the $69,233,125 Cash Infusion) by having Omagine, Inc. make a secured loan to Omagine LLC to finance the first phase of the development of the Omagine Project. The first phase of the development of the Omagine Project is expected to constitute primarily initial design work and its scope and budgeted cost will be decided upon by Omagine LLC shortly after the DA is signed. Pursuant to the provisions of the Shareholder Agreement such a loan from Omagine, Inc. to Omagine LLC would constitute a Financing Agreement Date. Management is presently examining several alternative methods of making such financial resources available to Omagine, Inc.

In order to move into the actual design and development stage of the Omagine Project, Omagine LLC and the Government must first sign the Development Agreement. Notwithstanding the foregoing, no assurance can be given at this time that the Development Agreement actually will be signed.

Please be advised that the foregoing assumptions and this discussion are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 which involve uncertainties and other factors which could cause the outcomes described herein to differ from future Company achievements as expressed or implied by such forward-looking statements.

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US Real Estate – Why I Continue To Be Seriously Bearish

Posted by AGORACOM at 6:06 AM on Saturday, August 20th, 2011

I continue my 2009 bearish call on US real estate for all the same reasons … and I see nothing to even begin changing my mind.  The best Americans can hope for is a base at current levels … but my call is that US real estate is going to get worse.

If for no other reason, consider the fact that US real estate prices have failed to move higher despite US Federal Reserve ZIRP (zero interest rate policy), which we now know will continue into 2013.  God help homeowners if the bond markets decide to take matters into their own hands and demand higher rates, or if the Chinese decide enough is enough.

In the meantime, have a look at the following graph illustrating US home inventories, courtesy of the good people over at Calculated Risk …  Despite the fact that home inventories are actually lower to the tune of 8.9% over last year, the months of supply is moving higher due to a slower sales pace. That kind of divergence can only be described as bad … very bad.

40% of US 2nd Mortgages Are Underwater …. Double Dip Becoming A Double Crash … QE3 Coming

Posted by AGORACOM at 9:31 AM on Friday, June 10th, 2011

If you really need the full story click here – but this says it all

PIMCO Shorts US Debt, Goes To Cash – What Does This Mean For Small-Cap Investors?

Posted by AGORACOM at 8:46 AM on Monday, April 11th, 2011

The biggest news for small-cap investors to digest – by far – is that PIMCO has not only sold all of its US Debt Holdings, it has gone short.  Find my comments below via Twitter (reverse chronology) and my follow on comments below on how this plays out (theory vs. practically):

WHAT DOES THIS MEAN – Theoretically?

On it’s surface (I stress SURFACE), Bill Gross, Founder of PIMCO, is telling us that QE3 isn’t coming and nobody will be stepping into to replace US Fed purchases of US Gov’t debt.  That will lead to – at the very least – a drop in Debt prices, so he is getting the hell out of Dodge.  Simple enough … until you get to my practical comments below.

First, here are the theoretical (I stress THEORETICAL) follow-on effects:

INTEREST RATES – Going higher, just a matter of degree

$USD – Should strengthen with rising rates

EQUITIES – Should weaken for two reasons: A) Corporate expenses rise on higher borrowing rates = lower profits; B) Investors sell stocks to raise cash. Small-cap resource stocks fall in unison.

GOLD / SILVER – Should weaken against the US Dollar at the very least, potentially against most major currencies

US REAL ESTATE – Bombs Away .. my real estate theory since October 2009 remains intact

WHAT DOES THIS MEAN – Practically?

Unfortunately, we have learned over the last decade that economic theory can no longer be relied upon.  After all, interest rate easing that began after 9/11 was never intended to crash real estate markets, plunge the planet into a debt crisis and lead to record nominal gold prices … yet here we are despite the “brightest” minds at the US Fed, White House and Central Banks around the world.

What truly happens isn’t so linear because market manipulation has taken the natural ebb and flow out of all markets – debt, equities, commodities, currencies.  Prices are no longer determined by value – they are determined by confidence or a lack thereof.  As such, what should practically happen is the following:

CONFIDENCE CRISIS – When US Fed purchases of US debt vanishes and isn’t replaced by the market, a crisis of confidence will commence.

INTEREST RATES – Will move incrementally higher, then accelerate as US debt prices free fall

$USD – Will initially strengthen with rising rates and bond nibbling, then drop as investors realize bond/confidence risk is too great.  Swiss Franc and Canadian Dollar will do very well.

EQUITIES – Double Dip probability rises dramatically. Small-cap resource stocks take an initial hit, followed by massive rebound on gold, silver moves (see below).

GOLD / SILVER- Will initially weaken by as much as 20% /30% respectively on early $USD strength, then rocket towards all-time inflation adjusted highs of ~ $2,200 and $150 within 12 months

US REAL ESTATE – Bombs Away .. my real estate theory since October 2009 remains intact

AM I A GENIOUS OR WHAT?

I’d like to think so – but I don’t think so for two reasons:

1] Obvious Reason – I could be very wrong and a number of other outcomes could occur.  This time, I think I’m right – but see #2 below

2]  The Fed / White House / Wall Street Financial Matrix Isn’t Stupid – Despite what many smart people have to say, the powers that be aren’t as stupid as they seem.  They just don’t give a damn about your long-term interests. Despite damage to the current and long-term US economy, I firmly believe they have executed their plan perfectly in their best interests – and they’re not finished ….

QE3

It’s coming … 100% … only this time it will require the financial pain I have outlined above in order to politically justify it … but as I posted on March 30th, QE3 Will Be Delayed, Not Terminated.

At that point, the game plan resumes … but not before Bill Gross and PIMCO step back into US Debt, go long and make a killing on their cash thanks to rising debt prices, which leads to falling rates, much weaker $USD, stabilized stock markets, MUCH higher gold/silver, MUCH higher junior resource stocks.

Until then, plan accordingly.

Regards,
George

US Real Estate Is In Big Trouble

Posted by AGORACOM at 9:38 AM on Wednesday, March 30th, 2011

I’ve been relentless in my blog / twitter posts that – contrary to fluff predictions – US real estate was nowhere near a recovery.  Why? I don’t need charts, graphs and stats to tell me

  • Americans are either broke or sitting on their cash.
  • Americans don’t have access to credit
  • “Shadow” Inventories Aren’t Very Shadowy (my word)
  • Americans aren’t stupid and are not buying into US government fluff statistics

What I do need a chart for is to illustrate the proof is in the pudding.  US real estate continues to remain in trouble – and god help homeowners if the Fed doesn’t come through with QE3.

Courtesy of BusinessInsider.com

Peter Schiff Video From New Orleans: Dollar, Silver, Gold, GDP, QE2, Elections

Posted by AGORACOM at 3:16 PM on Saturday, October 30th, 2010

You simply have to love the fact that you can’t be at the New Orleans Investment Conference – yet you still have an ability to watch Peter Schiff provide commentary from his hotel room.  Here is his latest 10-minute video.  Grab a cup of coffee, sit back and watch.  Leave me your feedback in the comments section below.

Regards,
George

Checkmate – US Real Estate On The Verge Of Imploding, Pushing Gold Closer To $2,200

Posted by AGORACOM at 1:28 AM on Tuesday, October 5th, 2010

As mentioned earlier, Ollick confirms that according to rumors, the government is going to impose “some kind of 90 day foreclosure moratorium on the banks which would melt down the housing market.”  – Zero Hedge

If you are a frequent reader of this blog or our Twitter stream, then you know my clear and unequivocal stance on the US real estate recovery – there isn’t one and, in fact, US real estate is headed for a crash of epic proportions.  Forget the charts, data and expert analysis.  At times like this, you simply need to rely on your Grandfather’s logic.  Specifically:

  • The people are out of money
  • The people are underwater
  • The sub-prime scam jig is up
  • The banks are not lending money
  • “Prime” neighborhoods are strewn with abandoned homes, squatters or perpetually delinquent owners
  • Despite the propaganda, we all know that real estate shadow inventory dwarfs current inventory
  • Despite the propaganda,  Americans have no faith or hope of any “recovery”

… And now, perhaps the biggest bombshell of all …

  • Title Undefined Mortgages.  Translation? Nobody knows who truly holds the mortgages on millions of US homes.
  • As a result, title insurers are refusing to insure mortgages in foreclosure or otherwise, uncertain as to who actually owns the title.  Problem? Lenders won’t write mortgages without title insurance.
  • Further problem? Investors that have been buying homes in hopes of catching the bottom are going to dry up overnight for fear of buying a foreclosed home whose title is undefined.

For a little further insight into the matter  Watch The Full Video Below.

It’s terrible that real estate may come to this – but it was inevitable given the farcical game that Wall Street and the government have been playing with real estate. Most notably, by not forcing banks to mark-to-market the true value of their residential mortgages, the government artificially maintained a real estate market that was truly in need of playing the only card it had left – catharsis.

Well, we are about to learn that markets can only be artificially maintained for so long.  Eventually, they break free and revert to their true pricing levels.  US Real estate is about to go through a mean dose of reversion, while simultaneously providing gold with additional fuel for $2,200.

Canadians Are Making A Killing Of A Lifetime On U.S. Real Estate … Is It Still Too Early?

Posted by AGORACOM at 7:16 PM on Sunday, October 11th, 2009

The family and I were at church earlier today, followed by the typical social gathering in the church hall.  While there I spoke to a very good friend of mine (I’m not describing him any more than this to maintain his privacy) who advised his family has just purchased a condo in Florida for just $US 60,000.

How big of a killing was this recent purchase?  After factoring in the fall in Florida real estate and the rise of the Canadian Dollar, you’re probably looking at anywhere between $CDN 65,000 – $75,000 over the last couple of years.

The killing is even more dramatic in percentage terms, which is anywhere between 50 – 60%.

This was ironic because I quickly recalled a Twitter conversation I had earlier this week with my friend and Top 10 Financial Blogger, Paul Kedrosky, that went like this:

Snowbirds 01

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Snowbirds 02

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Snowbirds 03

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Now, I think my buddy made a great purchase because it’s hard to argue with a 2-bedroom condo for just $US 60,000.  However, for the most part, I still think it’s too early to get into Florida real estate.  Why?  I think the $USD is going to get even cheaper and real estate is going to fall even further due to factors like greater supply coming to market as a result of the foreclosure moratorium.

If you’re Canadian, are you considering buying real estate in the US?  Or is it too soon and better deals are still on the way?

If you’re American, are you considering buying real estate (other than a principal residence) at these prices?

FOLLOW UP:  Here’s a little more support for my position.  Housing Crash to Resume on 7 Million Foreclosures – Bloomberg

FOLLOW UP #2: After a number of comments below, it is telling that not one person is advocating the purchase of US real estate at this time.  Some would say this is a great contra-indicator and telling us this is precisely the time to buy – but this is one of those cases where I’m going to go with the crowd.

Regards,
George