Wednesday, November 26, 2014

Dourado Resources (DUO) - Tech Vend in?

There's no doubt that the current market for junior resources firms is bleak.

Technology start ups on the other hand are the flavour of the month.  This combination is resulting in a number of resources firms finding themselves with dwindling cash reserves and not many other alternatives but to vend in a Tech. firm to raise capital and rebirth.

Another company that has fallen into this category is Dourado Resources (DUO).  The Perth based company has been focusing on developing gold & copper projects (Mooloogool & Sabbath).

Their quarterly report to 30th September shows a company cash balance of $86,000. Subsequent Appendix 3b's (x2) show raisings of $25,000 and $75,000 both at $0.01 per share and a premium to prevailing share price at the time.

The company currently has a miniscule market capitalisation of $1.3 million and interestingly shareholders have approved raisings of up to $3.5 million to be made in the future, obviously significantly higher than the current market cap!  The company has stated that it is in advanced discussions with one party in regards to a capital raising initiative.

I would like to point readers to the announcement made to market on 20th of November titled "Company Update & Forward Strategy".  The market response on that day was quite muted however after market a number of popular Hotcopper members started spruiking the stock and the next day it surged from $0.01 to a high of $0.012.

Since the announcement the traders have moved on and sold the stock down steadily.  The announcement stated the company is discussing, negotiating and assessing opportunities in various sectors.  Three proposals have been put forward to them include one technology opportunity.

Considering the current market you would think that the only way to raise funds would be via a technology acquisition.  In conclusion, with a measly market cap and a possible tech vend in coming it's one worth watching, even more so with the price at or below the price before this new information has come to hand.  DUO shares closed today at $0.007.

Sunday, November 9, 2014

Broad Investments - Substantial Acquisition Coming?

An interesting announcement that came up on my radar during the week was one made by Broad Investments (BRO) on Wednesday in the form of a Market Update.

Readers of my blog will remember that I used to identify shell plays that may be about to vend in the next hottest or popular commodity or technology.  This form of speculating is very hit or miss although can be quite lucrative for the early mover who gets in at rock bottom and has a lot of patience.  There's also a good chance that nothing eventuates.  Recently, the hottest projects have been Graphite (this appears to have worn off, although OGI Group (OGI) was good fun to trade) or tech start ups.

Broad Investments (BRO) is one worthy of attention.  In it's recent Market Update the company advised that it has finally turned a profit after being listed on the ASX boards for a significant time.  It appears the company still uses the same announcement format from 8 years ago!  The company reported six consecutive quarters of being cash flow positive as well as a modest profit of $45,000 for the financial year ending 30/06/14.

The company activities involve the provision of telephony and communication services through its subsidiaries.  The company has a market capitalisation of approximately $2.5 million and as at 30th October it has cash equivalents of $575,000 (including cash $297,000 / ASX listed shares $47,000 / Trade receivables $232,000).  Revenue for the last financial year was $3.8 million.

The numbers stack up however the potential share price kicker was for those that read to the very last paragraph of the announcement which stated the following:

"the Directors and management are currently considering a substantial acquisition, which has now reached due diligence and independent valuation stage, but is still subject to successful financing and final terms and price negotiation. The Board will provide further updates should this or any other transaction it may be currently considering or working on, reaches a level of certainty in negotiations, due diligence and financing, which the Board can reasonably be confident of completion. "

BRO last traded at $0.003 on Friday on 2.5 million units.  The stock is thinly traded.

Tuesday, October 21, 2014

Blina Minerals (BDI) – worthy of a punt?

One stock that has come up on the radar the last few days is this little gold and diamond tiddler, Blina Minerals (BDI).

With the stock not trading at $0.002 for over a month and a couple of buyers coming up on open yesterday morning and this morning paying the same price it hasn’t been hard to identify that there was something going on in the background.  This was confirmed today with a solid 29 million units changing hands with basically all the stock trading at $0.002 except for a small quantity on close.  The stock closed at $0.001 however this can more or less be ignored as these units sold into the close appear to be sold by a Chi X bot that bought during the day and has a mandate that it cannot hold overnight.

Anyway, now that the trading aspect has been covered let’s take a look at the story which starts with another company, Orbis Gold Limited (OBS).

Orbis Gold recently announced an updated scoping study showing very solid numbers on their Natougou gold project in Burkino Faso.  At the same time, the company also announced that they had received an unsolicited and indicative takeover proposal by Semafo Inc. for $0.62-$0.65 per share.  Interestingly, Semafo Inc. did not have a condition to complete due diligence on the OBS takeover.  In other words they are very confident that the company is undervalued and they are wishing to move quickly.  So much so, a few days later they announced the takeover for $0.65 per share.  Trading in OBS shares has resulted the price creeping up to $0.70 today.  This suggests that the market believes another bidder may appear or that the stock has been re-rated as a result of the scoping study.  At the start of trading today the market capitalisation on OBS is approximately $167 million.  They’ve also hired an adviser for their defence indicating that there’s going to be more to the story.

BDI tenements lie adjacent to OBS’ making it a nearology play.  BDI’s tenements appear to be on the same fault line.  BDI has a miniscule market capitalisation of approximately $1.5 million. As at June 2014 their cash balance was $1.4 million.

BDI have made the following comments on the project “The soil sampling showed high gold values in excess of 50ppb but Blina was unable to access the original analytical reports and has therefore adopted a cautious approach to the results. However, the regional setting of the Exploration Licence just 15km from the Natougou gold deposit on an interpreted north-northwest trending structure and along trend from the regional soil geochemistry anomaly of Orbis Gold makes the tenement an attractive exploration prospect.”

News flow on Blina Minerals is imminent with the July quarterly activities Report stating the following:

“A soil sampling programme has commenced and results will become available in the September quarter.”

These sampling results are now overdue.

Back in town

It's been a long time...

We quite often start things and we either lose interest, get too busy or it all becomes too hard.

I really enjoyed posting about the stocks that caught my attention and hopefully assisting others in identifying opportunities.  It's been over a year and a half since my last posting to this blog but I'm hoping to change this and start posting semi-regularly when I can.

I've sort of made a start with sending out some tweets to my followers recently.  For the times that I can't post in detail to my blog or it's a time sensitive piece of information I'll send out a tweet.  I highly recommend that you click on the "follow me on twitter" banner!

For those that have followed me on Twitter recently may have come across a couple of gems!  These have included alerts to watch:
  • Toro Energy (TOE) - Identified that the MD of TOE was in India with Prime Minister to sign uranium deal ($0.08 -> high $0.13) and;
  • Capital Mining (CMY) - Alerted to the acquisition of Chinese Cloud Computing company ($0.005 -> high $0.013)
Today and yesterday I also alerted followers to OGI Group (OGI).  I sent out a high priority tweet yesterday afternoon at $0.007 after the company announced that they were acquiring graphite licences adjacent to Triton Minerals (TON).  It took some time for the market to digest the news before the stock closed at $0.01.  Today the company went on to open at $0.014 and trade right up to $0.03 before settling down to $0.024 on close.

TON today announced it's Nicanda Hill Maiden JORC Resource.  Trading was very erratic.  In true TON style the stock opened up high before getting sold off to close up $0.09 at $0.405.

For a piece of nostalgia on TON and it's initial moves, I dug up a previous post here:

How far they have come in two years!
Happy trading.

Wednesday, January 16, 2013

Artemis Resources (ARV) Star Performer

With the ASX market picking up quite substantially over the last few months confidence is finally starting to return to the small to mid cap sector.  Each and every day we are seeing a number of stocks moving aggressively and volumes increasing.

Today's star performer was Artemis Resoures, up $0.013 to $0.019 (171%) on 61.5 million units.  The company announced that a "Review of Mt Clement Project identifies significant antimony mineralisation". Antimony prices have risen signficantly in the past few years and the company believes that this part of their gold project now warrants drilling.

Coal prices have been in the doldrums and we are seeing recovery in this sector now with good gains made by stocks such as Stanmore Coal (SMR), Continental Coal (CCC) and Universal Coal (UNV) today (all up over 10%).

Wednesday, January 2, 2013

ASX up after Fiscal Cliff avoided

Our market motored along today with the ASX 200 (XJO) adding 57 points or 1.2% and crashing through the 4700 barrier.  This followed news in the US that the senate had passed the bill that will ensure that they avoid crippling tax increases and so called 'Fiscal Cliff'.

Telstra Corporation (TLS) continued on it's way with a rolling high and close of $4.44 (up $0.07).  Resources stocks such as RIO, FMG and NCM all had a very good day.  The banks were slightly stronger.

In the small cap space Drake Resources (DRK) outperformed, up $0.05 or 25.6% to $0.245.  The stock was only $0.062 before Christmas.  On the flip side, Korab Resources (KOR) a stock I mentioned yesterday, suffered profit taking and was down $0.053 to $0.092.

Tuesday, January 1, 2013

Korab Resources Surges on Asset Sale News

The ASX market closed early yesterday at 2:10PM EST however that didn't stop Korab Resources (KOR) surging 116% to $0.145 after making a price sensitive announcement at 12:20PM.

The company has announced that it is selling its Winchester magnesium project in the Northern Territory to an Estonian company for up to $33.2million.  Unlike many takeover deals announced in the resources sector of late this takeover is binding between the parties and subject to regulatory approvals.

The deal will involve Augur Investments Ou paying $16.6 million in cash on closing of the deal and potentially $16.6 million in royalties from mined magnesite.  On paper the deal is good, especially considering that after the share price surge Korab Resources still only has a market value of $17million.  The company also has a gold and silver project in the Ukraine, gold project in Western Australia and other non-core projects.

RCR released a broker research report on the stock on the 14th of December and has a valuation price of $0.21 per share.  The broker believes that the Winchester project is uneconomical so it remains to be seen if Korab Resources will actually receive any royalties in the future.

With Korab Resources currently short on funds it will be interesting to see if a capital raising is completed to get them through to the closing date of 31/03/13 for the deal.