Wednesday, September 29, 2010

Today's movers and shakers

Whilst the Aussie market is trading sideways and still attempting to stay above that 4650 level, there's definitely a lot of money to be made in the smaller cap stocks with most days now showing some top gainers with share price movements of 40% and above.  Stocks that come to mind include Northern Uranium, Orion Metals, Avanco Resources and Peak Resources.

Today Avanco Resources received much attention today with it's announcement 'Iron Ore Project Update'.  Whilst there was information confirming the receipt of the initial payment from Vale for the Trindade North project the announcement also detailed the conditions of the purchase of the project all of which we have heard before.  Those that read the announcement more closely would have come across the statement "pending drill holes assays are expected soon, with abundant copper mineralization having been already logged for many of these holes. The Company is anticipating to be able to report further results in the coming weeks." in regards to the drilling completed at the Rio Verde Copper Project.  The shares finished up $0.026 to $0.096 on volume of a massive 306 million.

Galaxy Resources (GXY) had a nice little spike in it's share price before the company decided to put it's shares into trading halt.  The company is due to provide an update on the Mt Cattlin project and future financing arrangements.

Capital Mining (CMY) showed that anything rare earths is still the flavour of the month by surging 33% to $0.12 after hitting a high of $0.15.  The company copped a speeding ticket from the ASX for it's efforts.

Finally, I recently mentioned Apollo Consolidated (AOP) in a post regarding how it could be one to watch however had reservations about the number of shares that would flood the market (issued to Patersons clients).  Well, it appears that the overhang of stock is easily being soaked up by the market.  It also appears that the Patersons clients aren't selling the stock down but rather drip feeding it into the market.  This is evident today with nearly 35 million shares changing hands and the stock only increasing by $0.002.  I dont think it will be too long before it really starts to move.

Tuesday, September 28, 2010

Takeover fight for Sphere Minerals?

For those that like to speculate on increased bids on takeover plays then it may be worth while taking a look at Sphere Minerals (SPH).  Sphere Minerals is a company that is focussing on 3 iron ore projects (Guelb el Aoujm, Lebtheinia and Askaf) in Mauritania, West Africa.  On August 24th the company received a takeover bid from Sidero Pty Ltd, a wholely own subsidiary of Xstrata, for $2.50 per share.  It is interesting to note that this is Xstrata's first real foray into the iron ore sector after predominantly dealing in nickel, zinc and coal in the past.

When assessing if a company is worth taking a punt on there are a few things to observe and ask.  These include:
  • Share registry and existing shareholders - is the share registry wide open with a number of smaller holders or is there some big holders with blocking stakes?  A register that has smaller holders means that taking control of the company is easier and may encourage more bids.  When a major shareholder announces that they will accept the bid currently on the table than it is less likely that a counter bid will come.
  • Trading after the initial bid is made - is the share price trading above or below the initial takeover bid?  If the shares are trading above the bid price then the market is factoring in the possibility of an auction or another suitor emerging.  Shares trading below the bid price may suggest the market believes another suiter may not come to the party or that there is too many conditions to the bid which may result in it failing.  Shares may also trade at a discount if it is a script (share) offer because the takeover price is not finite and is linked to how the well the bidders share price is trading.
  • Substantial holder notices - these are announced to the market by the bidder.  It is a great tool to get an idea of how many other shareholders are accepting and if the bidder is gaining control of the company.  The other key is if substantial holder notices are made by a non-bidder.  This suggests that they accumulating before launching a counter offer or acquiring a blocking stake.
  • Media commentary - quite often the media will publish articles detailing if there will be another bidder, this commentary is always speculation but nonetheless is good reading and though provoking.
So how does this all link in with Sphere Minerals?  The shares have constantly traded above $2.50 since the takeover bid was announced and with good volumes too.  The bid by Xstrata has failed to gain traction and with the acceptances received to date they are only holding 7.06% of Sphere Minerals.  Whilst a lot of acceptances are submitted at the last minute this holding is still small and it demonstrates that current shareholders are unwilling to part with their stock at $2.50 (and especially considering shares can be sold higher on the market).  Xstrata have realised that their takeover attempt is not moving along quickly enough by having to extend the takeover offer period by an additional 2 weeks.  Another key is that on 27/09 a 'becoming a substantial holder' notice was lodged with the ASX by Sin-Tang Development Pte Ltd, this sparks interest as to what the motives are by this company.  It has accumulated a 8.63% stake.

Sin-Tang Development is an investment company based in Singapore.  The company recently invested in Exco Resources (EXS) and last year in Royal Resources (ROY).  Sin-Tang Development Pte Ltd must have plans for Sphere Investments by raising it's stake above 10% and thus defeating the condition by Xstrata that it receive acceptances of over 90% or by doing something different otherwise it would leave the company with only one option and that is to sell into the bid at $2.50 after paying above that price on market.

Broker Euroz has put a price target of $4 on Sphere Minerals and believes that "there is scope for a competing bidder and/or an improved offer from Xstrata"

In other takeover developments Dart Energy (DTE), the company recently that split from Arrow Energy, has made a scrip takeover offer for Apollo Gas (AZO).  The offer comprises of 3 Dart ordinary shares for every 4 Apollo ordinary shares; and 3 comparable Dart options for every 4 Apollo options.  The offer values Apollo Gas at $0.79 per share based on Dart Energy's closing price of $1.05 on 24/09.

Massive investment into Rare Earths

Just when you think that this sector cannot get any hotter it was announced yesterday that Chinalco will invest $1.5 billion in Jiangxi Rare Earth and Rare Metals Tungsten Group.  The news report can be found at and Reuters.  It is astonishing and bodes well for those ASX listed rare earth companies.  Today Lynas Corporation (LYC) was slightly weaker (down $0.025 to $1.325) however Arafura Resources (ARU) was very strong with its shares up $0.125 to $1.21.

Friday, September 24, 2010

Kasbah Resources (KAS), no news, no speeding ticket...

Today Kasbah Resources (KAS) shares have raced away 60% ($0.085) to $0.225 on volume of 9.2 million.  The company has not issued an announcement nor has the ASX issued a price query to the company.  So why the surge? Tin prices have been strong recently and the Eureka Report covered the stock a bit over a week ago.  But the main reason?  Apparently the company was also covered by the Diggers & Drillers monthly publication overnight with a strong recommendation.  The copyrighted publication was posted on stock chat forum 'Hotcopper' by a member only for the moderators to pull it down.

Hartleys also issued a research report on the company with a speculative buy recommendation.

Thursday, September 23, 2010

***Apollo Consolidated shares to come on

I recently blogged about Apollo Consolidated (AOP) and it's option to acquire a gold project in West Africa.  There's been plenty of interest with the shares trading good volume.  Today we received information via an announcement that the company has finalised a placement through Patersons Securities in which their clients have collectively paid $0.005 so Apollo Consolidated could raise $1,000,000.  Whilst we knew that this was coming I do believe it is reason to possibly sit on the sidelines for a bit.  200,000,000 is a lot of shares to come onto the market.  Clients of Patersons will be sitting on almost a 240% gain on their investment and that will be too greater temptation to sell. 

As an aside, access to these kinds of placements to clients show one key advantage of being with a full service broker.  As a person that likes to take full responsibility for my own trades and investment I tend to trade online for the cheaper brokerage costs however throwing a bit of business towards a full service broker will remind him/her to think of you when such deals come along.

Wednesday, September 22, 2010

Morning Briefs

All eyes will be on Avanco Resources (AVB) after it's surge yesterday.  The company announced that drilling confirmed 'existence of a exceptionally high grade copper zone' including one spectacular hit of '9 metres at 50.49% copper from 18 metres.'  Not all of the assay results have been sampled so there's chances there could be more good news on the way.  There's plenty of bids in the market depth this morning and the stock will probably gap up on open above $0.07.

After accumulating a stake in Northern Uranium (NTU) Conglin Yue has now moved on to Orion Metals (ORM) too.  He filed a substantial holder notice on Monday evening helping the share price along yesterday.  He filed another notice yesterday afternoon confirming his stake increase to 12.05%.

It seems like a few are catching on the to the potential of Botswana coal play African Energy (AFR).  The share price has seen some awesome gains the last week and surprisingly avoided receiving a speeding ticket from the ASX.  Today the company has announced a price sensitive update and exploration target.

Gryphon Minerals (GRY) remains in trading halt pending a capital raising.  It's no wondering the directors have decided to do so considering the share price has risen from $0.84 a month ago to last trade of $1.45.

Monday, September 20, 2010

Apollo Consolidated into West African Gold

With the gold price at current highs it seems that every junior is either switching their exploration focus to their gold projects, vending a gold project into their company or completely changing their company activites to gold exploration.

Apollo Consolidated (AOP) is one such company.  It used to be a biotech and has come back out of administration with a now focus on gold exploration.  It's first foray into the gold sector was it's purchase of an 80% interest in the Rebecca Gold Project located 150km east of Kalgoorlie in Western Australia.  It appears however that the company is really starting to gain interest following it's announcement in July and presentation last week regarding the option it has to acquire Aspire Minerals Pty Ltd, a company with tenements within Cote d Ivoire.  Apollo Consolidated has sprouted off in the recent announcement that not only are the guys that helped get Gryphon Minerals (GRY) and Ampella Mining (AMX) get off the ground are involved but the project does have some 'nearology' to Perseus Mining (PRU).  These are some big names and very successful explorers in the West African gold game.

Today's share price action is strong with the shares currently up $0.002 to $0.017 with good volume.  The sell side is reasonably thin however with over 484 million shares on issue I do have reservations about how many of those will come on to the market.  I also need to take a closer look at the terms of the option (to buy Aspire Minerals Pty Ltd) but one thing is for sure, and that is there's quite a lot of interest in this one.

Saturday, September 18, 2010

Focus Minerals Research Report

  • Eagle Research (Keith Goode) has issued a research report on Focus Minerals (FML) with a speculative buy recommendation
  • Report dated 16/09/2010
  • Target: $0.10
  • FML last trade: $0.056 (17/09/2010)
  • Research report link

ABM Resources Research Report

  • BGF Equities has issued a research report on ABM Resources (ABU) with a buy recommendation
  • Report dated 16/09/2010
  • Target: $0.07 
  • ABU last trade: $0.041 (17/09/2010)
  • Research report link

Thursday, September 16, 2010

Resource Generation Broker Research Report

  • Shaw Stockbroking has issued a research report on Resource Generation (RES) with a buy recommendation
  • Report dated 15/09/2010
  • 12 month price target: $1.60
  • RES last trade: $0.69 (16/09/2010)
  • Research report link

Wednesday, September 15, 2010

Molopo Energy Broker Report

A good source of mine has indicated that a major broker will commence coverage on Molopo Energy (MPO) with a target/valuation price significantly higher than the current market price soon.  The company hasn't been covered by large brokers in the past and quite often broker reports do have an impact on the share price.

Orion Metals flies on rock chips

Orion Metals (ORM) surged 72% to $0.215 today after announcing results of rock chip samples taken at it's Killi Killi Hills project.  Nearly half of the samples showed presence of heavy rare earth elements whilst some of the samples also showed anomalous levels of gold.  Considering the market cap of this company is still very small there could be a lot more share price appreciation in this one.

Tuesday, September 14, 2010

Small Cap Snippets

I'm amazed about how much interest there still is in Northern Uranium (NTU).  The fully paid shares have now gone ex-rights and the rights are trading under the code NTURB.  For those that follow the stock don't forget to watch closely for any arbitrage trading opportunities between the rights and heads.  Also interesting to note is the forever changing share registry.  Not long after Areva confirmed it had exited it's position so to did Mineral Resources (MIN).  Since then we've also had Conglin Yue (from my research he seems to be a private individual investor with many other holdings) show his hand after accumulating a 10.92% holding.

This morning I tweeted about Batavia Mining (BTV) and that it would be one to watch today considering it's form yesterday.  Definitely a leaky ship.  The company went into trading halt this morning before trading commenced and it will announce exploration results soon.  It's neighbour, Western Desert Resources (WDR) announced drill results from it's Roper Bar Iron Ore Project yesterday with little fanfare.

Finally, Avanco Resources (AVB) had another case of 'flashing' or fake bids earlier this morning.  The games in this one have been prominent the last few days.  'Flashing' involves showing fake buy or sell orders to incite other traders into placing orders and therefore triggering trading.  The stock had numerous large buy orders in pre-open this morning which were cancelled before market opened.

OZL won't be passive with Sandfire Resources

For those that have a copy of the Australian Financial Review (AFR) from yesterday there was a nice little artice on page 18 regarding the intentions of OZ Minerals (OZL) and their stake in Sandfire Resources (SFR).  The article details how the OZ Minerals chief executive says that the company will not be a passive shareholder in any of the companies that it invests in (including Sandfire Resources).  He goes on to say that OZ Minerals will not be an investment house investing a bit here and a bit there because investors can do this themselves.  This suggests that any company that OZL invests in could be a takeover target as it will simply not just 'sit' on an investment.

Unfortunately I cannot provide a URL link to the article because AFR does not provide the full story unless you are a subscriber.

Thursday, September 9, 2010

Orion Metals (ORM) now next to Northern Uranium (NTU)...

Orion Metals (ORM) has staged a massive 76% increase in it's share price to $0.15 after announcing today that it has acquired the Killi Killi Hills rare earth project in Western Australian close by to Northern Uranium (NTU) tenements.  The company picked up the tenements on the cheap by paying only $55,000 (cash and scrip) and a possible future maximum royalty of $100,000 to Mount Resources Pty Ltd.  I tweeted about the announcement a little after 3pm and luckily took a small position at $0.11 at the time.

Reading the forums online there has been a lot of chatter about the stock and it's potential upside for a number of reasons.  These reasons include:
  • Small market cap of only $8 million undiluted (Northern Uranium's is approximately $40 million)
  • Lack of shares on issue (approximately 55 million) which will make it hard to stifle the share price
  • Rock chip samples recently taken with results due in the next week.  Anticipation of these results will help the share price.
  • 'Nearology' to Northern Uranium.  Traders and investors will be wanting to ride the next share price burst after the performance of NTU shares.
The company also has other rare earth tenements in Queensland plus a copper-gold project near CuDeco Limited (CDU).  Tomorrow will be an interesting day, hold on to your hats ladies and gentleman.

As an aside and interesting to note, Areva has taken it's chance to exit the share registry of Northern Uranium.  Areva filed a 'ceasing to be substantial shareholder' notice to the ASX today.

Tuesday, September 7, 2010

ASX enquires Chrysalis Resources (CYS) about drop in share price

I recently posted about the sudden drop in the share price of Chrysalis Resources (CYS) before the stock was placed in trading halt and a subsequent announcement was released to the ASX advising that their drilling at Doolgunna West had found no results of significance.  I commented on how the share price drop seemed fishy, I wasnt the only one.

In a 'Pure Speculation' article by Robin Bromby yesterday he posed similar questions and asked "Has the ASX noticed?".  The answer is yes!

Today we see that Chrysalis Resources has responded to an ASX query.  The query raised by the ASX goes somewhere along the lines of:  Your shares have dropped from $0.26 to $0.20 just before a trading halt, we want to know when you knew of the information regarding the drilling results versus how long it took before the news made it to market.  It makes interesting reading.

It does go to show that price and volume indicators still go along way in preempting news.

CYS shares last traded at $0.145, down $0.02 at 12:34PM AEST.

Research Note on Dragon Mining (DRA) - Patersons

  • Patersons have issued a research note on Dragon Mining (DRA) with a 12 month rating of SPECULATIVE BUY.
  • Report dated 07/09/2010
  • Target price $0.22
  • DRA last traded $0.12 (07/09/2010 12:52pm AEST)
  • Research report link

Sunday, September 5, 2010

Cougar Energy Updated Research Note (Patersons)

  • Patersons have issued an updated research note on Cougar Energy (CXY) with a 12 month rating of HOLD. 
  • Report dated 02/09/2010
  • Target price $0.08 
  • CXY last traded 0.031 (03/09/2010)
  • Research report link
Shares in Cougar Energy were suspended way back on 20/07/2010 after the Queensland Department of Environment and Resource Management (DERM) ordered the closure of the Kingaroy plant due to concerns of the quality of underground water being affected.  Underground water samples taken by DERM have come up clear however the department seems to be intent on making life difficult for the company after rejecting it's environmental submissions since.  Cougar Energy is now suffering funding issues and with the share price now at $0.031 (after recommencing trading on 02/09/2010) any raising won't be at a great price.  Very dire.

Saturday, September 4, 2010

High Risk, High Potential return in real estate shell

For those that are interested in a possible high risk investment in real estate from the ground up may like to take a look at Olea Australis (OLE).  The company used to sell olive oils however has disposed of all assets relating to this and are evaluating new opportunities for the company with a highly likely bias towards commercial real estate.

The company has just over $1.5 million in cash on hand and a market capitilisation of approximately $2 million so we're looking at an extremely high risk, potential high return sit-and-be-patient-type investment.  Things are slow going at the moment which is evidenced by the fact the company has been looking for alternatives for over a year now (although they were close with one business proposal which eventually fell over).  In recent times the company has announced the appointment of Tony Pitt, an experienced person involved in numerous other initiatives for mergers, company wind ups etc to maximise share holder returns.
You need to also take into mind that when an asset is found there is going to have to be a capital raising too. 

As always, trading/investing in shell companies is high risk and I would only ever invest money in such companies that you can afford to lose.  Shares in Olea Australis last traded at $0.003 yesterday.

Friday, September 3, 2010

Chrysalis Resources - Writing on the Wall?

I posted about Chrysalis Resources (CYS) when the company still remained in trading halt on Wednesday (01/09/2010) and briefly mentioned that I was wondering if the pending drilling results were to be negative considering the sudden drop in share price the day it went into trading halt.  Take a look at the trading data below:

Date              Open    High     Low    Close   Volume

02-09-2010 $0.140 $0.160 $0.140 $0.140 1,733,132

25-08-2010 $0.230 $0.230 $0.200 $0.210 686,500

24-08-2010 $0.265 $0.270 $0.260 $0.260 44,230

23-08-2010 $0.270 $0.270 $0.260 $0.265 130,502

20-08-2010 $0.280 $0.290 $0.255 $0.260 215,007

19-08-2010 $0.295 $0.295 $0.280 $0.280 132,000

You can see that the stock was slowly drifting down in the lead up to 25-08-2010 which seems nothing out of the ordinary.  Suddenly, on 25-08-2010 (late afternoon trading halt) the stock dropped $0.05 on volume of 686,500 units raising my suspicions.

Whilst it is hard to react to daily share price movement if you are not sitting at the screen all day it does go to show how important having a stop loss in place can be.  Anyway, on 02-09-2010 the company announced that "the assay results of our drilling at the 5 target areas have returned no results of significance. At this stage the Company has no explanation why the assays have not returned any anomalism."  Back to the drawing board.  The shares were punished and closed at $0.14.

At least the shares have slightly rebounded to $0.15 today.

Neighbour Sanfire Resources (SFR) remains it it's own trading halt pending a resource upgrade announcement.  I think that this news has been factored into the share price already and the upgrade has been expected so I dont think there will be too much movement in the share price unless it is a blockbuster upgrade.  I did read somewhere lately that if OZ Minerals were to make a move on Sandfire Resources that it would have to be sooner rather than later because the way that Sandfire Resources is upgrading resources the share price is only going to appreciate and make it more expensive to acquire.

Thursday, September 2, 2010

Canyon Resources up after West Africa gold acquisitions

Gold in West Africa seems to be one of the favourable and fashionable areas on the market at the moment and there seems to be quite a rush of juniors acquiring projects in countries such as Burkina Faso, Senegal and Ghana.

Canyon Resources (CAY) is the next cab off the rank to also acquire projects.  The company has only been listed over a few months and raised $3.5 million through it's prospectus to explore it's gold project in Cue, Western Australia and to also investigate potential investments in West Africa.

Today the company announced a binding agreement to acquire Askia Sarl Pty Ltd and the two gold projects it holds (Taparko North and Tao Projects in north eastern Burkina Faso).  Canyon Resources has decided to conserve cash and purchase the project via issuing shares to Askia Sarl Pty Ltd leaving the company plenty of cash to explore.

CAY shares are up $0.07 to $0.36 today after the news.  CAY has very little shares on issue (just over 27 million) which means there are very few tradeable or 'free floating', this is evidenced by the many gaps in market depth on the sell side and make it pretty tricky (and risky) to try enter and exit a position.

Wednesday, September 1, 2010

Moment of Truth for Chrysalis Resources

Chrysalis Resources (CYS) still remains in suspension and has done so since 26/08/2010 pending release of an announcement of drilling results on it's Doolgunna West tenements.

There has been so much excitement surrounding the Doolgunna area since the success of Sandfire Resources (SFR) that I think the results from Chrysalis Resources will be widely anticipated.  The companies tenements are about 20km away from Sandfire Resources Degrussa project so it could provide an indication if the belt extends from Degrussa and by how much.

Keeping an eye out for this announcement will definitely be worthwhile and help determine a little if it is all just hot air...

For those holding CYS my only concern is the lack of share price appreciation in the lead up to the trading halt.  Usually, if the news is good, there is a nice spike in share price and volume before any annoucements.  In fact with this case the share price dropped on increased volume which makes me wonder.