Monday, January 24, 2011

Acuvax (ACU) Next Biotech to Resource Play

Acuvax Limited (ACU) had some nice volume and trading today so I decided to do a bit of research and see what I could come up with.  I'm quite excited about this high risk shell play that I am sure is soon to vend in a resources project and see some good returns!

Today's share price action suggests to me that the company is soon to acquire a resources project, that or the market is starting to join the dots together and get onboard...

The first sign was the annual report issued in September and the following statement contained within:


The Company is continuing to pursue investment opportunities in the both the biomedical area and
alternate sectors. The Company is currently in preliminary discussions with several interested
parties with a view to furthering any investment opportunities for the Company at the completion of its capital raising program."

The above statement is quite vague and gives no indication what the further investment opportunities may be so taking a position back then would have been just a punt.

Those astute market watchers or people with a keen eye for details may have picked up on the next clue in late November.  This was in the form of old directors resigning and new director appointments of Keong Chan and Lloyd Flint.  Lloyd Flint is currently a director of Palace Resources (PXR), past director of Zambezi Resources and also has secretarial duties at Globe Metals & Mining (GBE) and Odin Energy (ODN).

In December (02/12) we see a change in Secretary and office to where else but Perth.  Perth is where many of the small resources specialist brokers such as Patersons and resources companies reside.  It's a resources rich state, especially in the North.

The next clues are becoming less subtle.  Numerous substantial holder notices are being lodged in early to late December.  Those investors include Jersey Investments, Murdoch Capital and Syracuse Capital.  These are all companies with stakes in recently listed float Glory Resources (GLY).

In conclusion I think that today's share price action was more than just a pump and dump and there's a bit more to come on this one.  ACU shares were up $0.002 to $0.004 on 66 million units, still valuing the company at a small $4 million.  If other recent shell plays such as Energio (EIO) and C @ limited (CEO) are anything to go by this should be very interesting!

Sunday, January 23, 2011

Running with Zircon Theme

Following up on my post last week regarding Zircon and the potential of associated explorers I've done some more reading and come up with a few links for those that are interested.  The links are shown below:

Chinese hunger for zircon drives handy deal with Diatreme
Ceramic tile craze boosts mineral sands demand
Zircon producers may start calling the tune as shortages loom

Whilst two of the articles are a little old it is interesting reading and mentions two additional companies that I did not cover: Diatreme Resources (DRX) and Image Resources (IMA).

Thursday, January 20, 2011

China's demain for ceramics to spur Aussie Zircon stocks

Much of my time is spent sifting through announcements trying to find that one or two lines that might signal that a company is changing focus or on the hunt for a new project which could be a good catalyst for some share price gains.  Every so often I get an idea and a top down approach prevails, this is one of these cases.

China.  It is one of the drivers of the market at the moment and key to many of our resources stocks on the ASX.  Whilst the focus is quite often on iron ore in China's booming construction industry there is another ingredient which is key - ceramics, which are made from ZIRCON.  Ceramic tiles are used on the floors, walls and almost any surface in buildings in China.

Iluka Resources (ILU) is the heavy weight listed on the Australian market.  It recently stated that there is a worldwide shortage of zircon which will continue and thus support zircon prices.  The company has an excellent chart and has tripled in the last year.  It will probably see more gains but I am here to investigate the smaller capped stocks.

Matilda Zircon (MZI) is the smallest play on the ASX.  It has had a checkered past including going into administration whilst having a decent Tiwi Islands asset.  Michael Kiernan who I used to respect somehow managed to screw the company up similarly to Territory Resources (TTY).  Avoid.

This leaves three plays that have a geniune chance to make some good returns.  Sheffield Resources (SFX) has only been listed for just over a month and as a result is quite cashed up with over $6million in cash (not bad for a market cap of ~$11 million).  It's always hard to judge new listings as there isn't much of a chart and you cant measure the company performance.  Having said that, the company does have a few projects in Western Australia and that includes an ex BHP prospect with a 1.5-2.5 billion tonne exploration target.

Gunson Resources (GUN) and Base Resources (BSE) are the ones to watch in my opinion.

I remember last year (February) when Base Resources purchased the Kwale mineral sands project in Kenya.  The share price tanked below $0.10 as the market was hoping for a hot project at the time (zircon wasn't 'sexy').  They purchased the project for next to nothing and the previous owner had sunk millions into it already, including completing a DFS and having all the permits already in place.  Recently Base Resources announced that the project economics have become more robust and estimate an NPV of $160 - $210 million.  Goldman Sachs recently put out a research report with a $0.50 12 month target on the stock and buy rating.  The report cited that the valuation put on the stock was discounted as a result of the high capital expenditure required compared to market capitilisation risk (I.e. asking how can a company that small raise the funds to get the project off the ground?).  It is good to see a small stock being covered by one of the major brokers.

Gunson Resources has a smaller market cap (~$47 million) when compared to Base Resources although their project is in Western Australia.  The Coburn Zircon project has an estimated NPV of $190 million.  The company share price hit a high of $0.30 in December but has cooled off since.  Expect newsflow especially when statements such as "Discussions with potential strategic investors in the Project are ongoing, with seven interested parties actively reviewing the investment and offtake opportunity." are made to the market.

GUN closed at $0.24 whilst BSE at $0.425 today.

Monday, January 10, 2011

Returns Scoreboard for 2010

ASX Code - Date Mentioned - Then Price - 31/12/2010 PriceMove

     JML            13/02/2010            0.4                  0.675             69%

    ARV            29/07/2010           0.043                0.063            47%

    AVB              2/08/2010           0.019                0.145           663%

    HRS              5/08/2010            0.21                  0.36              71%

    INE               8/08/2010           0.047                0.045             -4%

   NTU              9/08/2010             0.11                0.405           268%

   TOE            31/08/2010           0.099                  0.16              62%

  CAY              2/09/2010             0.36                  0.66              83%

  ORM              9/09/2010            0.11                  0.25            127%

  AOP             20/09/2010          0.017                0.012             -29%

  AFR             22/09/2010          0.165                  0.59             258%

  SPH             28/09/2010            2.49                  3.04               22%

 DDD               4/10/2010          0.032                0.041               28%

  PRR               5/10/2010           0.125                 0.17               36%

  SER            27/10/2010            0.062               0.083               34%

There's been plenty of returns to be had in the last six months and especially in the small cap resources stocks which tend to be my favourite area.  Whilst I've mentioned many stocks in the last year or so the above table shows those stocks that I've had the most interest in and the returns from the time mentioned until the end of last year.  Many of the stocks you may have taken profits in or not held for that long but it does give a nice little indication of performance of the blog.  Don't forget to click on any of these companies in the right-hand margin of the blog to have a look as some of the reasons for my interest in these stocks originally.

AVB ended up being the cracker of the year with a staggering 663% return!  A number of these stocks have run even harder in first week of January.

Resources stocks to target this year in my opinion are copper, coal, lithium, potash, rare earths and zircon companies.

After taking a break from the last couple of months I hope to provide insightful and interesting commentary going forward for 2011.  Good luck with your investing!