The ASX Stock Selector

Hastings Rare Metals Research Report

2012-02-11T16:22:00.000+11:00

RM Research has released a research report on Hastings Rare Metals (HAS)
Research report dated 06/02/2012
Rated as Speculative Buy
HAS last trade: $0.17 (10/02/2012)
Research link

Balamara Resources - 'Nearology Play'

2012-02-09T22:14:00.000+11:00

Balamara Resources (BMR) is a stock that I have been monitoring over the past week. There hasn't been a massive volume day that has caught my attention like some of the other stocks I have been posting about lately. The rise has been a consistent one with increasing volumes.

The ASX is on the ball. Today the company received a price query asking why the stock has moved from $0.01 on 03/02/2012 to $0.016 today. Balamara Resources had no explanation and referred the ASX to recent announcements.

The company used to go by the name of Sultan Corporation (SSC) however has now rebranded itself. It depends on how you are playing a stock that will determine if this speeding ticket is a positive or negative. Those that took a position as a daytrade will probably be disappointed as inevitably a stock will experience weakness after a speeding ticket. There is the perception that a company cannot announce any price sensitive news for a little while after responding. If you dont fit into the above category then I think it's a positive...

The stock may be weak for a day or so which could be a good chance for those wishing to open a position before it's next upward move. I do think that there is a bit of news flow for this company to look forward to. For a starter, the company is about to commence drilling at it's base metals project in Poland. For those that like to take a punt on 'nearology' plays then it may be worth researching further. The company claims it's project lays immediately adjacent to Europes biggest Copper producee (KGHM).

On another front the company is in good communications with the Togo government regarding the tender process for a phosphate deposit. This news, however, could be months away.

Bandanna Energy - Bidders back?

2012-02-07T20:50:00.000+11:00

I was alerted to Bandanna Energy (BND) recently when the stock had a massive volume day of over 26.2 million units Thursday last week (02/02/2012). The stock surged up $0.105 to $0.76 on that day. Considering the stock hasn't seen that much of a daily volume for years it went on my watchlist.

I've been looking further into the stock over the last few days. Last year the company effectively put itself up for sale with potential acquirers running the ruler over the company. Bandanna Energy also had employed corporate advisors to assist in the process.

Unfortunately the bidders evaporated and the company put that down to deteriorating and/or poor conditions on equity and credit markets. In the end BND raised $100 million in funds from Insto investors at a price of $1 per share plus a further $1.1 million from retail investors. The insto entitlement offer was oversubscribed however the retail entitlements were poorly subscribed to as the market price dipped below $1 issue price.

One has to wonder if a bidder is revisiting BND. After all, market conditions are a lot brighter. The ASX trading band has tightened to 4200 - 4300, there are excellent signs coming out of the US and a Greek debt default appears slimmer. Interestingly enough the RBA decided today to keep the cash rate on hold citing these reasons, which startled the market. The ASX 200 dropped after the news whilst the Australian Dollar surged.

The volume on 02/02/2012 could be a very good signal. Should a bidder come for BND you would expect that it would have to exceed the recent raising completed at $1 which leaves a lot of upside. You've also got to remember that even if a bidder doesn't appear the stock was over $2 only six months ago. There's recovery in it at least.

Jacka Resources & Pancontinental Oil & Gas Link

2012-02-05T21:40:00.000+11:00

Pancontinental Oil & Gas (PCL) is a stock I mentioned on Thursday night as one to watch on Friday after it came up on my scan. The stock managed to hold it's strong gains from Thursday and finish even at $0.11 on Friday (03/03/2012), again on good volume. The stock hasn't gone unnoticed with the ASX as after market a price and volume query was issued and responded to. The company advised there was nothing that needed to be announced to the market.

Hartley's issued a research note on the company earlier in the week which may have prompted more interest in the stock. Hartley's rates the stock as a Speculative Buy and has a six month target price of $0.23 due to a number of catalysts.

It is interesting to note that Jacka Resources (JKA), a stock first mentioned in a July post last year (also $0.11 at the time), had it's shares up $0.01 to $0.165 on Friday on good volume. So the link? Both companies have a joint venture to pool resources to evaluate petroluem acreage opportunities in East Africa. I am wondering if JKA has started running as a result of PCL running and the market is simply guessing that they may have finalised an application for an onshore asset.

Considering PCL received a 'please explain' from the ASX on Friday it will probably take the wind out of it's sails. If JKA continues to rise there may be some news directly and only related to JKA around the corner. If JKA backs off then we know the market was only speculating on joint venture.

One thing is for sure, JKA technically looks great so if the rise is not broken then definitely keep an eye on it!

Lynas Corp Fires up whilst Mantle Mining gets ASX query

2012-02-02T19:46:00.000+11:00

The ASX 200 regained all of yesterday's losses and end up 42.1 points to 4267.8 for the day.

All eyes were on Lynas Corporation (LYC) as the share price surged over 19%, up $0.255 to $1.59 after confirming that Malaysia's AELB board approved the granting of a 2 year temporary operating licence for their rare earths project in Gebeng, Malaysia. The company will be granted a permanent operating licence should it comply with the terms of the temporary licence. Those that had long CFD positions with a guaranteed stop loss (to protect on the downside should the licence not have been granted) will be very happy. Macquarie has maintained an outperform tag on the stock.

Elsewhere, Mantle Mining (MNM), which has been a favourite on this blog surged to a high of $0.125. The volume on and just after market open was phenomenal and I thought that it could be a massive day. Unfortunately the ASX lodged a price query with the company which capped any larger run that may have been on the cards. I liked the response from MNM. Whilst the company advised there is no explanation for the rise in volume and price it did say the following:

"The Company is at an exciting stage in its development.

The Company is progressing a drilling program at Bacchus Marsh and expects to have further results from that program available during February and March.

The Company also notes that trial dates for its action relating to the Mt Mulligan tenements have been set for early March."

MNM closed up $0.01 to $0.115 and the buy side of the depth is still reasonably stacked.

Yesterdays scan came up with Pan Asia Corp Ltd (PZC), today the stock opened at $0.145 and flew to a high of $0.175 early morning before being sold off for the rest of the day and closing at the opening price.

My scan says that tomorrow's stock to watch is Pancontinental Oil (PCL). The stock was up $0.014 to $0.11 today on 6.7 million units.

AXG Mining Limited (AXC) Research Report

2012-02-02T19:37:00.001+11:00

RM Research has issued a research report on AXG Mining Limited (AXC)
Research report dated 30/01/2012
Speculative Buy rating
AXC Last Traded Price: $0.011 (02/02/2012)
Research link

Market Action Today

2012-02-01T18:29:00.001+11:00

The market got hit today with the ASX 200 dropping 37 points to 4225.7. Fairfax Media (FXJ) jumped $0.075 to $0.815 after it was revealed that Gina Rinehard grabbed another 10% of the company. The stock had a massive turnover of over 226 million units. Questions are being raised as to whether she is trying to take control of the company to promote her political and resources views via content.
The market may have gone down today but there was still no stopping Maverick Drilling (MAD) and Syrah Resources (SYR). Take a look at their amazing charts below:

MAD has doubled since being mentioned in the The Motley Fool email recently however encountering oil in the first test well at their Boling Dome Field has helped it on it's way. I'm none the wiser on SYR however it's other graphite counterpart Strategic Energy (SER) has been also been strong of late with investors taking positions before the ex-date is announced on distribution of Mega Graphite shares.

Mantle Mining Corp (MNM) continued to strengthen since I first posted on it on 19/01/2012. Today the stock closed up $0.011 to $0.105 on healthy volume of 4.5 million shares. Watching the stock today the market depth has been improving. The stock just needs to break that wall of sellers at $0.105 (2,148,467 shares) and then it will be very interesting.

Finally, the most promising stock that came up on my trusty scan today was Pan Asia Corp Ltd (PZC). The stock traded 1.5 million shares and increased $0.03 to $0.145. I've seen this stock be a bit of a leaky ship before price sensitive announcements in the past.

Back on track...

2012-01-31T22:17:00.000+11:00

A month of 2012 has already been and gone! With all the holidays over and Australia Day out the way all brokers should be back on deck this week at the latest (if not, give them the sack!) Market turnover should get back to some normality.

Things are definitely looking positive. There is plenty of signs that the US recovery is on it's way and many firms are announcing their conviction lists with recommendations on exposure to the US led recovery in stocks such as BLD, CPU, NWS and JHX. Greece is becoming less and less mentioned in the media. The volatility in the ASX 200 is also decreasing and the market seems to have found a happy medium at 4200 - 4300 levels.

This has boded well for small cap stocks the last couple of weeks. There seems to be many going for a run and the raft of quarterly reports reminding us what our favourite companies have been up to hasn't gone astray.

With the market having been in the doldrums for the last 6 months or so my stock picking in the small cap category has left a lot to be desired. Hopefully I can write some quality posts and get us back on track this year!

Mantle Mining (MNM) technicals not unnoticed

2012-01-19T22:18:00.000+11:00

A stock that came up on my radar today was Mantle Mining Corporation Limited (MNM). The stock hit a rolling year low of $0.048 only ten days before Christmas followed by a break out two days before Christmas that prompted a price enquiry from the ASX. The company could not provide any explanation for the spike of its shares apart from activity on internet chat sites.
Today, around 10.7 million units or $970,000 worth of stock changed hands and the price ticked up over 10% to $0.092. This is the largest volume since March last year.

The activity suggests that there may be news on the way and it could come from a number of fronts. Traders will be hoping that the stock price doesn't overcook resulting in a ASX enquiry that will kill the momentum. The activity may also be in anticipation of the things the company has on the go in the next few months.
The company recently drilled 4 holes at it's Bacchus Marsh coal project which has a 1-2billion brown coal tonne target. It remobilised a rig in December for a further 11 drill holes that are to be completed in the 15 hole drill program. The company is also taking action to transfer tenements from previous owners for the Mt Mulligan coal project in Queensland however the court case isn't until March. Considering these two fronts are a month or two away my most likely suggestion for the share price activity is a joint venture with Exergen Pty Ltd musn't be far away.
Directors have recently taken shares in lieu of payment of services which is a good sign.

Earth Heat Reseources (EHR) Research Report

2012-01-17T20:44:00.002+11:00

Arrowhead Business & Investment Decisions has issued a research report on Earth Heat Reseources (EHR)
Research report dated 13/01/2012
Fair Value Bracket: $0.039 to $0.881
EHR Last Traded Price: $0.037 (20/01/2012)
Research link

Dragon Mountain Gold - One Step Closer

2012-01-06T19:25:00.000+11:00

I posted about Dragon Mountain Gold (DMG) two months ago regarding the sale of their Chinese assets. When the posting was made the stock had closed at $0.41 and since then the stock price has gradually increased and hovered around $0.45.

A week ago the company confirmed that all approvals have been received and the transaction was completed. The company are due to receive approximately $150 million as a result which equates to a cash backing of $0.62 per share. This has seen liquidity in the share price improve substantially and a greater interest in the stock.

Unfortunately I haven't been posting too much in the last few months as the small cap speculative end of the market has been very tough in light of the overall market and worries about Europe's sovereign debt. It is these kind of trades or investments which are a good target as they almost have a built in floor or protect on the downside.

I recommend setting a news alert on this stock to be able to monitor any announcement made on what the company will be doing with the funds. From the announcement made on 07/11 we only know the following thus far:

"The proceeds of the sale would allow the Company to actively pursue other investment opportunities in the resources industry. The directors will also consider other capital management alternatives with
respect to the proceeds."

DMG shares last traded at $0.495.

The Motley Fool's Top Stock 2012

2012-01-05T21:36:00.001+11:00

As a forum member of HotCopper I occasionally receive marketing material in my inbox. The majority of the time it is someone selling their new whizz bang fool proof trading scheme similar to Optionetics or ways of trading the increasingly popular FX markets.

Today I received a link to The Motley Fool's Top Stock 2012 special report. It is an interesting piece which discusses how telecommunications has evolved in Australia. I didn't know that Australia Post and Telecom (now Telstra) were once the same company! The firm goes on to tip M2 Telecommunications Group (MTU) to be the stock of 2012 based on it's organic growth, service orientated business and positioning for introducation of the National Broadband Network (NBN).

Whilst MTU is a reasonably large capitalised company, it will be interesting to see if the report has an impact on MTU's share price.

Research Report on Isonea Limited (ISN)

2012-01-04T20:49:00.000+11:00

Viriathus has issued a research report on Isonea Limited (ISN), formerly Karmelsonix Limited.
Research report dated 03/01/2012
Target Price: -
ISN Last Traded Price: $0.006 (04/01/2012)
Research link

Nimrodel Resources (NMR) Research Report

2011-12-31T09:20:00.000+11:00

DJ Carmichaels has released a research report on Nimrodel Resources (NMR)
Research report dated 15/12/2011
Speculative Buy - 12 month target price $0.17
NMR Last Traded Price: $0.048 (30/12/2011)
Research link

Dragon Mountain Gold - Return of Capital?

2011-11-08T21:17:00.000+11:00

Dragon Mountain Gold (DMG) today made an announcement that they were selling off their only asset, the Lixian Gold Project for a consideration of $175 million. Whilst Dragon Mountain Gold does not own 100% of the project being sold they estimate that of the $175 million that their share of the proceeds will be $150 million. DMG currently has a market capitilisation of about $93 million. It makes you left wondering, what's the catch? Investment opportunities like this do exist even, this one to the tune of $57 million.

Following the news the share price opened at $0.47 before racing to an intraday high of $0.495. Surprisingly, the stock only finished up $0.02 to $0.41. I think that this can be explained by the fact that there was a few insiders on this one that have made a quick buck and sold into the early strength today to take profits. After all, the stock has increased from about $0.29 late last month.

Whilst there is a few hurdles that remain such as approval from shareholders, Chinese government and Australian FIRB (a little strange considering the asset is in China) these hurdles seem like a formality.

DMG has hinted at completing a return of capital to shareholders. Superannuation Funds will be hoping it is a tax effective structure whereby a chunk of the return of capital is a fully franked dividend.

I expect the share price to appreciate as we lead up to the key dates.

It Works! - Coretrack Limited Technology

2011-09-21T22:26:00.000+10:00

Coretrack Limited (CKK) shareholders have suffered a bit this year with the company share price on a steady downward trend. The share price hit a rolling year low of $0.071 last month but today shareholders received some excellent news.

The company is focusing on developing it's Core Level Recorder System (CLRS) technology which is used when drilling holes for oil and gas. Basically, the technology sends a signal to the surface advising the driller if the sample being collected has been jammed in the hole. This can result in significant cost savings because as it stands if the driller suspects that sample has been jammed he/she can only remove the drill and check or take a punt and continue to drill deeper. With drigs in short supply and the equipment expensive, the use of this technology could go a long way in solving the problem explained.

Today, the company claimed that the technology managed to measure core intake for the entire drill hole at the Noblige 2 deep water well operated by Woodsie Petroleum (WPL). Whilst this is early days and only one trial this is a big step for the company in proving it's technology.

CKK shares finished up $0.012 to $0.105 on 2.5million units traded.

Jacka Resources Trading Halt

2011-09-20T20:49:00.000+10:00

It's been just over two months since I first posted about Jacka Resources (JKA). Since then there has been a lack of newsflow. A few days after I posted about the company the stock price hit a high of $0.14 before that price spike was arrested after a 'please explain' from the ASX. The share price since then has been weak along with the rest of the market.

The company went into trading halt yesterday and is due to release an announcement tomorrow regarding a 'Head of Agreement for a strategic asset transaction'. It will definitely be one to keep an eye on over the next few days.

Liberty Resources Research Report

2011-07-28T21:38:00.000+10:00

RB Milestone Group has released a research report on Liberty Resources (LBY)
Research report dated 14/07/2011
Target price: $1.03
LBY Last Traded Price: $0.087 (28/07/2011)
Research link

Mineral Sands still popular: MRC shares surge

2011-07-27T21:54:00.001+10:00

At the start of this year I discussed in a post how I thought that Mineral Sands such as Zircon were going to be in high demand due to the needs of China for this ingredient for ceramics. Iluka Resources (ILU), the heavyweight of the section, at the time was $8.90. Since then the company has provided bullish forecasts, confirmed improved prices for Zircon an Rutile and had excellent broker coverage. The stock today closed at $18.70 and Goldman Sachs has a price target of $21.

The other two companies I mentioned have been varied. Gunson Resources (GUN) was $0.24 when mentioned and now $0.185 whilst Base Resources (BSE) has improved from $0.425 to $0.575 today. BSE is currently in trading halt pending a capital raising.

Today we saw that the sector is still popular. Mineral Commodities (MRC) jumped $0.061 to $0.16 today on turnover of 5.1 million units. The company currently has two interests in South African mineral sands projects however today the company announced that it was to acquire further projects in Western Australia.

MRC will purchase Cable Sands from Cristal, has first right of refusal to buy further tenements from Cristal in the Murray basin and is also establishing a processing agreement with Cristal. MRC is also looking at purchasing Simto in an independent transaction.

MRC currently has a market cap of about $23 million. It is acquiring Cable Sands for $96 million. It seems very ambitious. $35 million will be financed through vendor financing with Cristal. MRC intends to raise the remaining funds through institutional investors.

Existing shareholders of the company and those buying on market currently will hope that the capital raising occurs at a high price and that they are not diluted heavily. I believe that if the company pulls this all off it will be a company making deal. The company will have scale and they claim it will be the second largest producer in Australia. It is quite possible then that predators may start sniffing around.

Central Petroleum Research Report

2011-07-24T13:06:00.000+10:00

Bakers Investment Group has released a research report on Central Petroleum (CTP) with a Strong Buy Recommendation
Research report dated 15/07/2011
Valuation: $0.48 per share
CTP Last Traded Price: $0.078 (22/07/2011)
Research link

TPL Corporation: Uncanny Resemblance to TVN Corporation

2011-07-20T22:02:00.001+10:00

TVN Corporation (TVN) was one company that I covered in my ASX Shell Play series back in February this year. I was sceptical of the possible future returns and the stock price at the time was a measly $0.011. A lot can happen in a few months. Since mentioning the company it has managed to enter into an options agreement to acquire the Nurrst Thermal Coal project in Mongolia, sink a drill and hit a significant intercept. The share price last traded at $0.071, up 27% today on 133 million units. It's a popular stock, no doubt, with plenty of investors having made excellent returns.

Today I managed to come across TPL Corporation (TPL) which has striking similarities. The similarities almost make me wonder if TPL is a no brainer?
TPL has an internet based business in the form of Total Hits, much like TVN has it's own internet marketing business however I don't think that we will be hearing much more of these bussinesses going forward (take a look at the TVN retail store, what a basket case!). Both companies also share the same address and personnel being Hugh Warner and Neil Hackett. I am pretty sure that the two companies would be sharing information. TPL has made it it's intensions clear by stating 'TPL is also pursuing a strategy of evaluating and targeting potential high quality coal assets for acquisition in Mongolia.'

TVN currently has a market capitilisation of $33 million compared to TPL's $12 million. TPL today closed at $0.023.

I believe that those that have realised excellent profits on TVN will naturally switch these funds to it's little brother TPL awaiting the next project to be vended into TPL. Don't forget - Mongolia is the place to be!

Shale Gas Boom!

2011-07-19T22:15:00.000+10:00

There's a lot of companies with strong balance sheets following capital raisings during the GFC. These companies have also been very prudent with their spending. The market has been weak with the S&P/ASX 200 (XJO) dropping 10% since it's high in April leaving many share prices battered especially for the small to mid cap companies.

These two factors are a great cocktail for Mergers & Acquisitions (M&A). The acquirers have excess funds whilst the targets have a weak share price. This has proven true with announcements of Santos (STO) making an all scrip offer for Eastern Star Gas (ESG) whilst Hanlong Mining Investement Pty Ltd launching a conditional takeover bid for Sundance Resources (SDL).

The takeover announcement that has piqued my interest is the $USD15.1 billion takeover offer by BHP Billiton (BHP) for shale gas play Petrohawk. The announcement comes after BHP advised the market earlier in the year that they were aquiring Chesapeake Fayetteville USA Shale Assets. BHP is signalling that this is going to be an area of great value in the future.

Shale Gas is in it's infancy in Australia but that is about to change. The big boys are about to make their move and ConocoPhilips has done so first by way of a non-binding farm in agreement with New Standard Energy (NSE). The agreement is hoping to see ConocoPhilips spend up to $USD109.5 million on four stages of exploration work on the Goldwyer Project in the Canning Basin. See: A Fracking good deal on Aussie shale gas (The Australian).

Some of the different shale gas plays on the ASX and their respective basins include:

Adelaide Energy (ADE) - Cooper

AWE (AWE)- Perth
Baraka (BKP) - Georgina
Beach Energy (BPT) - Cooper
Buru Energy (BRU) - Canning
Drillsearch (DLS) - Cooper
Emerald (EMR)- Canning
Empire Oil (EGO) - Perth/Canning
Exoma (EXE) - Galilee
Icon Energy (ICN) - Cooper
New Standard (NSE) - Canning
NorWest (NEW) - Perth
Oil Basins (OBL) - Canning
Origin Energy (ORG) - Cooper/Perth
Santos (STO) - Cooper
Senex (SXY) - Cooper
Strike Energy (STX) - Cooper
Transerv (TSV) - Perth

Rather than reinvent the wheel and discuss these companies I did manage to locate an excellent report published by Morgan Stanley titled 'Australia Oil & Gas - Shale Gas: Grab a Surfboard...' It is definitely worth a read.

Interestingly enough, today the share price of EGO shot up $0.003 to $0.029 on large volume of 146 million units. The company responded to an ASX speeding ticket advising that there was no explanation to the share price action.

Whilst there is still much risk in Australia for Shale Gas there definitely is great reasons to have an exposure to this promising sector.

Back Ex-Hardman Directors on Jacka Resources

2011-07-17T16:15:00.001+10:00

It was just over two weeks ago that Jacka Resources (JKA) announced that they were offered the exclusive negotiating rights over the Ruhuhu Basin (oil and gas) by the Tanzanian government. When this announcement was made it definitely caught my eye and whilst the share price did spike I was surprised there was not more volume behind it and that it wasn't a bit stronger. I decided to put the company on my watchlist.

We've had no news since. Friday's (15/07/11) share price action suggests something is about to happen. The stock price jumped $0.019 to $0.11 or 21% on strong volume of 3.8 million units. Infact, that's the largest volume on the stock since listing in July last year. From a technical perspective it breaks a downward trend that has seen the share price slide from $0.23 in october to a low of $0.067 in late June.

In the announcement that I refer to Jacka Resources mentioned that a product sharing agreement would be negotiated over the next few weeks so this may be coming to a conclusion soon. I do like the fact that they mentioned they would be the 100% owner and importantly the operator giving them good control. So is the stock price moving on the back of the pending agreement?

Well there appears to be a lot more to like to Jacka Resources. I am wondering if the market is starting to warm to the potential of this company? DJ Carmichaels covered the company in October last year in a research report titled 'Upcoming Exploration and Appraisal Activity in Africa' and quoted a $1.36 unrisked upside target for the company.

It is also worth noting that the company has a market capitilisation of $9 million, recently completed an entitlement bringing $4.6 million into it's coffers and the number of shares on issue/free float is reasonably low. The personnel involved with the company are also high profile with ex-Hardman Resources directors onboard including Richard Aden and Scott Spencer who built Hardman Resources into a $1.4 billion company before it was taken over.

Jacka Resources seems to tick many of the boxes.

Raisama Limited Research Report

2011-07-14T19:10:00.000+10:00

Patersons Securities has released a research note on Raisama Limited (RAI) with a Speculative Buy
Research report dated 12/07/2011
Target Price: $0.23
RAI Last Traded Price: $0.12 (14/07/2011)
Research link

TNG Limited Research Report

2011-07-09T18:28:00.000+10:00

Old Park Lane Capital has released a research report on TNG Limited (TNG) with a buy recommendation
Research report dated 07/07/2011
Short Term Target Price: $0.27
TNG Last Traded Price: $0.095 (08/07/2011)
Research link

No afternoon sell off today!

2011-06-29T19:29:00.000+10:00

The ASX 200 finished up 55.2 points to 4529.5 and it was good to see that for the first afternoon in almost a week that it didn't get sold down!

It meant that the small end of the market saw some risk money coming into it and quite a few winners. I couldn't help but notice yesterday the price and volume spike in C @ Limited (CEO) shares, up almost 18% on 16 million units traded. Yesterday's trading action proved the leaky ship with the company today announcing that coal seams were intersected from two holes drilled at it's Mongolian licences. The stock was up 33%.

Energio Limited (EIO) also had good gains today with it's shares up $0.005 to $0.036 on 17.6 million units. News flow should be good in the next few weeks with samples from it's Agbaja Plateau due. Anticipation of these results could enable a short term trade in the lead up.

Finally, the share price drop in Vmoto Limited (VMT) has been arrested after the ASX issued a (reverse) speeding ticket enquiring as to why the price had dropped from $0.022 to $0.015 from Monday to Tuesday. The company could provide no explanation and based on that the market assumed there is no bad news around the corner and marked the price up.

Today's roundup

2011-06-22T18:28:00.000+10:00

The market closed up for a second day in a row today with the S&P 200 up 24.4 points to 4532.6 after being up 57 points earlier. It appears that the bears still concerned about Greece took opportunities to sell down into the spike.
A raft of juniors were up off their lows after the market sell off in the past week. These included Bannerman Resources (BMN), up $0.03 to $0.25 and Greenland Minerals & Energy (GGG) up $0.07 to $0.615 on good volume of 2.1 million units.

Murchison Metals (MMX) and Gindalbie Metals (GBG) were both strong after in an interview the QR National (QRN) CEO advised it would invest in the Oakajee Port and Rail project should the existing partners not be able to complete the project. MMX as a partner in the project is expecting cost blowouts.

MMX went into notice received at 3:47pm and the stock did not reopen/participate in the closing auction.

MetroCoal Limited Research Report

2011-06-18T10:52:00.000+10:00

RBS Morgans has released a research report on MetroCoal Limited (MTE)
Research report dated 15/06/2011
Target Price: $1
MTE last trade: $0.595 (17/06/2011)
Research link

Market Commentary

2011-06-16T20:52:00.000+10:00

The market tanked almost 2% today with the S&P 200 dropping 88 points to 4479. Sentiment is poor and whilst it doesn't bode well for small cap stocks for those that are taking a longer term view it could be a good time to top up on some of your favourite cheapies.

Movers for today included NSL Consolidated (NSL), Empire Oil & Gas (EGO) and Enterprise Metals (ENT). NSL whilst focusing on iron ore projects in India moved on the news that it was acquiring thermal coal projects in Queensland as the opportunity presented to them was too good to refuse. Shares finished up $0.01 to $0.055.

EGO was one for the traders (and always has been) as it's shares spiked 22% to $0.028, with 231 million units changing hands. The company announced it was in discussions on a forward sales gas contract with Alcoa.

ENT received a speeding ticket from the ASX after it's shares improved from $0.20 to a high of $0.245 today. Volume wasn't exceptionally high so it makes you wonder if the surveillance division is a litte bored at the moment with the spec end of the market quiet. The company cited no reasons for the share price increase. One of the directors recently purchased a small parcel of shares on market.

Transit Holdings Research Report

2011-05-28T11:44:00.000+10:00

Taylor Collison has released a research report on Transit Holdings (TRH)
Research report dated 25/05/2011
TRH last trade: $0.805 (28/05/2011)
Research link

Red October Resources - Good Recipe?

2011-05-11T22:27:00.000+10:00

One company that did catch my eye today was Red October Resources (ROS). The company only listed on the ASX on Monday and closed at $0.295, an excellent premium on it's issue price of $0.20.

Today the share price improved further and closed up $0.07 to $0.37 on higher volumes (over one million units today compared to less than 500,000 yesterday and the day before). ROS raised $4.5 million in the float and it's only project is via a farm in agreement on a nickel (and other minerals) project with Segue Resources (SEG). SEG has in my opinion been a bit of a cellar dwellar and underperforming company for some time.

ROS doesn't seem to have too much going for it now however I'm more interested in it's potential. Today the company made an announcement which gave us some hint as to what is on the cards. The prospectus advised us that the company was pursuing new projects in resources sector in Australia and abroad. Now, today we received the news that the company is focussing on Kazakhstan and has been offered Gold, Silver, Tin, Copper, Manganese, Platinum, Iron Ore and Potash projects.

The announcement was clever in that it served a purpose of letting the market know what the company was about and intending to do especially for those who hadn't heard of this new listing. In my opinion the farm in agreement with SEG is really just a cover, a way for the company to get a listing approved by the ASX (the ASX wouldnt approve listing of a company that didnt have any assets, yet.). After the news the buyers started coming.

I think that this one is a good recipe. Low shares on issue will allow for share price increases to be exaggerated and less sellers to come onto the market and hold the price down. Those wishing to realise their stag profits may have done so already in the last couple of days. The speculation and anticipation of what may be vended in will drive the share price. Does this remind you of anything???...

Fortis Mining (FMJ) listed in December last year. The company announced early in February the intention to acquire a 'world class' potash asset (02/02/2011 Share price $0.38), late February FMJ signs head of agreement to acquire potash assets in Kazakhstan (23/02/2011 Share price $1.49) and then the share price hits a high of $3.98 on 03/03/2011.

Speewah Metals Research Report

2011-04-28T20:16:00.000+10:00

Alpha Securities has released a research report on Speewah Metals (SPM)
Research report dated 21/04/2011
SPM last trade: $0.28 (28/04/2011)
Research link

Shell Play Update: Olea Australis

2011-04-17T19:13:00.000+10:00

Olea Australis (OLE) is a company that has featured a few times in the shell play stocks that I have been posting about over the last few months. The company finally has vended in resource projects and gone down what has been a popular path in the last year - West African Gold.

The company made an announcement late on Thursday before trading commenced again on Friday morning. In what has been some time in the making the company is acquiring two other companies both of which are in the process of acquiring ground in Ghana and Cote d'Ivoire. The problem is recently there has been unrest and political problems in Cote d'Ivoire with the country almost going into civil war.

The response to the announcement by the market was poor. Infact the shares barely traded as they were pushed down from $0.003 to $0.002. I am mixed on this one - positively, it is a case of out with the old and in with the new with the OLE staff to step down and Tim Fry to join as the Chairman. This is a good scalp as he has excellent experience from working with Lihir Gold. On the other hand the political conditions in the country and time that the company will be suspended to comply with Chapter 1 and 2 listing rules with the ASX will put some investors off (no trading for up to three months).

If anything, the shares are at rock bottom. I tend to think that it is a matter of touching base with this one at a later date, that is, September when the acquisitions have been bedded down.

Mozambi Coal Coverage

2011-04-13T20:19:00.000+10:00

I recently posted about Mozambi Coal and it's potential.

It appears that there is a few people taking notice of this company and it yesterday received coverage by Proactive Investors Australia, definitely a good sign and positive for the stock. The article can be found here.

From my observations of the stock in morning it appears that there is a persistent buyer on open which one can only assume is Polo Resources increasing it's position in the company.

Diatreme Resources Research Report

2011-04-13T20:03:00.000+10:00

Intersuisse has released a research report on Diatreme Resources (DRX)
Research report dated 12/04/2011
NPV based valuation: $0.30
DRX last trade: $0.094 (13/04/2011)
Research link

Transit Holdings Research Report

2011-04-12T18:36:00.000+10:00

RM Research has released a research report on Transit Holdings (TRH)
Research report dated 08/04/2011
Short term price target: $1
TRH last trade: $0.50 (12/04/2011)
Research link

Mozambi Coal: Riversdale nearology

2011-04-07T22:14:00.000+10:00

I couldn't help but notice the volumes traded on Mozambi Coal (MOZ) the last few days. The ASX noticed also and issued a price query accordingly on Tuesday (05/04) quoting the stock price rise from $0.25 on 31/03 to $0.33 on 05/04. The company advised they had no explanation for the share price rise.

Mozambit Coal is a stock that I have followed for some time. For those that follow my blog you will have noticed that I do like to investigate shell companies and this was one of them. Back in the day the company used to hire out dump trucks and had a syringe-type technology (from memory), a strange combination, under the name RTL Corporation (RTL).

This is all before the company acquired coal basin deposits in Mozambique. By way of acquiring Dugal Pty Ltd the company has acquired two licences including one with ground of 172 square km adjacent to the Riversdale Mining (RIV) block. Mozambi Coal was suspended for a number of months whilst it complied with ASX compliance rules that apply when a company has a major change in activities. Before going off the boards the stock was trading at $0.022.

One of the key points here is that whilst the company was complying with listing rules Rio Tinto (RIO) launched a takeover bid for Riversdale Mining (RIV), proving and increasing the value of other tenements in the area. MOZ shares were reconstructed and when they commenced trading again at the start of March they were at $0.35 or $0.035 equivalent. That's quite a success for those that purchased before the stock before it was suspended. Since then the shares weakened which would probably be as a result of some old stale shareholders finally moving on and the whole Japan earthquake crisis.

Things are now definitely starting to hot up. I think that word is getting around about the potential of this stock. The recent share price gain could also be explained by the fact that TSX listed company Polo Resources has become a substantial shareholder (11%). The company advertises itself as "a natural resources investment company focused on investing in undervalued companies and projects with strong fundamentals and attractive growth prospects." Polo Resources has made excellent gains in other investments such as Extract Resources (EXT) and Caledon Resources (CCD).

MOZ closed at $0.355 today after hitting a high of $0.40.

Buy on dips.

Biota Holdings Research Note

2011-04-07T20:55:00.000+10:00

RBS Morgans has released a research note on Biota Holdings (BTA)
Research note dated 06/04/2011
12 month price target: $2.02
BTA last trade: $1.375 (07/04/2011)
Research link

Big name on register of Red Fork Energy

2011-03-30T21:13:00.001+11:00

At the start of March I posted about following the big boys and their investment decisions. One of the stocks that cracked a mention was Red Fork Energy (RFE). At the time of posting the share price was at $0.405 and weakening.

It now appears that the others are catching on to the likes of BHP Billiton (BHP) and the potential of shale gas in the US. George Soros, the billionaire investor, has taken a slice of Red Fork Energy through his investment fund. After the news the stock surged as high as $0.52 on the 25th of March and trading volumes over the last few weeks have been excellent.

Definitely a stock to keep an eye on.

Further details on the investment made by George Soros can be found at this link.

Unilife Corporation Updated Broker Report

2011-03-13T09:54:00.000+11:00

Griffin Securities has released an updated broker report on Unilife Corporation (UNS)
Report dated 10/03/2011
12 month price target $1.75 CDI's ($10.50 NASDAQ)
UNS last trade: $0.74 (11/03/2011)
Research link

Julia rings the bell (of destruction)

2011-03-11T22:44:00.002+11:00

The irony. Our Prime Minister Julia Gillard rung the bells at the New York Stock Exchange last night. The DOW dropped almost 2%.

Everything that the government touches turns bad. I've read numerous articles the past week from Charlie Aitken to Coppo (Goldman Sach's trading desk daily memo) and they've been ruthless about the current government and it's decisions. It's partly because it is the 2 year anniversary of the bottom of the GFC and also partly because the ASX has been smacked 4% this week that all this negative commentary has been floating about.

The instos have been waiting for their opportunity to sell and with commodities prices hitting all time highs, the Aussie dollar still above parity with the US and the Middle Easy troubles it has been an easy decision to sell. This is coupled with the governments dangerous decisions regarding the resources super tax (which hurts all Australians, yes we all hold BHP and RIO through our superannuation fund) and carbon tax. It's no wonder that Australian companies are targeting and acquiring projects overseas. Africa used to have Sovereign risk but now we do!

There is a lot of fear in this market which unfortunately doesnt bode well for the small cap stocks that we follow. For those that are gutsy it may be a time to top up on your favourite stocks whose share prices have been hit by low liquidity (the lack of buyers forces prices down on low volumes). For others it may be a time to sit on the sidelines, not open any new positions and wait until the world settles down. Having said this, who knows when things will settle - Japan has just been struck by an earthquake so markets may get hit further tonight.

Shell Play Brief: Olea Australis

2011-03-08T22:05:00.000+11:00

One of the ASX shell plays that I posted about recently was Olea Australis (OLE). I'm revisiting this one because the time frame for any action has now shortened or become clearer after the announcement made on 01/03/2011.

I have seen on occasions when the ASX will issue a query or 'please explain' to companies that have held cash and little in the way of a business activity or any assets for an extended period of time. An example that comes to mind was Wavenet International (WAL) which held cash for ages and received this query. This was an excellent example of a shell play that has seen the stock rise from $0.08 to $0.60 after vending in coal assets.

If you get a moment I would recommend reading the response made by OLE to the ASX. The company has stated 'the directors have held preliminary discussions with at least ten parties interested in Olea as a basis for a transaction for a listing on the ASX' In lamens terms this means backdoor listing another company.

OLE proceeds to advise that none of these discussions are advanced enough to warrant further disclosure. The company does however state that 'the directors anticipate that OLE would be in a position to demonstrate to the ASX within four months that it is compliant with listing rules 12.1 and 12.3' In other words OLE will be making some form of announcement in regards to this back door listing within 4 months - we now have a clear timeframe!

Cobar Consolidated Resources Research Report

2011-03-06T12:35:00.000+11:00

Ord Minnett has revised it's research on Cobar Consolidated Resources (CCU) with Buy recommendation
Report dated 01/03/2011
12 month price target $1.20
CCU last trade: $1.035 (04/03/2011)
Research link

Mesoblast Research Report

2011-03-06T12:28:00.000+11:00

Southern Cross Equities has updated it's research on Mesoblast (MSB) with a Buy recommendation
Report dated 03/03/2011
12 month price target increased from $7 to $11.
MSB last trade: $6.33 (04/03/2011)
Research link

Leveraging off the Big Boys...

2011-03-05T15:32:00.000+11:00

It's not too often that I mention the likes of BHP Billiton (BHP) or Newcrest Mining (NCM) but today is a different day. Having said that, NCM did manage to have an excellent day yesterday with a move up of $1.79 or a lazy 4.68% after a market update that included the doubling of an estimate at it's gold project in PNG.

So why do I mention the big boys when I am usually focused on the small cap minnows? We can learn a lot from these guys. After all, they have large teams of analysts, reasearchers and forecasters that can assess the future global trends in commodities. They are in the know and following their moves could be very successful.

To explain in simple terms, the most recent example is BHP Billiton and POSTASH. It started when they lobbed a hostile takeover offer towards Saskatchewan's Potash Corp. Suddenly there was a focus on the world food shortage and how potash and phosphates used in fertilisers were going to be in high demand in the agricultural sector. Every potash stock has run since including Souther Boulder (STB), Rum Jungle (RUM) and Reward Minerals (RWD). We've also seen Fortis Mining (FMJ) rush to an intraday high of $3.98 and be as volatile as I dont know what. General Mining (GMM), a company that may suffer from bad PR has a potash project in Mongolia however it had been overlooked, not til yesterday. That probably leaves only Transit Holdings (TRH) yet to go for a run and it's a pretty good bet that it will.

Anyway, enough of Potash as I've gone off on a bit of a tangent. So what are the next moves of the big boys that could give us some trading ideas in the small cap space?
BHP has now decided that it's next play is shale gas and it is going to spend just under $5 billion to purchase assets from Chesapeak in the US. An article detailing the deal can be found here. Gas prices in the US have been depressed for some time so I think that BHP is trying to get in early whilst projects can be acquired at basement prices. Analysts think that this is more of a long term strategy whilst waiting for gas prices to improve. Red Fork Energy (RFE) is a company that has shale gas assets in the US and like the prices for gas it's share price has been depressed for sometime. I couldn't help but notice the improvement in share price the last few days and the number of buyers around generally increase. A nice trend reversal too. RFE last traded at $0.405. Any readers that have companies in the same vein are welcome to post a comment suggesting them.

Back to NCM. I posted recently about the EU List of Critical Raw Materials and how it formed the basis for a substantial amount of research by me of late. Funnily enough, one of those materials is Tungsten and Newcrest mining has recently signed a deal with car giant Mitsubishi to supply tungsten! Newcrest's O'Callaghans tungsten project is gaining more focus and compared to BHP's shale gas possible focus NCM's play could be more of a short term winner. This puts the spotlight on other Aussie companies with an exposure to tungsten and I like Wolf Minerals (WLF), Vital Metals (VML) and Icon Resources (III).

Vital Metals has the largest market cap of the three and has somewhat been in the doldrums for some time. Things look like they are about to change. Not only have the trading volumes and interest in the stock improve however there has been changes at the board level so hopefully new blood can get the company back on track. The company has boasted in it's quarterly report that their Watershed tungsten project is gaining world wide attention so there could be some good news soon regarding some form of a deal. VML last traded at $0.14.

Icon Resources is currently rationalising it's projects including divesting projects to focus all it's efforts on the Mt Carbine tungsten project. It's shares last traded at $0.13 but suffers from a lack of trading and interest currently.

Finally, Wolf Minerals is only a newly listed company however their project in the UK is possibly the fourth largest owned by an Aussie company. With tin at all time high prices and also thrown into this project this company is one to definitely put on the watchlist also. It last traded at $0.375.

WHL Energy Broker Report

2011-03-04T18:58:00.000+11:00

Hartleys has issued a research report on WHL Energy (WHN) with a Speculative Buy
Report dated 03/03/2011
12 month price target $0.097
WHN last trade: $0.047 (04/03/2011)
Research link

Tantulum & Niobium - Australian-American Mining (AIW)

2011-02-25T23:15:00.000+11:00

After reading about the EU 14 critical mineral raw materials report and posting about it the other day I've become really interested in these materials. It's resulted in me casting my eye over some of the ASX listed companies with an exposure to each of them.

One of the companies that has caught my attention is Australian-American Mining Corporation Limited (AIW). I will firstly state that the company is focusing on it's uranium assets in the US. This isn't a bad thing - the outlook for uranium in my opinion is very good and I'm almost on the verge of calling myself a uranium bull. Having said this, it is the specialty metals project in Arizona that has the potential for lithium, tantulum, niobium and rubidium which has piqued my interest.

The company has a lot going for it including an excellent cash backing of $7.127 million which means there will be no capital raisings and share dilution any time soon. They are also holding 3 million shares of Forge Resources (FRG) worth $4.08 million. That's a total of over $11 million in enterprise value (EV) not including all of their uranium, gold or rare earths projects - all this for a market cap of $23 million.

Anyway, back to the specialy metals project. The project acquired in November last year was done so via cash and scrip (shares). The cash amount was a nominal $25,000 whilst the scrip component was 3,000,000 shares. I always like to hear that the seller of a project is to receive stock. Why? This confirms that they still want some skin in the game and to have exposure of upside to the project indirectly by holding stock. AIW believes that the project has the potential to be of a large scale and with significant grades. They have also been able to access a large database of previous work which will help in targeting key areas.

AIW is intending to list on the TSX in March this year which is significant news. North American investors will value the projects of this company much higher than their Australian counterparts and this could result in a rerating of 8 - 10 times! I expect a nice appreciation in the share price in the lead up to this listing. If experience is anything, Prima Biomed (PRR) and it's listing on the NASDAQ was one test case (recommended at $0.125 in October, see post)

AIW shares spiked $0.009 to $0.073 today on very good volume of 9.2 million units. The market is awaiting drilling results on it's Apex uranium project so trading suggests this will be announced soon or there is some other newsflow around the corner.

Resource Generation (RES) Broker Report

2011-02-25T21:50:00.000+11:00

RBC Capital Markets has commenced coverage of Resource Generation (RES) with an Outperform
Report dated 22/02/2011
Price target $1
RES last trade: $0.725 (25/02/2011)
Research link

EU List of Critical Raw Materials

2011-02-24T21:36:00.000+11:00

As an investor that focuses mainly on the small to mid cap resources part of the market I am quite often using a top down approach to finding stocks to invest in. This involves seeking the latest trends that may result in demand in a particular resource increasing or supplies decreasing possibly due to disruptions to mines etc. A recent example of this includes the focus on oil stocks as a result of the current Middle East crisis, however I do prefer trying to discover which will be the next obscure hot metal!

One list that I have been working from lately is the Europa 14 critical mineral raw materials list which lists minerals and metals which are considered critical especially from a supply shortage perspective.

Whilst the report has been out for some time it is a good starting point for research purposes. Rare earths has been well covered so I am hoping to take a look at a few companies with an exposure to the other metals listed in the report share this with you soon.

Southern Boulder Mines Research Report

2011-02-24T20:32:00.000+11:00

Arrowhead Business & Investment Decisions has completed a Due Diligence and Valuation Report on Southern Boulder Mines (STB)
Fair share value bracket: $6.25 - $29.95
STB last trade: $4.77 (24/02/2011)
Research link

Cbio Limited Research Report

2011-02-23T18:40:00.000+11:00

Wise-owl.com has issued a research report on Cbio Limited (CBZ) with a Spec Buy
Price target $1.47
PIR last trade: $0.59 (23/02/2011)
Research link

Advanced ASX Shell Plays

2011-02-20T14:00:00.001+11:00

This is my final post exploring some of the shell plays listed on the ASX. In my earlier posts I took a look at those companies that are still a little unloved and well away from volumes being traded that mean anything. These next three shells that I take a look at today are what I would say are in the developed stage and possibly known to you for the reason that they are attracting interest and have seen some excellent gains from their lows already.

C @ LIMITED (CEO)
This company is probably as advanced as a shell can be. The market capitilisation is a staggering $17 million which means the share price is a bit overcooked considering no project has yet been acquired. The company has confirmed it's direction and advised the market it is specifically looking at coking coal projects in Mongolia. They currently have a team of geologists assessing licenses so a project may not be too far away. C @ Limited last traded at $0.037 after coming up from lows of just under a $0.01 in August last year. If anything, this goes to show that if you get in early there can be excellent gains to be made in shell companies. This stock was once unloved too - in August last year it went days without trading and when it did the volume was maybe 100,000 - 300,000 units.

SELECT VACCINES LIMITED (SLT)
This is another company that has already had strong share price gains with the share price appreciating from $0.002 in August to the current price of $0.011 giving the company a market cap of $12 million.
SLT has raised funds a few times last year to keep itself going whilst it searches for new opportunities. There has been no indication as to which direction the company is headed. The company appointed new directors in September who have experience in backdoor listings.

ROBE AUSTRALIA LIMITED (ROB)
ROB has been on the radar of quite a few traders recently. It has had a couple of share price breakouts resulting in share price queries (or speeding tickets) from the ASX. The company has given the standard response - we know nothing! The share price was seriously overbought when it hit $0.03 and it has since backed off to $0.016. The company used to operate stockbroking and wealth management businesses and provide corporate advisory services all of which have now been sold. Considering these businesses are all market related I would imagine that the board would have very good contacts in the industry which is a positive. After all, and from my experience in the industry, everyone knows everyone.

Early Stage ASX Shell Plays (part 2)

2011-02-15T21:37:00.001+11:00

Let's continue our look at some of the ASX shell plays that are still in their infant stage with very little volumes being traded...

GEOTHERMAL RESOURCES (GHT)
This is probably the most riskiest of the shell plays that I am going to mention however one of the more different cases. The company is teetering on the edge with cash to the tune of $249,000 (Quarterly Report 30/11) and has had to minimise all expenditures to survive. The company has two geothermal projects in South Australia however due to the poor sentiment towards the sector and subsequent lack of funding the company has found itself in a position whereby it needs to branch out into other commodities to survive. Management are hoping by acquiring a project that is in a more 'sexy' sector that they will be able to raise funds. The company has stated:

"An alternative is to diversify Geothermal Resources exploration base into other commodities that have more immediate appeal and for which capital can be raised. This uses the Company’s exploration skills and could provide shareholders with more immediate returns whilst waiting for an improvement in the geothermal exploration investment climate. Directors are monitoring other investment opportunities, particularly in the precious and rare earth metals sector, and may act to secure a suitable opportunity if it presents itself."

Considering that the company has very little cash something is going to happen sooner rather than later, whether it be administration or a hot new project. GHT last traded at $0.09.

NEW AGE EXPLORATION (NAE)
I like this prospect. This is one of the more cashed up shells around with about $4.3million on hand so there is less pressure on management to vend in a project anytime soon. From my research it seems that an Iron Ore project will be the most likely kind of project to be acquired by the company. The company has been looking for a project for some time now (almost a year) so things are slow going however they nearly acquired an Iron Ore project in Spain. Negotiations for this Spanish project are unlikely to result in an outcome. NAE has an excellent MD in Gary Fietz who worked at BHP Billiton (BHP) in their Iron Ore division for 21 years. NAE last traded at $0.09.

ADVANCE ENERGY (AVD)
I believe that this company is about to move out of the early stage shell play category with the share price having mini breakouts every so often and trading volumes picking up. The stock price is becoming quite volatile also. There is good value here with the market capitilisation at $5 million and the company having $2.5 million on hand. Recently the company sold it's US oil well projects for $11.3 million which helped the company extinguish outstanding debts. What I find exciting is that the company's financier has allowed them to maintain a $40 million line of credit facility for future acquisitions! AVD last traded at $0.026.

TVN CORPORATION (TVN)
Unusally this company is maintaining it's internet marketing business whilst deciding a resources project might be a good way to 'diversify'. I am unsure what experice the management have in the resources sector and the tenement applications made tend to lack any detail or substance in the announcements made to the ASX. TVN last traded at $0.011

Papillon Resources Broker Report

2011-02-14T20:22:00.000+11:00

Foster Stockbroking has issued a research report on Papillon Resources (PIR)
Price target $0.80
PIR last trade: $0.78 (09/02/2011)
Research link

Early Stage ASX Shell Plays (part 1)

2011-02-13T21:40:00.000+11:00

Following up on my Introduction to ASX listed shell plays post it is time to explore a few of these plays that are in the very early stages with almost no interest and volumes traded. These are the plays that will take some time but offer higher returns for those that are patient!

OLEA AUSTRALIS (OLE)
I originally posted about this company in September and not much share price action has happened since, which goes to show that they are all not winners and early stage plays can be a long haul. The company has a market cap of about $2 million with about $1.3 million in cash on hand. Tony Pitt was appointed to the board in June last year and was looking at vending in commercial real estate assets and as a result almost pulled off a merger with Becton Property Group (BEC). The deal subsequently fell apart and Tony Pitt left the company but retained his shareholding. Since this the company has reinstated its plans to seek a new business for the company. I think this was a good turn of events as real estate is not entirely interesting in comparison to resources projects. It is interesting to note that Ian Murie serves on the board and is also tied up with Acuvax Limited (ACU), a company I recently posted about that has a high chance of backdoor listing a resources project. OLE last trades at $0.003.

FRESHTEL HOLDINGS (FRE)
Freshtel is a company that had business in VOIP technology. The company has been restructuring for the better part of a year now and this has included selling off their UK VOIP assets which were running at a loss. The company has some debt and in November stated that it had sufficient royalty income to maintain the shell. It is currently capped at $2million but only has just under $180,000 in the bank. It is a bit worrying that they failed to lodge their quarterly on time and were suspended as a result (only to lodge soon thereafter). We havent been given any hints as to what may be vended into the shell however we do know that they 'continue to investigate and search for an appropriate business to back into the listed shell and thus give shareholders an improved future with Freshtel' Things arent moving too quickly at Freshtel and the stock last traded at $0.003.

INDIA EQUITIES FUND (INE)
This company is as pure as a shell play can be. The company has no debt, no business and is sitting on cash. The company used to invest in companies listed on the exchange in India however suffered from the share price always being under the value of the securities in it's portfolio. The company decided to liquidate it's portfolio and return capital to the shareholders. It held on to some cash until it's register was raided, a meeting convened and the new shareholder nominating it's own directors and then taking control of the company. I've covered this company before so you can read up further here.
This particular company is one of my preferred picks because with the cash it has on hand there is very limited downside. The net tangible asset backing is $0.0614 per share whilst it's shares traded at $0.044 so there is some good value here. The new directors also have good experience with shell companies. The last update (which I recommend you read) provided by the company was on 30/11/2010.

Shaw River Resources Research Report

2011-02-12T21:50:00.000+11:00

Hartleys has issued a research report on Shaw River Resources with a 'Speculative Buy'
Price target $0.38
SRR last trade: $0.205 (11/02/2011)
Research report extract link

Introduction to ASX listed shell plays!

2011-02-12T21:21:00.000+11:00

Investing in shell plays has always been a favourite past time of mine however this kind of investing has become a lot more popular recently. Reading the online forums there is many discussions on which stock will be the next to fly on announcement of a new resources project acquisition. Frequently I read and are amused at coments such as 'it will be the next ten bagger!' Having said that, there is good money to be made and a couple of different strategies to be deployed. It's taken me a while to collate the information as some of the obscure plays are really hard to find but I'm happy to share my research with each of you!

It must be stressed that this kind of investing is extremely risky. I don't want anyone to be under any illusions, do not go and put your life savings on the stocks I am going to mention.

In my opinion there is two ways of investing in shell companies. Firstly there is the patient, slowly accumulate at low prices and sit tight method. This method involves considerable time sitting and waiting. After taking a position it may take months and months for something to happen. It is characterised by a stock that is unloved, very rarely trades (even for days) and has little to no interest. The stock is usually under a cent per share and nobody posts anything about the stock on online forums such as HotCopper. This kind of investing has the potential for much greater rewards if it comes good as there is much higher share price appreciation.

The other method in my opinion is to get on the stocks that have been shells for sometime but are starting to fire up. This is characterised by increasing volume, interest in the stock and especially comments online. The advantage of this method is that something is going to happen sooner for the company however you may have already missed a bit of the run up in the share price.

It's all a bit of a time versus money type decision.

So stay tuned over the next couple of days as I release the results of trawling through all those company quarterly reports for that elusive comment 'we are evaluating numerous projects, possibly in the resources sector locally and abroad to deliver shareholder value'!!

Earth Heat Resources Valuation Report

2011-02-08T20:50:00.000+11:00

Arrowhead Business & Investments Decisions has issued a due diligence and valuation report on Earth Heat Resources (EHR)
Report dated 07/02/2011
Valuation: $0.364-$0.964
EHR last trade: $0.081 (08/02/2011)
Report link

Gunson Resources Research Report

2011-02-07T21:46:00.001+11:00

Resources Capital has issued a research report on Gunson Resources (GUN)
Report dated 04/02/2011
Valuation: $0.70
GUN last trade: $0.23 (07/02/2011)
Research report link

It appears that a few more brokers are realising the shortage of minerals sand, especially zircon and the resulting good outlook for zircon prices. This has culminated in Gunson Resources being covered soon after Base Resources (BSE) recently.

Gunson Resources shares increased $0.03 to $0.20 following the issue of the above research report. This bodes well considering the company is completing a Share Purchase Plan at $0.20 and will result in more funds in the kitty should the market price hold firm.

Base Resources Research Report

2011-02-04T19:16:00.000+11:00

Euroz, a well respected firm released a broker report this week on Base Resources (BSE).

Those that have been following my blog will know that I am bullish on mineral sands and have mentioned this company, Gunson Resources (GUN) and a few others recently.

The report commenced coverage with a valuation of $0.76 (well below today's closing price of $0.43) and long term $1 share price.

Euroz believes that the Kwale project has potential revenue of US$160-180m p.a. generating EBITDA of $80-$100m once in full production.

I personally believe that the market is starting to cotton on to the potential of mineral sands companies and that every portfolio should have some exposure.

Acuvax (ACU) Next Biotech to Resource Play

2011-01-24T23:15:00.000+11:00

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:

"Outlook

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!

Running with Zircon Theme

2011-01-23T20:42:00.000+11:00

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).

China's demain for ceramics to spur Aussie Zircon stocks

2011-01-20T22:46:00.000+11:00

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.

Returns Scoreboard for 2010

2011-01-10T21:33:00.000+11:00

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

     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!

Melbourne Cup Day... Trading will be quiet

2010-11-02T09:32:00.001+11:00

It is that first Tuesday in November here, Melbourne Cup day! From my experience volumes will be low today and any share price moves will be exaggerated as a result. Whilst the ASX is open it is a non-settlement day.

Overnight European and US sharemarkets were showed modest gains and/or were flat. Oil prices were strong, base metals were only slightly stronger whilst the gold price was weaker. The RBA makes a decision on interest rate levels today. Stocks which may be of interest today include:

*Resource Star Limited (RSL) - This stock has attempted to break $0.20 the last couple of days and whilst it has breached it intraday it has not managed to close on or above it. Today could be that day. Results from drilling of it's JV Machinga REE project with Globe Metals and Mining (GBE) and pending. Closed at $0.195 yesterday.
*Artemis Resouces (ARV) - The stock hit a high of $0.10 yesterday before closing at $0.094. Again, this stock is awaiting drilling results from its Yangibana Rare Earth Project. The company stated in its Quarterly Activities report on 29/10/2010 that "The Company will release results of this drilling program once all of the results have been received from the laboratory and after the technical team has compiled and interpreted the results."

Good luck in backing a winner today.

Stocks to watch today

2010-10-28T09:46:00.000+11:00

*Gunson Resources (GUN) - Very good volumes traded the last 3 days with levels not seen since January this year. Buyers have been strong and the stock closed at $0.12 yesterday after hitting a high of $0.14. GUN hired a corporate advisor a few months ago to assist with seeking offtake partners and funding for it's flagship Coburn Zircon Project. Trading suggests a deal may be around the corner.

*Curnamona Energy (CUY) - Again, another stock with volumes traded that havent been seen for a long time. The stock has come up from $0.18 close on Friday to $0.23 yesterday and has a tight share register. I'm unsure what is pushing this uranium junior.

*African Energy (AFR) - I've been following this one for a few weeks now. There's been plenty of big buyers around for some time now and it appears that the company is getting a re-rating due to it's Sese coal project in Botswana, that or theres quite a few speculators getting on board in the lead up to drill results to be released soon for this project.

Strategic Energy Resources, great exposure to Graphite

2010-10-27T12:34:00.000+11:00

When you hear of graphite you immediately think of the material that they use to make pencils, right? Graphite has many other traditional applications in that it is used for steelmaking and is consumed for refractories, brake linings, clutches and lubricants. This is all a little boring thus far however the exciting part is that the global demand for Graphite is increasing as it becomes more utilised in new age applications such as fuel cells, semi conductors and nuclear energy. Other applications also include lithium ion batteries for electric and hybrid cars.

Strategic Energy Resources (SER) is one stock with exposure to Graphite through it's Uley project in South Australia. The company through former management and under a different name have had Uley project for some time however due to low prices for graphite the project has been under care and maintenance since 1993. This is about to change. Demand for graphite is increasing and the mineral has been noted as one of 14 by the European Union as critical as a result of it only being produced by a small amount of countries. China produces 80% of the world's graphite and recently introduced taxes to curb export of the mineral. Sound familiar to rare earths?

Strategic Energy Resources recently made a non price sensitive announcement to the market on 05/10/2010 detailing much of this information in the form of a project update. The market took a day to respond but did push the share price to a high of $0.057 on 06/10/2010. Since then we've seen the stock hit a high of $0.079 on 18/10/2010. The share price has been a bit of a rollercoaster ride but it's only been in the last few days has the volume really dropped off and the share price steadied so maybe now is probably the time to accumulate.

Catalysts for the share price over the next couple of months include the possibility of a joint venture with Japanese companies and thus the recommencement of production. Shares in Strategic Energy Resources last traded at $0.062 (12:30PM).

Counter bid for Sphere Minerals looking slim

2010-10-25T21:13:00.000+11:00

I've posted a couple of times on the takeover bid of Sphere Minerals (SPH) by an Xstrata subsidiary (Sidero Pty Ltd) and the chance of a bidding war occurring.

Unfortunately the chances of this happening are fading and those that are holding may need to seriously consider selling on market above $2.50 or accepting the takeover at $2.50 per share. Risks on holding this one are increasing. Management for Sphere Minerals signed a 'no shop, no talk' clause which means that they cannot solicit any other offers (without paying a break fee) whilst Sidero Pty Ltd has extended the takeover offer period twice after acceptances have been slow rather than increasing the offer to encourage acceptances. The other problem is that Sin-Tang, the possible other bidder, has accumulated a stake over 10% which means Sidero Pty Ltd will have to drop it's 90% acceptance condition. Rumours are that Sin-Tang is going to announce some form of alternative proposal rather then counter bidding and the market tends to agree with the shares now starting to trade below $2.50, something which has not occurred for some time now. One thing is for sure, without the bid of $2.50 the share price will drop.

Macquarie Harbour Mining Broker Report (updated)

2010-10-25T09:23:00.000+11:00

RB Milestone Group have issued an updated research report on Macquarie Harbour Mining (MHM)
Report dated 21/10/2010
Target: $3.92 (previously $3)
MHM last trade: $1.25 (22/10/2010)
Research report link

Time out

2010-10-07T16:25:00.000+11:00

Moving house. It's a real joy. Unfortunately I'm going to be a bit time poor for the next week or so whilst I move into a new apartment. As a result I wont have too much time to follow the market or conduct any research, so the posts will be few and far between. I haven't forgotton about my readers so do drop by every so often! See you again soon.

Toro Energy trending up

2010-10-07T15:09:00.000+11:00

Uranium stocks are ones that have been out of favour for a while now. The big boys such as Paladin Energy (PDN) and Energy Resources (ERA) have been trending downwards and sideways respectively whilst uranium spot and contract prices have also been doing the same. Despite this something appears to be going on behind the scenes with Toro Energy (TOE) if the trading in its shares are anything to go on.

I briefly mentioned Toro Energy in a post at the end of August and was impressed with an article that covered the company in the Australian Financial Review. At the time the shares were trading at $0.099. Since this time they have bobbled up and down however trading in the last couple of days has caught my eye. At 3pm AEST the shares are up $0.015 to $0.13 on volume of 13.7 million and these kind of volumes haven't been seen since January this year. I believe some form of good news is around the corner.

BC Iron Research Report

2010-10-06T08:04:00.001+11:00

Argonaut Securities has issued a research report on BC Iron (BCI)
Report dated 29/09/2010
Valuation: $2.90
BCI last trade: $1.925 (05/10/2010)
Research report link

Prima Biomed, worth a look.

2010-10-05T08:26:00.000+11:00

Prima Biomed (PRR) is a company that specialises in cancer treatment technologies and it's flagship product is CVac, which is used in the treatment of ovarian cancer. It has always been a company that I have avoided. Early last year it traded under a cent and for me it was a bit of a 'pump and dump' penny dreadful. Anyway, the company did come to life and surged as high as $0.29 in October last year before slowly trickling down to yesterday's closing price of $0.125.

One thing that has got me interested in the company is the fact that it is seeking a listing on the NASDAQ. This is very good news. The ASX has only a small space for Biotech stocks and it is a sector that hasn't had any love for a long time. The US market on the other hand has a much larger interest in Biotechs and values these type of companies much higher than Australia. I expect that the company stock price will appreciate in the lead up to being listed on the NASDAQ because of this and it appears to have already started to occur in the last few trading sessions. The rise in share price has also been slow and steady and not like the old 'pump and dump' days. For evidence of this phenomenon I recommend that readers take a look at Unilife Corporation (UNS) and it's movements prior to becoming listed in the US.

Accountability to shareholders rant

2010-10-05T08:02:00.001+11:00

As with most investors I've been closely following the rare earths scene, after all there are some big gains (and some losses) to be made from the sector. This has involved a lot of googling and investigation into which companies may have rare earths projects that have been mothballed or simply forgotten about by the market.

I came across 3D Resources (DDD) and their website about two weeks ago. I was interested by the quote that "3D Resources Limited (3D Resources) is a minerals explorer targeting high value commodities (gold, copper, lead, zinc and nickel) and “future metals” (platinum, palladium, molybdenum, uranium and rare earth metals) in Western Australia." I started trawling through information on their website, announcements and reports but didn't really have any success in finding anything out.

I recommend shareholders and potential shareholders to contact any company should they have any questions or queries as after all the board (directors) are accountable to their shareholders, yes they work for us. Whilst directors will not be able to provide any sensitive information that has not already been releaseed to the market they quite often hint or use innuendo to communicate when drilling results may be due etc. I decided to email DDD and two weeks later, no response! Not very good PR especially considering it "is our policy that all emails sent to 3D Resources Limited at the above email address will be replied to within 8 business hours of being received." Directors need to remember that their wages decrease the general funds available for shareholders and owners of the company. I understand that quite often the directors are very busy people but for a company of this size that hasnt completed any works on their existing projects for some time and every quarterly activities reports released states that 'we are evaluating our projects and JV partners' over and over you wouldnt think it would be too difficult responding to an email.

If anyone has any details of the rare earths projects (if any) of this company I would definitely be interested to hear from you. DDD last traded at $0.032 yesterday (04/10/2010).

Macquarie Harbour (MHM) Mining Research Report $3 Target

2010-10-01T13:58:00.000+10:00

RB Milestone Group have issued a research report on Macquarie Harbour Mining (MHM)
Report dated 28/09/2010
Target: $3
MHM last trade: $0.67 (01/10/2010 1:57pm)
Research report link

Sphere Minerals in the media

2010-10-01T11:22:00.000+10:00

I recently posted on Sphere Minerals, a company currently under a takeover offer with the potential to receive counter bid(s). The company yesterday got a nice little mention in an article in the UK's Telegraph.
Apparently Sphere Minerals shareholders have been receiving calls from Xstrata appointed staff to contact clients and urge them to accept the takeover. I've been in broking circles for some time however I have never heard of this occurring before.

For inexperienced readers it must be noted that there is always the risks associated with takeovers not succeeding and the stock then trading lower without the support (or floor) of that bid.

Today's movers and shakers

2010-09-29T21:24:00.001+10:00

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.

Takeover fight for Sphere Minerals?

2010-09-28T16:43:00.002+10:00

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

2010-09-28T15:52:00.001+10:00

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 Marketwatch.com 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.

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

2010-09-24T10:53:00.002+10:00

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.

***Apollo Consolidated shares to come on

2010-09-23T13:48:00.001+10:00

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.

Morning Briefs

2010-09-22T09:56:00.000+10:00

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.

Apollo Consolidated into West African Gold

2010-09-20T11:42:00.001+10:00

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.

Focus Minerals Research Report

2010-09-18T23:04:00.000+10:00

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

2010-09-18T22:55:00.000+10:00

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

Resource Generation Broker Research Report

2010-09-16T20:27:00.000+10:00

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

Molopo Energy Broker Report

2010-09-15T21:35:00.001+10:00

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

2010-09-15T21:15:00.001+10:00

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.

Small Cap Snippets

2010-09-14T11:32:00.000+10:00

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

2010-09-14T11:01:00.000+10:00

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.

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

2010-09-09T18:52:00.000+10:00

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.

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

2010-09-07T13:56:00.000+10:00

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

2010-09-07T13:38:00.000+10:00

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

Cougar Energy Updated Research Note (Patersons)

2010-09-05T14:25:00.000+10:00

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.

High Risk, High Potential return in real estate shell

2010-09-04T22:43:00.000+10:00

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.

Chrysalis Resources - Writing on the Wall?

2010-09-03T13:06:00.000+10:00

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.

Canyon Resources up after West Africa gold acquisitions

2010-09-02T12:19:00.000+10:00

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.

Moment of Truth for Chrysalis Resources

2010-09-01T12:14:00.000+10:00

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.

Toro Energy: interest from Asian suitors

2010-08-31T13:18:00.001+10:00

The Australian Financial Review had a nice write-up in yesterday's paper regarding Toro Energy (TOE). The article discussed how there was many Asian companies interested in becoming joint venture partners for the Wiluna uranium project in Western Australia however Toro Energy was happy to progress with necessary approvals solo for now.

Also discussed was the fact that other companies from around the world were keen to sign offtake agreements. Toro Energy is hoping to be in production come 2013 and it is handy that it's major shareholder OZ Minerals (OZL) is still sitting on a lot of cash itself.

TOE shares last traded at $0.099 after being on continuous slide in the last year but bouncing from $0.064 in June 2010.

CuDeco bounces

2010-08-24T15:39:00.000+10:00

CuDeco Limited (CDU) has bounced and seems set to finish on it's high for the day. At 3:30pm AEST the shares are up $0.545 (32%) to $2.25. The company share price has been bruised and battered and fallen from over $5 in a bit over a week especially since announcing the Rocklands Resource update on 18/08/2010. In what was a disorganised attempt at an announcement and to arrest the share price slide CuDeco made clarifications, further clarifications and a press release too.

Finally, poor shareholders that have lost a lot lately have had some losses erased with the rebound in shares today after a letter from Sinosteel (partners in the project) to CuDeco showing continual support for the project was released to the ASX.