Nexus Energy responds to ASX speeding ticket

Nexus Energy (NXS) shares have been setting a blistering trading pace this morning with the stock gapping up on opening at $0.38 (+$0.075) on heavy turnover.  This prompted an ASX query upon which the company referred to an article in The Australian quoting Shell as a suitor in possible takeover bid.

The article mentions that several large shareholders in Nexus Energy have been "sounded out" for a takeover by Shell.  Nexus Energy responded saying that they were not in negotiations with any parties.

Best to put this one on the watchlist, wait for the commotion to die down and then consider taking a cheaper entry.  The shares have been strong lately and are coming off a $0.195 rolling year low in May.

Avanco Resources: Good trading signs

Avanco Resources (AVB) came up on my radar this morning.  At 11:10am there has already been over 7 million shares change hands with the price firming $0.002 to $0.019.  Volumes such as this haven't been seen for about 6 months.

The company mentioned in it's Quarterly Activities Report on 30/08/2010 that assay results from drilling at it's copper project at Rio Verde are pending so news could be around the corner.

A brief mention in 'Pure Speculation' may have also assisted the stock.

A break past $0.02 and the stock may really start to fire up.

Paladin Energy snaps up Uranium junior in NGM Resources

Paladin Energy (PDN) announces takeover of NGM Resources (NGM) on 21/07/2010.

Paladin Energy had participated in a couple of share placements in NGM Resources in the past so this was a move that has been on the cards for a while.  The off market scrip takeover values NGM Reources at $27 million and the consideration under the Offer will comprise one fully paid ordinary Paladin share for every 23.9 fully paid ordinary NGM shares that Paladin does not already own (equivalent of $0.15 per share at closing price on 20/07/2010).
NGM Resources owns three uranium concessions in the highly prospective area of the Tim Mersoi Uranium Basin in Niger, West Africa. Niger has a history of being a high uranium producer and is now the world’s 4th largest. Areva is a French listed company and has been operating in Niger for over 40 years and has definitely had a stranglehold and good relationship with the government. The Niger government is wishing to encourage further uranium mining to assist the economy resulting in many more concessions being granted and global interest by uranium companies. Back to Areva, after signing an agreement with the Niger government the company intends to spend up to US $1.4 billion on developing its Imouren deposit. In order to give perspective, this Imouren deposit is only second to the size of Australia’s Olympic Dam and NGM Resources concessions lie just slightly south.

Another related company is Artemis Resources (ASX: ARV) who are currently focussing on gold projects in Western Australia, their Molybdenum project adjacent to Spinifex Ridge but also have two partly owned tenements in the Tim Mersoi Uranium Basin. The tenements referred to as ‘Tag 2’ and ‘Tag 4’ lie between the major Chinese National Nuclear Corporation deposit and a Rio Tinto (ASX: RIO) deposit.  I believe that Artemis Resources is a company that warrants further investigation for potential investment considering the takeover that has occurred for NGM Resources and the interest in this particular area.

For more information regarding the Tim Mersoi Uranium Basin and the companies operating in the region (including those in this article) I highly recommend the following link:

http://www.stratamodel.com/tim_mersoi.htm

I would also recommend looking at the exploration permit map for Niger link on the above website which gives a great indication of the locations of tenements. Please note that the NGM Resources tenements are shown under the company name ‘Indo Energy’, its wholly owned subsidiary.

Lunch time lull example: Burleson Energy

I've noticed it a few times before whereby an announcement is made early in the day, the stock moves and hits an intraday high before cooling off again over lunch time before then strengthening again in the afternoon. 

Burleson Energy (BUR) is one example of this phenomenon I noticed today.  The company announced that "AKG, operator of our projects in Texas, has completed in-house volumetric resource calculations for the Heintschel gas condensate field, and has confirmed a potentially sizeable gas condensate accumulation." Don't ask me too much about all the figures in the announcement but you can tell that it has been well recevied by the market considering the share price has rocketed 40%.

So let's take a look at the finer details of the share price movement.  The announcement was made at 10:11am this morning.  By looking at the course of sales at just over an hour later the stock had hit an intraday high of $0.088 (up $0.028 from $0.06) at 11:17am.  The share price then started to trickle down and by 12:29pm the stock was back to $0.077.  This is the key point, the lunch time lull!  I've seen this time and time again where everyone goes to lunch, the buying pressure eases and it makes an excellent buying opportunity.  This time period is also characterised by the lack of trades.

Now at 2:42pm the stock is back up to $0.084 so you can see that as a nice litte bounce that could have been profited from.  I would recommend observing this taking place on small cap stocks that have made price sensitive announcements to see for yourself.

Investing in takeover targets when out of favour

Isn't it funny how a resource rich area or particular metal/commodity can go in and out of favour?  Sometime ago coal seam gas was the hot energy source.  It was the sector that everyone thought that consolidation and market activity was inevitable.... then nothing.  It simply dropped off the radar.  Royal Dutch Shell and PetroChina made a takeover bid for Arrow Energy (AOE) a week ago and suddenly it is all on again with Bow Energy (BOW) and Eastern Star Gas (ESG) making good share price gains since.  The bid for Arrow Energy was made with the share price languising at $3.48, a price probably not seen since about July last year.  Take a look at the Arrow Energy chart below:

For me when a takeover target share price is depressed it is one of the best times to consider taking a position.  I say this because this is the time that a takeover bid is most likely to be launched.  If a takeover bid is to succeed it obviously needs to a premium to the current market price.  Why make a bid for a company when the price is trading at $4.50 and you have to add a premium when you can make a bid when it is trading at $3.50 and then by the time you add a premium it possibly can still be under $4.50???  Whilst Eastern Star Gas has the last week been riding the coat tails of Arrow Energy you can still see the way this strategy could have worked as shown in the graph below:

Eastern Star Gas was trading at almost a one year low and has bounced from $0.65 to $0.85, a healthy gain of 30%!  It has been speculated that Eastern Star Gas would be taken over by Santos Limited for sometime now.

Strike Energy Research Note

• Hartleys has released a research note on Strike Energy (STX)
• Report dated 10/03/2010
• 6 month price target: $0.50
• STX last trade: $0.25 (11/03/2010)
• Research report link

CuDeco Limited up after confirming talks with Chinese parties

CuDeco Limited (CDU) surged today after it made the announcement to the ASX that it was in 'discussion with a number of different entities in relation to different aspects of the Rocklands project'.
I like the point that it goes out of it's way to state 'number of different entities'.

The company was forced to show it's hand and meet continuous disclosure rules after it was reported in the 'China Daily' that Xiangguang Copper was looking to take a stake in CDU.

The stock closed up $0.54 to $4.70 on volume of 1.4million shares.