Minquest Limited (MNQ) Performing Well

I recently covered a stock in Minquest Limited (MNQ) which is in the process of acquiring a pain recognition smartphone based technology company, ePAT.

When covered on 28th April the stock had closed at $0.019 and the following morning they opened at $0.018.  Since then the stock has posted a high of $0.034 on 4th May before retreating to a close of $0.027 on Friday (6th May).

For those that missed my original post, it can be found at this link.

Completion of Due Diligence for the acquisition is supposedly around the corner.

ePAT backdoor listing into MinQuest Limited (MNQ)

With the resources downturn we've seen a raft of the junior explorers complete "vend ins" whereby acquiring a target company by issuing a lot of scrip and raising funds to survive.  Originally there was a lot of money to be made in this area however it became saturated and lost it's gloss.  Tech vend ins are slowing up.  Now we are going through the Lithium vend in or acquisition craze.

One recent tech vend in that came up on my radar which I believe will buck the trend and do well is ePAT (Electronic Pain Assessment Technology).  MinQuest Limited (MNQ) announced the acquisition of this company on the 22nd of April.

Under the agreement MNQ will acquire the company by issuing 373 million consideration shares which will be held under a two year escrow period.  MNQ has completed an interim capital raising and will go on to raise a further $3million post consolidation.

ePAT is a smartphone based app that applies facial recognition technology by taking a video of the patient and then determining presence of pain by analysing the facial expressions.  The app is especially useful for assessing pain in patients that cannot communicate like infants or those with dementia.  The ease of use of the app should result in cost savings for healthcare areas like hospitals or aged care facilities.

ePAT is being compared to another healthcare app in ResApp which a patient breathes into a smart phone and the app can detect respiratory problems.  ResApp Health Limited (RAP) has gone on to be a bit of a market darling with it's share soaring from about $0.02 to $0.27 recently in under a year (market capitalisation currently is $105million)

In regard to the trading action, MNQ shares spiked to $0.022 and settled back to $0.016 on the first day of the news.  Unfortunately, a major shareholder, Magna has been the source of the heavy selling.  Fortunately, the convertible note conversions, which has resulted in shares being issued to Magna and sold into the market will be repaid.  Supply should start to decrease after this which will be a positive.

MNQ last traded at $0.019.

IT Vend in Candidate

Winmar Resources (WFE) is an Iron Ore explorer with it's flagship project being the Hamersley Iron project in Western Australia.

As we all know, Iron Ore prices have suffered a sustained downturn with little sight of a rebound.

Unfortunately for resources firms like WFE, their projects have become unviable and/or funds are not easy raise from capital markets.

WFE have admitted that their project in this current low Iron Ore price environment is not economic.  The company has placed all exploration on hold and is currently conserving cash.  With this in mind, the company is a prime shell candidate for a Reverse Takeover (RTO), an all too frequent occurrence in this environment.

So what makes WFE a good play?  Obviously, there are the factors I mentioned above but there's also been a hint or two as well.

Recently at the AGM the chairman openly admitted they are looking at potential vend ins which includes a short list of Information Technology acquisitions.  After this meeting it appears that a few Daytraders got a wind of this.  They started buying $0.005 and then $0.006 the following day.

The stock has retreated to more compelling levels at $0.004.  At this level the stock has a market capitalisation of about $1.7million.  It is debt free and the books showed $290,000 cash on hand at end of last quarter.  This gives the company a low enterprise value (EV) of ~$1.4million.

The board are yet to engage an expert firm to assist with a vend in.  I mean the likes of Otsana (assisted RYG) or more recently GTT Ventures (FCN).  Coming from a resources focus I don't know if the board have the smarts to pull off a deal so I am interested to see if they do appoint a firm to help.  This is the only negative I have identified.

WFE last traded at $0.004.

Regeneus Limited Breakout

Regeneus Limited (RGS) is a company involved in the repair and regeneration of cells (cell therapy)The stock has a market capitalisation of approximately $31 million (Peer comparison: Cynata Therapeutics Limited, CYP ~$60million) with good cash position of $4.8 million at 31/03/15 following a share purchase plan in September last year.

Excitingly, the company recently received approval to complete it's first-in human test of RGSH4K, a vaccine designed to activate the immune system to fight against cancer cells.  Trial in canines of this vaccine have shown promising results.  Benefits of cancer immunotherapies such as this include avoiding side effects of chemotherapy.

The company has also received approval to commence trials of their stem cell treatment "Progenza".  These step cells will be injected into the patients knee to reduce the effects of Arthritis.

The stock has attracted bullish targets from Analysts/newsletters including:

Edison

 

 

The Daily Molecule

 

For further in depth information regarding the stock I recommend clicking on the above links to view the research.

Technically today was a significant day for the stock.  It closed above a triple top of $0.18 (see chart today) on a spike in volumes both today and yesterday.

Investing in Biotech companies is high risk.  Failures of trials can lead to significant share price destruction.

Dourado Resources (DUO) - Tech Vend in?

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

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

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

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

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

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

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

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

Broad Investments - Substantial Acquisition Coming?

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

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

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

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

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

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

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

Blina Minerals (BDI) – worthy of a punt?

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

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

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

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

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

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

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

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

These sampling results are now overdue.