recommendation in 2003

I found it is quite interesting Rene recommendation on LSG back in September 2003.

"gold is trading at $US386 an ounce, very close to a new 7 year high. The Australian dollar this morning is trading at US68.09c."

Lion Selection Group (LSG) is an Australian investment company, primarily investing in resource companies (listed and unlisted) with a gold and base metal focus in Australia, Africa, and South East Asia. Listed on the Australian Stock Exchange in 1997, LSG has invested and committed a total of $71 million at the end of May 2000.
One gold stock that we think fits the bill for subscribers is Lion Selection Group (LSG). It is trading at $2.12, which is up 8c today. Its market capitalisation at $2.12 is approximately $212m.
LSG is a pooled development fund (this is from the company’s blurb), providing equity capital to small and medium Australian, African and South East Asian resource companies. It has a portfolio of 15 investments in gold and base metal activities at various stages of development. The company’s strategy is to invest around $5m-$10m per investment, with a minimum 10% interest, with half of the funds directed to projects in Australia, and the balance in Africa and South East Asia.
LSG takes a long-term view to investments, focusing on junior resource companies with operations in precious and base metals that are close to development or with exposure to advanced exploration.
On September 12th, the company announced that its NTA was $1.82 per share as at September 11th. Clearly, because of the rise in gold stocks since then, the NTA is likely to be substantially higher. The company’s managing director is Robin Widdup, who has had vast experience in the gold mining industry, prior to which he was a stockbroker with JB Were, specialising in mining research.
It is our very firm view that should gold continue to rise, as we believe it will, then this stock has plenty of upside left in it. The company has just recently shed a fully franked special dividend of 8c per share. The sort of deals that the company has done, for example, was selling their interest in a company called East African Gold Mines for $40.3m in July, realising a pre-tax profit of AUD$30m. Of course, by virtue of their position in the gold investment market, they are subject to many opportunities that are put to them, in so far as they are ready to move fast if something interesting comes up.
In gold stocks, one does not talk of PE multiples… that is just the way it is. If you take Newcrest (NCM), its PE ratio is virtually infinite. The top 20 shareholders of LSG include plenty of institutions and even the legendary gold fossicker from the west, Mark Creasy, who discovered the bronze wing deposit for Joseph Gutnick. The top 20 shareholders own over 50% of the company, so therefore, the liquidity of this stock is perhaps not as great as we would like it to be. However, the volume for the last 30 days has been about 11.5m shares, so with a bit of luck, subscribers should be able to get set at up to around $2.20.
We believe every portfolio should now have some gold exposure and we feel that this is an interesting way for subscribers to play the gold market. We would not be in the least bit surprised to see this stock trade at levels of around $3 sometime in the next 6 to 12 months.
Accordingly, the recommendation is to buy at up to around $2.20. Of course, it is speculative and there is no doubt about that, and so it should form no more than 3% of portfolios. Should gold plummet and should we be wrong, the stock will clearly fall, but it is our view, as mentioned earlier, that that is an unlikely scenario anywhere in the next 6 to 12 months.
Furthermore, should the Chinese market for gold go up, given the predisposition of the Chinese for buying gold, this could potentially cause a fairly explosive upside, as it has with base metals.