" Apollo ( AON ) looks even better. Below outlines massively undervalued take out bid for DMC by Capelambert.Good news for Apollo shareholders as we are sitting at a ridiculously low market cap of 20 million. I think we are worth at leat 3 times that. Market evidence is clear"
DMC massively undervalued: Ambrian
Kristie Batten Tuesday, 27 April 2010
LONDON-based brokers Ambrian Partners has initiated coverage of takeover target DMC Mining, giving the company a buy recommendation with a target price of A94c per share ? well above the takeover offer from major shareholder Cape Lambert Resources.
DMC Mining's Mayoko iron ore project in the Republic of the Congo
Cape Lambert?s original offer of 40c per share was upped on Friday to 46c per share to match a proposed offer from a third party.
Ambrian recently visited DMC?s 80%-owned Mayoko iron ore project in the Democratic Republic of Congo and was impressed with its access to infrastructure.
The broker said the takeover bid was a testament to the asset, but ?massively undervalues? the company.
DMC said in a letter to shareholders today that recent comments made by Cape Lambert?s executive chairman Tony Sage in the media indicate that he believes the third-party offer is too low, and is targeting a market capitalisation of $200 million for DMC.
?Clearly, if, according to Mr Sage, an approach at $0.46 per DMC share from a third party is too cheap, then what does that say about Cape Lambert?s offer at $0.46 per DMC share?? the company asked in the letter.
?Furthermore, your board notes that should Mr Sage?s estimated market capitalisation for DMC of $200 million come to fruition, this would imply a price of $2.30 per DMC share.?
The price of 46c per share values DMC at $39.1 million.
DMC advised shareholders to take no action, as selling their shares to Cape Lambert now would leave them unable to accept the potential third-party offer.
Further discussions and negotiations with the third party are continuing to determine whether there will be a transaction that can be put to shareholders as a superior alternative to the Cape Lambert bid.
An independent evaluation of the company, as well as DMC?s formal target statement, is due to be sent to shareholders by next Friday, May 7.
Cape Lambert currently holds 36.20% of DMC.
DMC shares jumped 6% or 3c today to 49.5c.
AON Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
