Am new to this company and on the basis of the initial feasiblility study see the possibility that it is massively undervalued.The initial feasiblity study was conducted by reputable firms (I believe the same ones doing the BFS)and so I expect the BFS will probably confirm what was then concluded. However I am hesitating about investing for the following reasons:
1. I am unclear about the potential repurcusions of the "court case". I cant see it in the annual report and would appreciate some clarification
2. There appear to be a lot of related party transactions in the annual report (e.g$630k to Landau's company; $240k to a related party of Nkuhlu; $161k to a consultany company linked to Sithole; and significant loans. To some extent I accept that if you invest in a company in Africa, you might need to accept a certain level of questionable behaviour. But if the prospects of this company are as great as what appears on the surface why do directors compromise the appearance of integrity at this level
3. Again, if the prospects are so great, why did the company bother listing in Hong Kong merely to raise a few million dollars. The stated reason of broadening financial options just doesn't ring true
4. Why didn't the price go up in August 2008 when the xstrata deal was first announced. More importantly why didn't the price go up in February when the initial feasibility study was released
5. And as everyone else is asking why does this BFS keep getting delayed?
6. Becuase I am unfamiliar with investing in companies primarily operating in Africa (with the exception of trading in CFE where I have done really well)I am also a little uncomfortable about implications BEEs (although I have also invested in GDO but, feel they are much more transparent in their management)
AS I said, I can see at a fundamental level, based on the initial feasiblity study, this company is massively undervalued. But it has been around for a while and the story isn't new.
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