Around the Traps ... with THE FERRET 07:58, Wednesday, 9 March 2005
Sydney - Wednesday - March 9: (RWE Australian Business News) - ***************************
Why do companies make such cheap placements?
SUMMIT RESOURCES (SMM), which we wrote up a while ago, made a gift of 22.8 million shares to a "limited number of investors" at 30c a throw when the market was better than 40c, and a couple of days earlier had been as high as 49c.
The give-away price initially knocked the shares down to 36c but yesterday they bounced as high as 45c in hectic trading sparked by renewed uranium speculation after the BHP BILLITON (BHP) move on WMC RESOURCES (WMR).
Those highly favoured "limited number of investors" forked out $6.8 million for the shares and a day later they're $3.4 million ahead.
Summit says the $6.8 million will be used on the company's 2005 Mount Isa uranium, copper, gold and base metal drill programs with drilling now anticipated to recommence next month.
The planned drilling will take place over the remainder of 2005 with holes drilled into Valhalla, Skal and Andersons uranium deposits, several Isa North copper gold targets, the May Downs gold and the Red Dingo copper gold targets.
In addition Summit will commence evaluation of its Constance Range iron ore deposits.
Uranium and iron ore ... there's two of the hottest flavours of the month for you.
*****
HILLGROVE RESOURCES (HGO) had a brief fling in the limelight after it announced extensive garnet mineralisation was associated with its already identified copper/gold resource at Kanmantoo.
The shares jumped 4.5c to 24c, but then drifted back to 20c.
Managing director David Archer said the garnet by-product had the potential to add another significant revenue stream to potential future cash flows from copper and gold, thereby maximising the use of the resource and making the South Australian mine potentially one of the three largest industrial garnet producers in the world.
"The deposit could support annual garnet production between 100 to 200,000 tonnes per annum," he said.
That's probably 100,000 and ...
*****
Ferret was surfing the net looking for possible reasons for the sudden slide in NEUREN PHARMACEUTICALS (NEU) when he chanced upon one of the best chat site discussions he's seen with the main protagonist basically doing a spectacular hatchet job on the aforesaid stock.
No wonder Neuren's 40c-floated shares have spiralled down from an opening day 40c on February 3 to as low as 28c on Monday.
They were steady at 29c yesterday.
Anyway, the chat forum came up with some interesting comments (slightly edited) which may have some pointers for bio-tech and pharma investors generally.
"In fact there's nothing clever or remarkable about filing patent applications," the hatchet-jobber said.
"It's quite easy.
"Anyone can do it, particularly if you're prepared to spend a bit on patent lawyers and filing fees.
"With Auckland University footing such bills until recently scientists have been able to file patent applications almost ad infinitum.
"Applications for a patent can be based on the flimsiest of evidence.
"All you need to do is show that no-one has thought of using a given molecule in a specific situation or disease.
"It doesn't matter whether the science is any good or not, nor does it matter whether the molecule actually proves to be a useful therapy for the disease you've selected.
"It doesn't even seem to matter whether the experimental results you report are false or faked.
"All that matters for a patent is that no-one has used the molecule for that particular purpose before.
"A company can adopt a blunderbuss approach to filing patent applications in the hope that one or two will come up trumps.
"It's hardly cutting edge 21st Century science.
"Remember - all a patent actually does is prevent anyone else copying or selling your 'invention' for a period of 20 years.
"Having such protection is only of any value if others are likely to want to manufacture or sell whatever it is you've patented."
*****
If Lewis Carroll were still around he could write a sequel ... Alice in Takeoverland.
It's full of wonder and everything is bigger or smaller than it seems.
After HILLS MOTORWAY's (HLY) magic with numbers fogged bidder TRANSURBAN (TCL) on Monday it was SOUTHCORP's (SRP) turn with the fairytales about FOSTER'S (FGL) takeover quest yesterday.
Southcorp, which was struggling at $2.86 a year ago, and is the subject of a takeover bid of $4.14 from Foster's, is worth $4.57 to $4.80 according to the target's independent expert, and worth $5.84 and $5.97 to Foster's if one includes all the synergies.
The independent expert says, "Southcorp shareholders are not being paid a reasonable share of the very significant synergy and efficiency benefits which Foster's is likely to be able to generate if the takeover is successful."
Yes, but ... take away the synergy gains and what's the point of the exercise for Foster's, or any other bidder?
The vehement opposition to the bid has had some effect, though, with Southcorp up 13c to $4.44 yesterday.
Foster's rose 4c to $5.34.
(Comments and complaints to [email protected] - no requests for advice please.)
