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.)
ENDS
Copyright © 2005 RWE Australian Business News. All rights reserved.
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