In our valuation, we use the market value of Stellar, which is ~$3M at the last closing price 8.5c. This ignores any premium for control that a strategic stake such as this could command. We view the Stellar holding as offering attractive leverage to new discoveries, but ultimately, we view it as a non-core holding for GIP.
Premium for control but not regarded as a “core holding”. Been other subtle and not so subtle flagging up the possibility of Gip selling the Stellar holding which i have covered here before so there can be little real argument that a sale has been considered by Gip of its Stellar kingmaker shareholding.
Out of escrow http://www.asx.com.au/asxpdf/20130114/pdf/42cdnkcpxpc7md.pdf
But could the gip price spike be connected to new good news in the Activities report that was not appreciated at first? What good news.
Abu Dabbab Jam tomorrow as usual how long have they been waiting for environmental approval now and that is even before you get into current conditions in Egypt for mining companies.
Gippsland has appointed El Torgoman Partners & Advisors Ltd (the “Advisor”) to provide various services to assist it and Tantalum International Pty Ltd (a wholly owned subsidiary of Gippsland) to raise the balance of the finance for the Project (“Shareholder Fund Raising”).
And what share goes up over the chance of highly dilutive shareholding fundraising?
Eritrea some good early results?
Other mining firms in Eritrea have been having their shares price hammered over the last two years and there has been recent instability in the country as well. These are firms a lot further along than Gip. Just look at the two year charts to get an idea.
There is good news over the price of tin. Alluvial tin a bright spot revenue from tin expected at $12.4 million but that was on 2000o a tonne would expect the price to be around 25000 at least over the lifetime of the project a “very positive impact”
However this is not new news and why the big dip followed by the big spike?
Once all gips other assets are discounted as the source of the spike that only leaves a development over the Steller shares that came out of the Escrow at the same time and it would be a big coincidence if it was otherwise.
The case for recent events being unconnected to Stellar share sale.
"There is nothing more deceptive than an obvious fact." "The world is full of obvious things which nobody by any chance ever observes."
Several companies that could buy the Stellar shares then Stellar in the Gandel stable of course i agree but it would rise conflict of interest issues and other issues that have been highlighted in the past.
Gip directors have a responsibility to their shareholders to get the best price for any assets sold would it really make sense to sell an asset now for say ten cents when you could sell it later for a big multiple of that plus a premium for it being a strategic stake?
After all the increased alluvial tin revenue and director loans should keep Gip ticking along so the company do not need the money unless they were going to pour resources into Eritrea or Egypt which does not seem that likely when it a waiting game there as normal.
If gip ever want to get any of its projects of the ground apart from the alluvial tin it will simply need more money than a sale of its Stellar shares would raise now. Better to wait till the predators start circling over SRZ and its Heemskirk prospect and after further upgrades in it resources.
Possible as well that other potential predators have been responsible for volume spike in Stellar (metals x, Yunnan tin, Malaysia smelting corporation, Resource Capital Funds and so on) and the share fluctuations in Gip are just a pure coincidence or based on information that is available to the market makers and has been better analysed by them .
Hope i have been as even handed as possible anyway will have to stop there as i am missing the six nations rugby and it is a really long post!
SRZ Price at posting:
6.5¢ Sentiment: LT Buy Disclosure: Not Held
(20min delay)