Hi All
In July, Fiftyone Capital noted that they had become a cornerstone investor in KZR which is positive news. They also advised that they had signed an investment mandate to write up research for a company in the coming months and noted that they would be receiving options as payment. They didn't mention the name of the company, but with the recent Appendix 3B's being released for "Options issued to third parties for consulting services" it's hard not to assume that these are for Fiftyone Capital to write up a research note..
They have previously written research on PAR which provides some insight into the potential that the research note could do to move the stock (PAR have of course had good fundamental news coming out along with other subsequent research coverage).
Fingers crossed anyway. The investor update can be read below:
https://www.fiftyonecapital.com/monthly-updates-1/2019/8/9/july-2019
Sticking with commodities, another large contributor this month was a new addition to the fund in the small cap gold exploration space. During the month the fund was a cornerstone investor in Kalamazoo Resources ($KZR). The capital raising for KZR was done at 12c per share and had a 1:2 option attaching. We proceeded to increase our position further on market as the valuation we thought looked very attractive relative to the potential exploration upside. The company has the Castlemaine project in Victoria not far from the worlds most profitable gold mine ($170-$190 per oz of gold) at Fosterville (owned by Canadian company Kirkland Lake – Market Cap ~$13b).
$KZR looked very cheap with a market cap around $11m and close to $6m in proceeds to come in from another project they sold off (Snake Well) giving it an EV of around $5m. This along with a high level of management ownership (~44% from CEO), a tight register and mouth watering upside from any exploration success. As such, it looked like a great opportunity for some small cap gold exposure to what we believe is a long sustained bull market ahead for gold.
PARTING THOUGHTS
We are also pleased to announce that we have recently signed a new mandate with a new company under our positive activism strategy. As such, we expect to have a detailed deep dive note released in the coming months. The fund will receive options for this work which as always, we return to our investors. Should our thesis on the company prove correct, we expect these options to materially contribute to our fund performance and investor returns. We look forward to sharing this company with you soon!
