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A A A You are here: ninemsn > The Bulletin > Columns & Opinion > - David Haselhurst


Return to a great Australian
Wednesday, November 21, 2007


An Aussie metals miner has been hitting some promising ore targets, so we're buying back in - and selling up elsewhere.
This week we're taking a second bite of the cherry in a stock that proved most rewarding earlier this year on the strength of some highly rated nickel and platinum group metals (PGM) targets in South Africa - Great Australian Resources (ASX code: GAU).
We bought in at 18c ( B, May 8) and sold at 33c ( B, June 5). They later ran to 40c, but by last week had drifted back to trade between 27c and 29.5c. There will be another run in this stock in the coming weeks. We've bought back in at 28c for reasons explained below.

In the meantime, we've done some portfolio housekeeping and sold down part of our CityView Corporation holding after the stock went "ex" entitlement to a one-for-five issue of options at 4c, exercisable at 15c by November 30, 2009. Our entitlement of 4000 options will soon be quoted and the cost charged against the Speculator's bank in coming weeks.

We may well buy back into this stock, which is focused on oil and gas projects plus base metals in the central west African countries of Cameroon and Angola, with considerable UK financial support.

Back to Great Australian. In our earlier commentary ( B, May 8), this column reported that GAU was undergoing a revamp at the hands of investment banker African Pacific Capital, which would almost certainly result in a re-rating of its share price. It did so in spades, of course.

Stockbroker-turned-investment banker Alan Doyle, a principal of African Pacific Capital (APC), joined GAU's board as chairman in January after raising $3m cash through a placement of 12 million shares at 25c. The company then acquired 50% of Platinum Mining Ventures (PMV), with the remaining 50% held by Doyle and associates through APC.

Following that, GAU had 68 million issued shares, $500,000 remaining cash and its new 50%-owned PMV another $1.3m cash. Since then, the listed company has announced two key corporate transactions:

The listed Sylvania Resources (ASX code: SLV) has taken a placement of 14.6 million shares at 27c to inject $4m in funds into GAU; and

GAU has agreed to buy the other 50% of PMV through an issue of 17.5 million shares to the APC vendors post the Sylvania placement.

These moves will result in Doyle and his associates at APC and Sylvania each holding just under 20% of the capital, which will expand to 105.5 million issued shares. The company will then have $5m net cash plus $6m due from the exercise of options at 20c each in 12 months.

Sylvania is a substantial cornerstone investor, with a market capitalisation of $507m, a dual listing on London's AIM board and two producing PGM-chromite mines in South Africa with a third under feasibility study. GAU shareholders are expected to approve these moves at a meeting on November 30. Ahead of that, GAU has appointed to its board as Sylvania's nominee mining finance heavyweight Gerry Nealon (brother of Ed Nealon, the founder of Aquarius Platinum (market cap: $3.33bn).

The South African assets comprise several PGM prospects in the Transvaal, including the Mooiplats project, where 20,000m of diamond drilling has resulted in a resource of 74.2 million tonnes of Merensky Reef at 4g/t PGM for 10 million ounces. The world platinum price in early November surged to an all-time high of $US1485/oz and is now just short of $US1400. Platinum comprises 90% of the Mooiplats PGM mix, according to GAU managing director and geologist Joe Cornelius, who predicts a bankable feasibility study to begin "in the near future".

Among the portfolio of projects acquired with PMV is the Morokweng impact structure about 400km west of Johannesburg near the Botswana border. This is a 30km diameter aeromagnetic anomaly created by a large meteorite impact perhaps 60 million years ago. It's a prime nickel target, in which PMV has a 52% interest, rising under an agreement with its black empowerment partner to 74% through the spending of $6m on exploration.

Watch out for a spin-off to GAU shareholders.

HOW THE PORTFOLIO STANDS
COMPANY BOUGHT COST ($) NOW ($)
6000 Image Resources IMA 9.01.06 av .93 2.14

2000 Andean Resources AND 9.11.06 av .322 1.70

4000 TZ TZL 10.01.07 av 2.55 4.41

20,000 Admerex ADL 1.02.07 .056 .064

6000 Navigator Resources NAV 22.02.07 av .51 .955

1666 Magnetic Res. ctg MAU 16.03.07 free unlisted

8000 Magnetic Res. MAU 31.03.07 av .188 .175

100,000 Viralytics VLA 3.05.07 av .072 .099

5000 Amadeus Energy AMU 17.05.07 .88 .785

6000 Cooper Energy COE 7.06.07 av .565 .67
4000 Australis Aquaculture AAQ 19.06.07 .545 .49

5000 Prairie Downs Metals '08 opts PDZ 28.06.07 av .44 1.01

30,000 Central Petroleum CTP 26.07.07 .19 .22

20,000 Morning Star Dec '08 opts MCO 9.08.07 .11 .15

8000 CityView Corp CVI 23.08.07 .092 .23

10,000 Meteoric Resources MEI 27.08.07 .175 .125

40,000 Copper Range '10 ops CRJOA 4.10.07 .045 .08
20,000 Great Australian Resources GAU 15.11.07 .28 .29
Total value of portfolio $92,435
Cash at bank $8,461

TOTAL $100,896

Portfolio change from Dec 29, 2006 +152.2%

Gain in All Ords since Dec 29, 2006 (5644) +16.8%
The Speculator's portfolio is notional, based on prices and turnovers in the week before publication. It commenced with $40,000 in shares at end of 2006 market valuation. The Speculator's family holds shares in TZ Ltd.