who likes a bit of back door action?

NDL seems to be flying under the radar of most, but not for long i suspect.

One of the more astute portfolio managers that is in regular contact (so far his EKM/GOR investment is a 40 bagger) brought this to my attention. Having regard to the following it is not a question of if, but how many bags we will make on this puppy.

3.5 market cap with 2.2 million cash
Only 86 mil shares on issue
Share register stacked with CPS brokers/clients


In the last month we have seen:

A further placement of 10.7m shares to sophisticated investors @4c to raise $400k (at pretty much no % discount to 7 day VWAP)
Director and substantial shlder Kyle Haynes acquire on market a further 500,000 shares @ 4c., and further buying of 350k last week.

So, the insiders have now all taken their positions. Saw this with ADD it didnt take long at all for the pump to begin once the insiders got set.

It is just such a perfect back door play

- Low shares on issue
- Lots of cash
- Implied value of $1.5m for a very clean shell
- CPS Securities Director K Haynes as a shareholder/director of NDL

These WA sophisticateds aren't buying into NDL at 4c to sell out at 6c, they will be looking for 20c plus....Everyone has the opportunity to buy into NDL now at low levels and join the big boys...

Its all about assessing and analysing the risk, relative to the upside.
NDL = lots of cash, low m/c low shares on issue,
To me, very little downside, plenty of upside....Sure it may drop, but with such a low m/c and lots of cash any major drop would not be justified.

Its how you play the game. You can be a player, or you can be played.

If you get in early, when the big boys get in, your risks are reduced (but never eliminated)
If you get in later, when the stock has profile and liquidity and inevitably run, your risks are far higher.

There are a number of factors at play in relation to back-door listings.

The key is that a public company is more valuable than a private company. This is for many reasons, including credibility, ability to recruit and incentivise top employees, the benefits associated with shareholders having the ability to freely trade shares and the improved access to expansion capital.

This is particularly the case with resource companies where the benefits of being public are often substantial. So it is possible to strike a deal with a vendor of a private company at very attractive private company prices, through issuing shares in the back door company, such that, when the deal completes, the vendor is rewarded through the increase in the share price of the back door company.

You might well ask, why not just IPO then? The IPO process may take up to 1 year, and requires substantial costs in relation to accounting reports, back dated audits, advisory fees, plus you automatically give up say 6% of the capital raised to the underwriter. Yes, there are often associated costs with a backdoor listing (including dealing with ASX Listing Rules 1 &2, re change and scale of activities) but the costs of an IPO far outweigh the costs of a back-door listing, plus an IPO takes far longer.

So thats the theory.

In practice, you will often see a lot of shareholder registry restructuring prior to the transaction...In CEO and SLT the managing directors of Paterson Securities became substantial shareholders prior to the transaction...In NDL Haynes from CPS and a number of CPS clients have taken positions.....if it is good enough for some of the leading WA brokers to take big stakes, then, that sends a pretty good signal that something potentially attractive will happen.

You often see brokers take personal stakes in companies, but for someone with the profile of CPS broker Kyle Haynes to be the 2nd largest shareholder and becoming a director, looks a good thing. Do I need to add the disclaimer all IMO????

Get on.