Metal Tiger an investment opportunity?

I started looking at Metal Tiger (MTR) because of the recent speculation regarding a possible tie up with W Resources (WRES).

What I particularly like about metal Tiger is the following:

  • Metal Tiger CEO Paul Johnson comes across very well. If he delivers as well as he talks this share has great potential.
  • Taking options at twice the share price demonstrates the BOD have belief in what they are doing. Also they are not creating wealth for themselves off the back of shareholders.
  • BOD have a strategy for ensuring shareholders can in the future extract their investment gains. In other words the Directors and pi’s can bank their gains without the sp collapsing.
  • Great collection of opportunities that could all generate significant growth. Only one has to deliver for a decent return.
  • Looking at the brokers note the sp seems incredible value. Market cap £4m.
  • BOD are very good at keeping shareholders informed.
  • One interview I watched implied business could be wound up in about 4 years having delivered value to the shareholders.
  • Broker target 2.3p based on Botswana opportunity. In other words doesn’t take into account other assets / opportunities.
  • Chairman recently invested £240k. Strong commitment when market cap at the time was £3.4m.
  • Makes sense taking positions at the bottom of market enables MTR to take advantage of others difficulties and acquire assets at rock bottom prices. Timing for MTR seems perfect. Acquirers, as one analyst put it, only want the family silver, not the dross.
  • Business comes across as being focused on delivering shareholder value. It doesn’t like many AIM companies seem to also have an eye on generating wealth for Directors at the expense of shareholders.

WRES connection – I’m not sure a link exists as recent WRES communications have focused on La Parrilla and obtaining finance to get into production.

The talk seems to have been sparked because:

a) MTR and WRES have presentations this week and on the day of the WRES presentation MTR are making public their strategy.

b) MTR brokers note compares one of their assets with a WRES asset.

Think the connections are a bit tenuous. Wouldn’t they have had their presentations on the same day at the same event if collaborating with one another?

MTR resistance at 1.15p I can see will be broken very quickly after the MTR 23rd and 25th February events.

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The majority of indicators would also indicate MTR is a strong buy.

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The Risks

A) Over commits. Resources stretched over too many opportunities.
B) Paul Johnson doesn’t deliver and is all talk. Don’t believe this for one minute as he says what he thinks and doesn’t seem to be saying what he thinks the market wants to hear.
C) We are not at the bottom of the cycle and returns take longer to materialise. So far the business has delivered.

The Opportunity

Significantly higher than the 2.3p broker target. Haven’t come to my final view yet but it’s North of 2.3p.

Virtually impossible to establish a projected share price level but if you just looked at the ECR deal and the A$66m tax opportunity. If MTR can obtain 10% of this that’s A$6.6m (£3.25m = 0.8p / share).

Therefore if Botswana value = 2.3p (Broker target) + 0.8p = 3.1p target. This still doesn’t take into account all of the other opportunities.

Conclusion

If Paul Johnson delivers a fraction of the opportunity this will be a great investment.

This information was available on the Blueshare investors site first thing this morning. Link on this page.

 

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