#MTR share price not reacting in line with #MOD sp. ***updated***

Is the Metal Tiger share price undervalued?

It seems perverse that whilst the resource news from Botswana gets better and better, MTR’s share price does not react in the same positive way as their partner MOD Resources share price.

This graph  compares MOD share price (brown line) with MTR’s share price. It is clear from this graph that MOD investors are reacting to news announcements resulting in the sp climbing whilst MTR’s investors have seen little improvement in the sp.

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The following graph highlights that in October, November and December 2016 MOD Resources and Metal Tiger’s share price movements mirrored one another.

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Then in 2017 the two share prices started to diverge. That divergence has increased significantly since the last MOD announcement. The two share prices now have moved so far apart, you have to conclude MTR is significantly undervalued or MOD over valued.

The following table takes into account:

1. MOD Resources – Sam’s Creek gold project and debt.

2. Metal Tiger – Asset Division, Thailand and Spain

and concludes that taking these variable into account the share price of Metal Tiger should be 5.1p. With the sp currently being 2.28p this would suggest the MTR share price is 131% undervalued.

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Interestingly the latest VSA Brokers note has a price target of 5.68p. Reasonably close to the 5.01p highlighted in the table.

The table indicates the value of the Asset Trading division excluding MOD share holding as £2,010,000. It is worth noting that the actual value of the Asset Trading division including MOD is  now £5.321m.

So why do we have a disparity between what ASX and AIM investors think about the value of the the Botswana asset?

  • Did we have significant short interest when sp was below 2p? The rise above 2p happening as shorts closed as good news released.
  • Short positions opened in belief warrant flipping would happen.
  • UK investors don’t understand the technical data being released by MOD.
  • MTR other interests, for example Thailand are seen as a negative.

If short positions holding the share price back, these eventually will have no option but to close as warrant flipping comes to an end, positive news from MOD continues and sentiment changes regarding the prospects for MTR.

UK investors will when the next brokers note is issued, have the technical data, they don’t understand, converted to a value / share price target. The last brokers note is out of date as doesn’t take into account the significant uplift in the value of the Asset Trading division or the increase in copper and silver resource in Botswana.

Thailand will soon be a KEMCO asset and any negativity, if it exists will not impact on Botswana value.

We are very close to reasons for the disparity between the MOD and MTR share prices being history. Based on no new information regarding resource size being released you would expect the MTR sp to rise to c5.1p.

Realistically the probability of the resource in Botswana not increasing is zero. You would therefore expect the sp to  rise above 5.1p.

Invest in MOD or MTR?

The following table indicates the returns you would expect if invested £10,000 in the two companies and a sale of Botswana resulted in a special dividend of £500m.

QThe table highlights that because of the disparity in the share price you would be 58% better off investing in MTR rather than MOD.

** Update : 12th March 2017

This table indicates the impact of the share price rise in MOD on the 10th March and what would happen if MTR distributed the dividend attributable to their 4.9% holding to MTR shareholders.

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Investing in MOD would provide a return of £48,777 and in MTR £91,373. This rather than a 58% uplift would be 90%.

Note: You also need to consider MOD have licences that MTR not involved in and MTR have other assets such as Thailand.

Conclusions

1. You could put forward a strong argument, if you believed a special dividend will happen, for transferring any holding in MOD into Metal Tiger.

2. MTR undervalued compared with MOD.

3. MTR share price has been held back.

4. We are very close to an MTR share price rerate.

5. MTR is currently a better investment opportunity than MOD.

It will only take a little price pressure for the sp to be released from the current range. Interestingly many of those anti MTR on LSE no longer post. This is a good indication they have closed their short positions.

 

 

Notes:

This information is worth reviewing:

1. VSA Brokers note for MTR (old, doesn’t take into account latest resource data).

http://sj.co.uk/VSA.pdf

2. YouTube blog is well worth a listen. Highlights reasons as to why the MOD/MTR T3 prospect has great potential.

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#MTR stunning results from under T3.

On the 17th February Michael McNeilly said in an RNS that what was under the known T3 resource would probably be a larger resource.

Today MOD Resources released an ANN (see here). Julian Hanna stated:

 

“This new intersection exceeds the width and grade of the overlying T3 resource which is several times wider than most copper deposits in the Kalahari Copper Belt”.

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The disparity between MOD resources share price and Metal Tigers share price has become even larger overnight with MOD sp rising by another 15% on the news.

We await with interest the release of the MTR RNS this morning.

It is clear the Metal Tiger sp will re-rate. The only question is when and by how much.

We must by now have reached the point that anybody shorting the stock would be better off moving to other feeding grounds.

#MTR news due?

Metal Tiger share price is drifting, whilst we await news about the Thai IPO and news from Botswana.

What we know is significant news will land soon.

Thailand

You only have to look at the significant number of consultants who MTR have engaged to progress the Thai IPO including:

Barr Consultants – Mine Plan for permitting submission and Tailings Dam stability Assessment.
GWRC – Hydrogeology Study
IEM – Environmental Plan and Second Baseline Study
5 Corners – Economic Study for permitting submission

Other consultants to appoint according to the RNS dated 11th January being:

  • Underground Air Quality Assessment and Stability Assessment
  • Tailings Geochemistry
  • Resource re-calculation
  • Updated AIM Standard compliant Preliminary Economic Assessment

Botswana

Inclement weather delayed progress early January. Since then however drilling progress has continued and we now await data from the MOD team.

Good results are expected. One of the drillers posted six photos of a section of core indicating visible copper. Why would he bother to take 6 photos of this section of core?

 

This isn’t a one-off. The following photo taken on the 3rd February indicates a recent core with visible copper. We will probably have to wait 3-4 weeks before the analysis of this core is released to the market.

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The next batch of analysis results released by MOD Resources are going to be interesting.

 

 

#RGM an investment opportunity?

Regency Mines in January  completed its acquisition of a 20% shareholding in Carbon Minerals Corporation (“CMC”).

This acquisition is significant as CMC own the Rosa coal mine in the United States and is going to provide near term revenue.

This has the potential to be a major revenue stream for RGM with significant coal outputs.

The  last brokers note from Dowgate (see here) doesn’t mention the Rosa mine, as deal hadn’t happened at that time and gave a share price target without this asset of 31.8p.

The last but one presentation from Regency (see here) makes a small reference to the Rosa mine with this graphic.img_1249

This asset is under the radar for many potential investors when in fact it is a major revenue stream.

The following figures are from Share Talk (Steve’s Shares – see here).

The figures for production of coal at 2000 tonnes per day and at $100 margin per tonne (30% lower that current coal values) are $200,000 per day and RGM has a 20% deal in place. So changing into GBP that equates to around £32500 profit to RGM per day.

Assuming production around 200 days per year that is £7.5M plus per year income for RGM.

This table is from the latest presentation on the Regency website giving their thoughts of the potential revenue.

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When the current market cap of RGM is c£2m it makes you wonder when the market will realise this stock is undervalued.

These figures are based on the Rosa mine alone. RGM have significant other assets as indicated in their presentation, such as an oil asset in Horsehill.

What will an updated brokers note from Dowgate state when it’s issued and includes the Rosa revenue?

RGM have also stated that they have received additional enquiries for their coal output since Trump elected president of the United States.

RGM share price is looking likely to re-rate in the very near future.

I have over the last few weeks built a position paying circa 0.4p a share and like many, will now hold tight awaiting any share price uplift.

#MTR – news due in Q1

Change in posting style of several on twitter and bulletin boards has nothing to do, I believe, with what they think about the MTR business.

It is highly likely they have changed their posting stance as have closed their short position and taken a long position.

Long term holders who have held and ignored traders posts, basing their investment on the fundamentals of the business, will now start to see their investment mature.

We have the following that will in the short-term add to the value of any investment in Metal Tiger:

1. Sentiment – those previously short and prolific with their tweets will now ramp the business.
2. Thailand IPO – as gets closer and news released, value will be reflected in the share price. Currently no value in sp associated with Thai business.
3. Botswana results – increase in activity in drilling programme. Any extension to T3 resource will have an impact on the share price.
4. Institutional investor taking a position – just look at the contact base of the new BOD appointment, Mark Potter and ask yourself why has he taken up a position with MTR, a small mcap business, when he could have taken a position with a major player?

His appointment, I believe will facilitate the arrival of an institutional investor.
5. Asset trading division is starting to deliver with several investments making significant gains.

Michael McNeilly (CEO) in a very short period of time has made significant inroads in translating MTR assets into shareholder value. His Proactiveinvestors interview highlighted his past track record dealing with IPOs and made a point of stating he would deliver the Thai IPO in May or June at the latest.

The share price re-rate will happen. The only question is when.

#CPX – Cap-xx an investment opportunity?

This is a link to the blog indicating why I invested in Cap-xx.

Cap- xx are currently trading at 10.5p that’s a 205% uplift in the share price with IMHO still more to come.

The American market has taken notice of the business and this afternoon if trading patterns continue as last week the share price will rise again in the afternoon.

#MTR fund raising and MOD Resources.

Metal Tiger placing has created some unrest amongst smaller private investors with many believing the dilution of their shareholdings has benefited the BOD and major investors.

In fact the BOD and major investors have also seen their shareholdings diluted.

So why has the Metal Tiger placing happened when the share price so low?

What we do know is MOD have said they intend to drill the life out of T3. To do that they need funding.

We now have A$5.46m (c£3.19m) raised by MOD resources with institutional investors partaking. MOD Resources are ready to start drilling T3 in early January 2017.

What would have happened to the MTR share price if they hadn’t already had their placing? In all probability the MTR share price would have gone down as investors would know MTR need to fund 30% of the T3 exploration. This scenario would have resulted in the MTR placing being at lower levels than has already occurred.

It looks like MTR had no choice but to raise the necessary funding when they did.

We know the CEO of MTR and MOD BOD members, together, attended meetings with potential funders during MOD boards recent visit to the UK. Is it possible as a result of these meetings, institutional investors indicated willingness to invest in MOD?

If that’s the case this could explain why MTR offered warrants as part of their placing and MOD haven’t.

It is going to be interesting to see what happens to the share price of MTR as a result of this news.

Investing is about the transfer of wealth from the impatient to the patient.

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