Metal Tiger has been a sleeping giant for a while.
Interest has been sparked and investors are now taking more interest in the business.
This blog highlights some of the Metal Tiger Business opportunities (see here).
Since then Metal Tiger have indicated they are investing in Kingsgate. This blog provides some background information on Kingsgate and the Chatree mine and indicates MTR are not the only business who see Kingsgate’s challenges as an opportunity (see here).
Metal Tiger have previously stated they intended to curtail their asset trading activity and would sell investments at the appropriate time. We have seen this most recently with Greatland Gold (GGP).
We can therefore conclude that Metal Tigers investment in Kingsgate is possibly a strategic investment.
MTR have been steadily buying KCN shares in the open market. Currently have 5.34% of the shares plus whatever they bought on the 18th October.
Why are Metal Tiger interested in Kingsgate?
Obviously since the announcement of the closure of the Thailand Mine, Kingsgate shareholders have seen the value of their shares plummet. Many large shareholders will have watched the share price drop from c$6 a share to c24c. Those who bought in at AUS$4 will have experienced a 94% drop.
If the mine re-opens and KCN shares increase in value to $2, this being a third of previous highs, based on today’s share price this would be a 440% return. This doesn’t take into account Kingsgate’s Chile assets or the profits MTR will have already potentially made buying KCN shares at a much lower price.
News on Chile asset due in December. This is expected to have a positive impact on the value of KCN assets.
So looking at conservative figures, MTR potentially looking at a minimum of a 500% return in a relatively short period of time. This is all dependant on the Chartree mine reopening.
What do Metal Tiger have to offer that could facilitate the opening if the Chatree mine?
- CEO lives in Thailand and is married to a Thai. Has great contacts in Thailand.
- Terry Grammer lives in Thailand. Why in the last couple of weeks did he invest just under a half of a million pounds in MTR?
- Mark Potter recently became a Thai national and lives in Thailand. Mark has exceptional contacts in Thailand.
- Extensive network of contacts in government departments.
- Team on the ground with extensive experience in obtaining mine permits. For example Surapol Udompornwirat a Thailand permitting specialist. Surapol previously worked for Kingsgate.
MTR have a good reputation in Thailand. This is completely opposite to Kingsgate’s reputation.
Everybody knows that to operate in Thailand you need to respect the Thai culture.
3. Liquid Assets/funds
MTR have in recent weeks built up a significant war chest with for example £480k from Terry Grammer and returns from their asset trading division,
4. Sprott / Rick Rule
The Warren Buffet of the mining sector has made a significant investment in MTR. Why recently was MTR CEO at a meeting with Rick Rule of Sprott? Sprott will be on side with the KCN play.
What happens next regarding KCN?
1. MTR decide not going to achieve their goal and exit their position with a substantial profit?
2. MTR continue to buy and at the appropriate time make their move.
a. Put somebody on the board?
b. Replace the board?
c. Package up KEMCO/KCN?
d. Use contacts/expertise to get Chartree mine reopened?
e. KCN take measures to repel MTR action. All they can do is take on debt to make business less attractive, buy back shares to make cost for MTR greater, convince shareholders that they rather than MTR are the best option for shareholders.
KCN have informed ASX that they intend to buy back 10% of the shares. These will be cancelled pushing up the share price. Unfortunately for KCN they now have to wait 2 weeks and can then only purchase 2% of the shares every 30 days.
This means MTR have a two week window to buy on the open market before KCN can do the same. I am therefore expecting MTR to buy everyday on the open market.
MTR can buy about 15% of the traded volume in a day without moving the sp up or down. The fact they are currently buying c20% in the open market indicates they are being fairly aggressive.
If MTR stop buying we can conclude they have reached their goal or have an off market agreement with a major shareholder.
This is getting interesting, with MTR currently in the driving seat for the next couple of weeks.
I await KCN’s and MTR’s next moves with interest. It certainly looks as if MTR are holding all the Aces in this game of cards.