The Speculator

We take up an entitlement for Golden Gate shares, and Minemakers launches a takeover.

PORTFOLIO POINT: We take up our one for seven entitlement in Golden Gate Petroleum’s share issue '¦ and Minemakers launches a takeover for affiliate UCL Resources.

Our West Texas oil developer Golden Gate Petroleum (GGP) has confirmed a fully-underwritten one-for-seven entitlement issue at 1.7¢ a share, to raise $4.5 million.

This was foreshadowed in the Speculator column on February 1 after Golden Gate highlighted a string of five successful discovery wells on Permian Basin targets in its December quarterly report.

Investors from Australia, New Zealand and Singapore registered because the holders of GGP shares at February 16 will rank for the issue, which follows a placement at the same share price on January 5 raising $1.7 million from professional investors.

The new funds will support the drilling and fracture stimulating of further vertical and horizontal wells on the Permian Basin where GGP holds a 100% working interest and 75% revenue interest in 8806 gross acres of leases.

Golden Gate completed the purchase of this ground earlier last year in a deal that delivered proven but undeveloped reserves at a purchase price of less than $US1 a barrel. The $4.9 million purchase price was settled through the issue of 196 million Golden Gate shares plus $US2 million cash to the vendor Arturus Capital Ltd.

Sydney-based Novus Capital Ltd has underwritten the new issue, which will add 264 million new shares to the present issued capital of 1848.23 million shares. The shares traded today at 2¢.

The prospectus reveals that shareholder directors Stephen Graves (4.56 million shares) and Frank Petuzzelli (9.045 million) intend to participate in the new issue.

-The Speculator portfolio, as at February 15, 2012
Company
ASX
No of shares
Bought
Purchase price
Current price
Current value
Image Resources
IMA*
15,000
31/12/2010*
0.362 av
$0.320
$4,800
Viralytics
VLA
19,995
20/12/2011
$0.308
$0.345
$6,898
Robust Resources
ROL
6,000
31/12/2010*
$1.49 av
$1.200
$7,200
Scotgold Resources
SGZ
25,000
31/12/2010*
$0.053
$0.077
$1,925
Scotgold Resources Options ex30/4/12 @ 8c
SGZO
2,500
$0.000
$0.001
$3
Coalworks
CWK
10,000
31/12/2010*
$0.830
$0.830
$8,300
GoConnect Ltd
GCN
120,000
31/12/2010*
$0.038
$0.038
$4,560
Minemakers
MAK
20,000
25/01/2011*
0.425 av
$0.290
$5,800
Platsearch
PTS
20,000
8/02/2011*
$0.130
$0.100
$2,000
Broken Hill Prospecting
BPL
20,000
22/02/2011*
$0.160
$0.110
$2,200
Austpac Resources
APG
40,000
2/03/2011*
$0.060
$0.043
$1,720
Potash West
PWN
11,050
30/03/2011*
$0.200
$0.280
$3,094
Cortona Resources
CRC
20,000
13/04/2011*
0.146 av
$0.145
$2,900
Golden Gate Petroleum
GGP
408,500
20/04/2011*
0.0145 av
$0.020
$8,170
TNT Mines
TNT
4,440
22/07/2011*
$0.000
$0.250
$1,110
Quickstep Holdings
QHL
20,000
23/11/2011*
$0.185
$0.170
$3,400
Orpheus Energy
OEG
19,250
17/08/2011*
0.164 av
$0.110
$2,118
Beacon Minerals
BCN
100,000
8/02/2012
$0.008
$0.010
$1,000
x
Total value of portfolio
$67,197
Cash at bank
-$11,020
Total
$56,177
x
Portfolio change since January 3, 2012 (started with $50,000)
12.35%
All Ordinaries change since January 3 2012 (then 4155.22)
3.94%
x
* Shares held from previous year, carried at their December 30, 2011 closing price.

Minemakers takeover bid for UCL Resources

Our listed minerals prospector Minemakers Ltd (MAK) this week announced a share swap takeover bid for its prospecting affiliate UCL Resources (UCL), also listed on the ASX.

Minemakers intends to make an off-market offer of nine of its shares for every 10 UCL shares held. The bid was promptly rejected by UCL directors, who advised shareholders to do nothing until the receipt of the bidder’s statement due next week.

Minemakers and UCL each have a 42.5% equal interest in a joint venture in the Sandpiper Marine Phosphate Project in offshore Namibia, off the west coast of Africa. The other 15% interest is held by Namibian company Tungeni Investments, all held through a joint venture company Namibian Marine Phosphate Pty Ltd.

Minemakers already holds a 13.1% stake in UCL and observed in its offer proposal that such a holding will make a competing proposal less likely.

The proposal, announced on Monday, was that the offer was worth 30.2¢ per UGL share, based on Minemakers’ share price of 33.5¢ at the close of trade on February 10 last week.

That represented a premium of 59.7% to UCL’s closing price of 19¢ on the same day. With a proposed minimum acceptance of just 50% of UCL’s shareholders, Minemakers appears to be in a commanding position. Minemakers shares declined today to trade this morning at 29.5¢ while UCL traded up at 24.5¢.

Minemakers’ December quarterly report, issued on January 31, described the Sandpiper project as “of world stature” with a Definitive Feasibility Study (DFS) due for completion by the end of the current March quarter.

The Sandpiper deposit is claimed to have a JORC-compliant resource of 1951 million tonnes and, as the quarterly report confirmed, a pilot scale beneficiation plant has met target aims of producing about a 28% phosphorous pentoxide concentrate from 18% bulk sample feed. (About 265 tonnes were collected from the shallow seafloor during the quarter using a two cubic metre mechanical grab and recovery system mounted on the MV Smit Madura and trucked through Walvis Bay to the Mintek processing facility near Johannesburg.)

Minemakers also holds a 100% interest in the Northern Territory’s Wonarah Phosphate Project, the largest undeveloped rock phosphate deposit in Australia with a JORC-compliant resource 782 million tonnes of 18.1% phosphorous pentoxide. The company has exchanged a memorandum of understanding with Indian fertiliser giant NMDC for development of the project.

Green light for Scotgold

Scotgold Resources (SGZ) has finally overcome all outstanding objections to the development of its Cononish gold/silver mine, 80 kilometres north of Glasgow, Scotland.

The company announced this week that National Parks Authority on February 13 had issued the “Decision Letter” formally granting planning permission to proceed.

Scotgold CEO Chris Sangster confirmed the company’s target was to proceed to development in the second half of 2012 on an initial planned underground operation to produce 20,000 ounces of gold and 80,000 ounces of silver annually.

Other targets remain to be tested or developed within the company’s 3200 square kilometres of exploration licences spread through central Scotland.

So far, Scotgold shares have barely reacted after so many months of bureaucratic delays – up by 1¢ today to 7.5¢, but still way short of the past year’s high of 11¢. At 7.5¢, Scotgold’s 194 million shares carry a market capitalisation of $13.55 million, with cash of $1.4 million.

This week: Exercised rights to 38,500 GGP shares at 1.7¢ each = $655.

David Haselhurst writes a monthly column for Money magazine. Please note that he is not able to provide personal replies to emails.

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