The Speculator
PORTFOLIO POINT: Beacon shareholders reject an offer from Ramelius Resources and shoot themselves in the collective foot.
On Monday of this week, shareholders in West Australian prospecting tiddler Beacon Resources (BCN) gathered at the Celtic Club in West Perth to vote on the company’s future.
Since it was only 10 am, the bar would have barely been opened. So it’s hard to account for their astounding rejection of a generous offer from Ramelius Resources (RMS) that would have greatly improved Beacon’s financial situation.
Readers may recall that on February 8, we added 100,000 Beacon shares to our portfolio at 0.8c a share. In the previous 12 months, Beacon’s 995 million issued shares had slipped from a high of 1.7c to a low of 0.4c.
We bought in at 0.8c after a deal was announced to restore the company’s fragile fortunes. At that price, the company carried a market capitalisation of $7.96 million.
Apart from $1 million in remaining cash, Beacon’s principal asset was its Barlee Gold project at Halleys East, 200 kilometres north of Southern Cross. Within its 400 square kilometre exploration licence area, it had so far identified a single gold resource, held within a 12 square kilometre mining lease (ML 77/1254).
The find, however, was adjudged to be not big enough to sustain a standalone treatment plant, and various small producers, with existing operations, became interested in buying it.
Beacon’s December quarterly report claimed an initial economically-optimised mining resource of 172,000 tonnes of 7.5 grams per tonne (g/t) for 42,000 ounces of contained gold. Although remaining cash stood at $1 million, quarterly expenditure was running at $420,000, half on exploration and half on administration.
One offer was already on the table (since early last year), with Southern Cross Goldfields (SXG) willing to buy the mining lease, plus all of Beacon’s other exploration tenements, through a paper offer of 60 million of its shares, to be distributed in specie to Beacon’s 2800 shareholders. Most would have ended up with unmarketable parcels and Beacon, with no exploration tenements, would have faced suspension of its stock exchange listing.
Then, on February 1, Ramelius Resources emerged with an offer to buy the mining lease, only with an upfront payment of $4 million cash (representing reimbursement of past exploration expenditure), plus royalty payments starting at $80/oz for the first 40,000oz of gold produced and escalating payments thereafter.
-The Speculator portfolio, as at March 14 | ||||||||
Company |
ASX
|
No of shares
|
Bought
|
Purchase price
|
Current price
|
Current value
|
||
Image Resources |
IMA*
|
15,000
|
31/12/2010*
|
0.362 av
|
$0.410
|
$6,150
|
||
Viralytics |
VLA
|
19,995
|
20/12/2011
|
$0.308
|
$0.390
|
$7,798
|
||
Robust Resources |
ROL
|
6,000
|
31/12/2010*
|
$1.49 av
|
$1.295
|
$7,770
|
||
Scotgold Resources |
SGZ
|
25,000
|
31/12/2010*
|
$0.053
|
$0.070
|
$1,750
|
||
Scotgold Resources Options ex30/4/12 @ 8c |
SGZO
|
2,500
|
$0.000
|
$0.001
|
$3
|
|||
Coalworks |
CWK
|
10,000
|
31/12/2010*
|
$0.830
|
$0.775
|
$7,750
|
||
GoConnect Ltd |
GCN
|
120,000
|
31/12/2010*
|
$0.038
|
$0.030
|
$3,600
|
||
Minemakers |
MAK
|
20,000
|
25/01/2011*
|
0.425 av
|
$0.280
|
$5,600
|
||
Platsearch |
PTS
|
20,000
|
8/02/2011*
|
$0.130
|
$0.085
|
$1,700
|
||
Broken Hill Prospecting |
BPL
|
20,000
|
22/02/2011*
|
$0.160
|
$0.097
|
$1,940
|
||
Austpac Resources |
APG
|
40,000
|
2/03/2011*
|
$0.060
|
$0.038
|
$1,520
|
||
Potash West |
PWN
|
11,050
|
30/03/2011*
|
$0.200
|
$0.270
|
$2,984
|
||
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
|
$0.021
|
$8,579
|
||
TNT Mines |
TNT
|
4,440
|
22/07/2011*
|
$0.000
|
$0.250
|
$1,110
|
||
Quickstep Holdings |
QHL
|
20,000
|
23/11/2011*
|
$0.185
|
$0.165
|
$3,300
|
||
Orpheus Energy |
OEG
|
19,250
|
17/08/2011*
|
0.164 av
|
$0.130
|
$2,503
|
||
Total value of portfolio |
$66,955
|
|||||||
cash at bank |
-$9,940
|
|||||||
Total |
$57,015
|
|||||||
Portfolio change since January 3, 2012 (started with $50,000) |
14.03%
|
|||||||
All Ordinaries change since January 3 2012 (then 4155.22) |
4.36%
|
|||||||
*Shares held from previous year, carried at their December 30, 2011 closing price. | ||||||||
The sale was subject to shareholder approval at the meeting called for Monday, March 12. Surprisingly, 40.37% of shares voted in favour of the sale, but 59.63% voted against, leaving Beacon seriously short of funds needed to carry out future exploration plans on at least four targets within its licence area, identified for drilling in the coming months.
I dumped our 100,000 shares at 1.1c as soon as the results of the meeting became known. Meanwhile, Beacon has appointed one Neil Fearis as an alternate director to Beacon’s chairman Paul Lloyd. The appointment will be valid until the March 27 shareholders’ meeting, which has been called to vote on replacing the present board.
* Sold 100,000 Beacon Minerals (BCN) at 1.1c ($1080)
Image raises cash to accelerate feasibility study
Our heavy minerals prospector had no trouble raising $1.88 million in cash through a share placement to accelerate the feasibility study now underway on its North Perth Basin Project.
The company placed 5,395,858 shares to so-called professional and sophisticated investors, at 35c each, to raise $1,888,550.
Following the placement, Image now has 99,184,817 shares on issue, with cash and liquid holdings of $2.8 million.
As reported in this column on February 29, Image has appointed a highly-experienced mineral sands
processing executive as project manager for its feasibility study. The study is being carried out over six of Image’s 11 100%-owned identified mineral resource discoveries.
Potash West waves the flag in Hong Kong
Investors in our fertiliser hopeful Potash West (PWN) may look forward to renewed support for the stock in the next week or so, if managing director Patrick McManus impresses the punters at Hong Kong’s Mines and Money conference from March 19-23.
Potash West is investigating the development of one of the world’s largest-known potassium-rich glauconite deposits, within exploration tenements covering 2900 square kilometres north of Perth.
It is also earning a 70% interest in a large, potentially rich phosphate/glauconite project near Derby in WA’s north-west.
Potash West, having reported encouraging extraction testworks, has seen its share price slip from a high last year of 35c to trade today at 27c.
David Haselhurst writes a monthly column for Money magazine. Please note that he is not able to provide personal replies to emails.