The Speculator

A new Chinese connection puts internet group GoConnect in the running for resources projects.

PORTFOLIO POINT: An offer to GoConnect investors of free shares in a forthcoming new listing has been enhanced and extended to June 22.

Shares in our internet entertainment company GoConnect (GCN) leapt on May 7 when the Melbourne-headquartered company confirmed a free distribution of 100 million shares in its soon-to-list associate First Mongolian Investment Holdings.

GoConnect shares jumped in the space of a day from 2.7c to 3.5c – an increase of almost 30% – on rising turnover. Indeed, GoConnect turnover surged to 29.03 million in the space of a week – more than double previous weekly turnover.

The distribution was to be made to investors registered with a minimum holding of 250,000 GoConnect shares by June 8, on the basis of one FM share at a face value of 40c for every 10 GCN shares held. So that meant a probable distribution of 25,000 free FM shares for a minimum holding of 250,000 GoConnect shares.

The issue was to be made to enable First Mongolian to secure a share spread for a compliance listing on the ASX. As at June 5, more than 500 GoConnect shareholders were qualified for the free distribution.

Last week, on June 5, based on then existing issued capital, First Mongolian and GoConnect upgraded the planned distribution to an approximate estimate of one FM share with a face value of 40c for every nine GoConnect shares held in a minimum parcel of 250,000 shares. That would lift the proposed distribution from 25,000 to around 27,700 FM shares, with fractions being disregarded.

The entitlement has been also extended by two weeks to shareholders who are on the GoConnect register by June 22.

A prospectus for the forthcoming float and listing is still in preparation, but qualifying GoConnect shareholders are expected to be offered the right to subscribe for additional FM shares.

GoConnect now holds a controlling 51% shareholding in FM’s former wholly owned subsidiary First Mongolian Media Ltd, while 49% remains owned by that company’s former parent First Mongolian Investment Holdings Ltd, the company now seeking a compliance listing in Australia.

First Mongolian Media is establishing WiFi media and IPTV businesses in Mongolia, licensing the technologies and content from GoConnect, which, in turn, is developing similar businesses in Australia and other Asian countries.

Lead manager in the impending float of First Mongolian Investment Holdings is Melbourne-headquartered investment banker Sino Securities International Ltd, whose managing-director Richard Li is also chairman of GoConnect.

Sino’s subsidiary, SSI Nominees Pty Ltd, owns 22.12% of GoConnect's 929 million issued shares, which traded today at 2.9c, down from a year’s high of 7.1c but well ahead of its low last year of $0.006.

Why the planned listing is being delayed

In its June 5 update, First Mongolian Investment Holdings advised that recent changes to Mongolian foreign investment legislation governing “strategic industries” in mining, finance, media and telecommunications had “created uncertainty in regard to the company’s manganese exploration tenement in Mongolia.”

It continued: “Accordingly, FM has expedited the restructuring of its mining portfolio and is finalising a strategic partnership agreement with an 'Institute’ representing the highest ranking Central Government mining authority in the People’s Republic of China. The agreement is expected to be signed shortly.”

This is seen as a “plus” by GoConnect chairman Richard Li in widening FM’s access to a broader market.

The FM/GoConnect announcement continued: “The Institute – (yet to be fully identified) – will provide ongoing mining consultancy and geological support to FM. In return, the Institute will become a 10 percent strategic shareholder of FM.”

Advanced China projects may be included

“The Institute has identified and is assisting FM to acquire a number of significant resources projects on the best commercial terms in Inner Mongolia, Mongolia and China, in producing and advanced exploration, metal and precious metal projects to be acquired by FM. In the light of legislative changes in Mongolia, the partnership with the Institute will strengthen FM’s business relationship with the Mongolian Government.”

Senior Chinese geologists to join the board

The announcement concluded: “FM has secured the interest of two senior geologists from China to join FM’s board as independent non-executive directors: Prof Vincent Zhu, former vice-chairman of the China Gold Society and consultant to Placer Dome China. He is a member of the Chinese Society of Geology, a Fellow of the Australasian Institute of Mining and Metallurgy and works on gold industry policy development in China; Prof Y.G. Li, head of the Institute planning to take a 10% holding in FM.”

The Speculator will certainly stay in there with GoConnect to collect our free entitlement to the float of FM and looks forward to the coming prospectus of First Mongolian Investment Holdings.

-The Speculator portfolio, as at June 13
Company
Code
No of shares
Bought
Purchase price
Current price
Current value
Image Resources
IMA*
15,000
31/12/2010*
0.362 av
$0.295
$4,425
Viralytics
VLA
19,995
20/12/2011
$0.308
$0.290
$5,799
Robust Resources
ROL
6,000
31/12/2010*
$1.49 av
$1.000
$6,000
Scotgold Resources
SGZ
27,500
31/12/2010*
5.5 av
$0.067
$1,843
GoConnect Ltd
GCN
250,000
31/12/2010*
0.034 av
$0.029
$7,250
Minemakers
MAK
20,000
25/01/2011*
0.425 av
$0.150
$3,000
Platsearch
PTS
20,000
8/02/2011*
$0.130
$0.070
$1,400
Broken Hill Prospecting
BPL
20,000
22/02/2011*
$0.160
$0.090
$1,800
Austpac Resources
APG
40,000
2/03/2011*
$0.060
$0.032
$1,280
Potash West
PWN
11,050
30/03/2011*
$0.200
$0.265
$2,928
Cortona Resources
CRC
25,000
13/04/2011*
0.146 av
$0.090
$2,250
Golden Gate Petroleum
GGP
408,500
20/04/2011*
0.0145 av
$0.013
$5,311
TNT Mines
TNT
4,440
22/07/2011*
$0.000
$0.250
$1,110
Quickstep Holdings
QHL
20,000
23/11/2011*
$0.185
$0.150
$3,000
Orpheus Energy
OEG
19,250
17/08/2011*
0.164 av
$0.110
$2,118
Black Mountain Resources
BMZ
10,000
17/04/2012
$0.300
$0.250
$2,500
Gullewa
GUL
40,000
22/05/2012
$0.063
0.078
$3,120
 
Total value of portfolio
$55,132
Cash at bank
-$6,610
Total
$48,522
 
Portfolio change since January 3, 2012 (started with $50,000)
-2.96%
All Ordinaries change since January 3 2012 (then 4155.22)
-0.89%
 
*Shares held from previous year, carried at their December 30, 2011 closing price.

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

Related Articles