I however do see a fairly major catalyst for SP appreciation this quarter and arguably this month as PMQ will be drilling Mount Borium this month and with a tiny mkt cap of $1.8mn at today’s close and very few shares in free hands then the the stage is set. Also we are a gold explorer at MB so keep an eye on the gold price as it is more likely to go up than down.
I have set out some research mixed with my own comments below:
The management seems very clued up and has a history of creating shareholder value by being excellent corporate custodians.
This year when just about every other stock I hold has been going cap in hand to shareholders for yet another CR PMQ carried out some inspired corporate activity and actually returned $3.9mn to shareholders in a special payment a few months ago . So no need for cash any time soon as there is still $1.9mn remaining on the balance sheet.
This shrewd operating by the management leaves the company with only 59.7mn shares in issue with the top 20 holding 59% of them as at the Annual Report. Interestingly a state owned Chinese company, Jien Mining, holds 11% of the shares.
What is a huge Chinese company doing holding a stake in in such a tiny junior as PMQ?
So with 59.7mn shares in issue and a SP of 3c we have a mkt cap of $1.8mn which is below our current cash level of $1.9mn. This values PMQ’s main projects at minus $100k on an EV basis and gives no allowance at all to PMQ’s proven management.
Now a few comments about the projects in the PMQ stable as things stand now:
Mount Cannindah
PMQ has agreed a JV staged farm in with a company called Drummond mining allowing them to earn up to 75% of the project subject to the expenditure of $6.75mn over a 4 year and 9 month period.
After Drummond’s initial work on this project they have agreed to move up to a 51% stake by spending a further $1.4mn by the middle of 2013. Following this they will have to spend a further $3.5mn over the 2 years following mid 2013 (compare this to our mt cap of $1.8mn!!).
Further details of this project are on page 6 of the Annual Report issued on 21st September.
A link is here:
http://planetmetals.com.au/_dbase_upl/Annual Report 2012.pdf
To my mind PMQ’s largely free carried interest here is worth more than the current mkt cap alone.
Mount Borium
Page 8 onwards in the Annual Report
A few key bullet points as follows:
Rock chip sampling has returned grades of up to 7.8 g/t Au, 56.4 g/t Ag with Cu, Pb and Zn also showing in useful amounts in assays.
The tennement lies in between the existing Einasleigh and Kidston gold mines with the latter just 8Kms from Mount Borium’s south border. It is worth noting that gold production at Kidston exceeded 3mn ounces.
The tennement has a road running through it and there is a railway track a few Kms to the North.
PMQ has access to data from previous drilling in the area and has isolated 3 priority targets for further drilling.
Preparation work for drilling is largely complete and PMQ will be drilling during this quarter.
PMQ has recently taken over the Oak Ridge tennement next door to Mount Borium to create one super tennement. Oak Ridge has shown historic prospectivity for Uranium having been drilled by a German explorer in the 1970s. Historic results also , as you would expect from this area, produced gold as well.
Casuarina Salt Project
PMQ has recently taken on this one as well for a small down payment of $65k, early days yet but more details are on page 13 of the Annual Report.
Finally on 10th September we received notice that a private investor has purchased a 5% stake in the company for cash in what looks like a series of on market trades and on 21st September the Chairman David Barwick purchased 805k shares for cash further reducing the freefloat available to the likes of you and me.
Ask yourself this … is all that really worth an EV of minus $100k and a mkt cap of just $1.8mn?
To my mind a very conservative mkt cap would put us at around $5mn and once drilling starts anything up o $10mn would make sense to me with good results likely to send it higher still.
And for those without a calculator the following handy little table makes a pretty clear point:
Mkt cap …… Share Price
$5mn ……… 8.4c
$10mn …….. 17c
$15mn …….. 25c
Currently we are $1.8mn mkt cap at 3c.
Surely I am not alone is seeing some seriously overlooked value here or have the lunatics truly taken over the asylum.
Any comments, corrections or feedback gratefully received.
Sorry for the long post.
EB
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