No sign of slowdown as Metal Tiger broadens network
11:06 13 Jul 2016
Kolar Gold is the latest to join a growing stable of junior mining investments
If mining company investor Metal Tiger plc (LON:MTR) has its timing right, in a few years time it will sitting out a raft of highly valuable global mining assets.
Among the juniors it has backed are Ariana Resources (LON:AAU), Eurasia Mining (LON:EUA), Kibo Mining (LON:KIBO) and ECR Minerals (LON:ECR).
India-focused Kolar Gold (LON:KGLD) has now just been added to that list.
Metal Tiger PLC (LON:MTR) is to take a 9.4% stake through an investment of £200,000 cash at 1.1p per share with a matching number of warrants exercisable at double that price.
Cameron Parry, Metal Tiger’s former chief executive, will become the chief executive of Kolar Gold. Luke Cairns will join as Kolar’s other executive director.
Through a stake in local company GMSI, Kolar has interests in a portfolio of gold permits and rights across India and also wants to revive the historic BGML mine that closed in 2001.
Progress has been stalled by the bureaucratic process in India but Paul Johnson, Metal Tiger's chief executive, is upbeat.
The new team will launch an operational review of the business as their first task.
“We are hugely excited by the opportunity afforded by our investment and Cameron’s involvement in Kolar Gold and we look forward to updating investors further on transaction completion.”
The investment was at a modest valuation that reflected recent resource sector apathy in the markets, he added.
And that has been the sentiment behind most of the recent activity.
Great start
Timing so far has also been nigh on faultless, starting from an exceptional start with one of its first investments, thermal power station developer Kibo Mining.
Johnson described the process to Proactive.
“We spent some time sorting out the business into the third quarter of 2014, but then we invested £150,000 in Kibo Mining at 1.5p.”
Within days it was trading up to an intra-day price of 12p. The team at Metal Tiger live and breathe the markets, and they weren’t going to miss an opportunity like that, even if there had been a strong element of luck in the timing.
So, in early January, only a couple of months later, Metal Tiger cashed out of its initial Kibo shares, crystallising what it called a “significant return” much of which was rolled back into Kibo via early conversion of 10mln 3p warrants that were attached to the original placing.
As with all the company’s major equity investments it retains a material stake in Kibo.
“The Kibo transaction gave us some working capital, and we wanted to reinvest it quickly and efficiently. We rolled some of the money into an investment in Eurasia Mining,” continued Johnson.
Profits re-invested
That generated another short-term profit to the tune of £180,000, most of which was then ploughed back into Eurasia through early warrant conversion, after production mining approvals were granted to Eurasia for its West Kytlim platinum mine in Russia.
Metal Tiger has also invested £250,000 in Ariana Resources, which is now breaking ground on the construction of a Turkish gold mine at the Kiziltepe project.
As they used to say on daytime top 40 radio, “and the hits just keep on coming”.
Moving into 2016, the company made a strategic investment into Australian Stock Exchange listed MOD Resources (ASX:MOD), its joint venture partner in Botswana.
It invested A$350,000 into the company, acquiring a 4.92% stake, at A$0.006 a share; at the time of writing the shares trade at A$0.0240, four times the price at which Metal Tiger bought in.
In February, it checked out of ECR Minerals, selling shares for £180,000 and banking a profit of £80,000, though it retains 500mln warrants that it can exercise at any time up until November 2018 at a price of 0.04p.
In the same month it acquired a 28.25% stake in ISDX-listed ZimNRG, paying £50,000 to grab 19mln shares.
Network starts to broaden
This was cited as the first step in the broadening of the network of interests in other publicly listed companies through transactions that gave Metal Tiger a significant proportionate holding.
Other irons in the fire include an option on a high grade silver-lead zinc mine a couple of hundred miles north west of Bangkok, where it has until August to thrash out an agreement.
Johnson said the company would also consider opportunities in other related sectors if the board considers there is an opportunity to generate an attractive return for shareholders.
This would include natural resource technologies and fintech opportunities offering leverage to resource identification, processing, recording, storage and trading businesses.
So, trying to guess where Metal Tiger will invest next has become a whole lot harder; far simpler to just invest in Metal Tiger and buckle up for the ride.
Philip Whiterow