The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Relative valuation using the only peer available. See p.2 of this note: aimchaos.files.wordpress.com/2017/01/kolar-gold-ltd-bought-05-01-2017.pdf I should also state that since publication, I have spoken further with members of management and they are of the opinion that Geomysore's assets are actually superior to Deccan's - not least because they have Jonnagiri which is the closest to production.
I'm close to 4% now. I don't know anything you don't know (or at least couldn't find out via searching in the public domain) - but my rationale for taking the stake is summarised in the aforementioned trade note. Our newest director is CEO of one of Geomysore's other major shareholders. It was that entity (and thus that CEO - also now our director) that was looking to sell to our only direct competitor, Deccan. The deal was only put on hold, and it has been mentioned in recent RNSs that it could be revived this year. The move onto the KGLD board by said CEO / director could be taken as evidence that both shareholders of Geomysore (KGLD and Australian Indian Resources Ltd) - who I believe control a little more than 50% of Geomysore - are looking to achieve a trade sale to Deccan. That, or else they are looking to list Geomysore in Bombay and achieve a similar valuation to Deccan (which is already listed on the Bombay Stock Exchange at a current valuation of over $60m - and has comparable assets to Geomysore). Either of these routes would likely crystallise substantially more value for KGLD than its present entire market capitalisation - with its other two ventures effectively thrown in for free.
Yes, agreed. I am of the opinion that there could also be significant corporate action before end June, with regard to the Geomysore stake. See p.2 of this brief note: aimchaos.files.wordpress.com/2017/01/kolar-gold-ltd-bought-05-01-2017.pdf
Short term trade: aimchaos.files.wordpress.com/2017/01/kolar-gold-ltd-bought-05-01-2017.pdf Also have a larger position for the longer term.
I have repeatedly stressed this scenario being a possibility for the past three weeks on Twitter. Really it should be taking nobody by surprise. However, this is by no means a worrying outcome. I would suggest that a RTO of N4 Pharma is now a very likely scenario. How much will 100% of N4 be valued at, once listed on AIM?! I believe that Nigel had the backing of Neil Woodford in his previous business, Oxford Pharma. My belief is that there will be plenty of appetite for this stock, if/when it relists as N4 Pharma. Holding and confident in Nigel and Gavin to deliver for shareholders.
Just to demonstrate the potential of N4: The likely next drugs to be reformulated after Sildenafil is Valsartan / Losartan. $11bn global annual market. Dwarfs the Sildenafil market. I envisage N4 creating a SPV for the product, with a partner injecting �0.5m to �1.0m into the SPV. N4 will hold 90%, valuing SPV / produc tin development at �10m. Returns to N4 (3-4 year horizon from now to receipt of royalties, post development and commercialisation by a major pharma) with an investment of only c.�2.0m at N4's TopCo level would be: $11bn (market size) x 12.5% (market share) x 10% (royalty to SPV) x 90% (N4's share of SPV) x 85% (gross profit margin) = $105m gross profit pa. Besides Sartans and Sildenafil ($38m gross profit pa using same model as for Sartans), N4 has earmarked at least a further SIX drugs for reformulation. ONZ currently owns 49% of N4, and the RTO option is surely a likely outcome, given the existing tie up / prior share swap.
Prolonged silence from both ONZ and N4 suggests a deal is being worked on. Share price rise in recent days looks like investors are positioning themselves ready for a potential announcement of this. There's also the prospect of another biotech investment by ONZ separate from N4. Waiting very confidently.