RE: Slightly odd company strategy22 Oct 2020 09:20
Morning Phoebus,
I'll try and be succinct.
1. The LVG, whilst on the face of it, is a large transaction from an mcap perspective, the amount of gold in the ground at LVG is not anything the size of the GR complex. The project is in Tanzania, so it's not really Australia at all. MNRG is a business listed in the UK on the main market here. Thus, it makes little sense to focus as an Australian business.
2. The company investing policy is to invest in and/or acquire companies and/or projects within the natural resources sector, with potential for growth or value creation. The O&G falls into this strategy, when considered with "how" the company intends to conduct itself, notably - For those projects that offer substantial growth opportunity the Company will seek a controlling interest and maintain a medium to long term investment view, while those that offer value creation opportunities, we will seek to list on an appropriate exchange and crystallize value in the short term. Hence the SPV for BritNRG. The world is changing in terms of how it manages resources out of the ground. The economy is de-carbonising. The O&G sector and BRITNRG offers opportunities for short term value creation. Businesses must adapt and become intelligent in the manner in which natural resources are managed. The journey is a change in direction, but does not constitute a diversion from the strategic aims of the business.
3. Right now.....yes the world wants gold right now, but it isn't a straight line NE to any destination. Non-correlating assets, with the right people, processes and intelligence, allows the BOD to have one eye on the "NOW" and one eye on the future. It would be folly of any business to not considered the implications of having a one-legged stool to sit on.
4. Lake Victoria Gold as a brand? Nope. It's a small mine, which will, over the longer term, form a minor part of the business. I said in an earlier post that the shareholders of LVG will most likely not retain most of their MNRG holdings - at the point of transaction, new II's will likely come on board to take those shares from many of the current LVG holders. It represents an exit for them which they have most likely been looking for.
5. LVG mine and BritNRG are knowledge curves, an income story, a consolidation in this market to demonstrate MNRG as a natural resource player with vision on the changing environment. The "real" long term play is much bigger than these two projects and that is why to see either of them in isolation is to miss the bigger picture. The Aggregation of Marginal Gains......to quote Sir D. Brailsford
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