Member Info for DJP4976

Final results should be out within the next 10 trading days.

Personally looking forward to seeing cash position, which considering Slade and Rae left this time last year, costs should be down. Would be disappointed if cash was any less than £3.5m or roughly .135p per share, likely will be slightly higher IMO.

Also looking for any sort of update on how things may be progressing with regards a target Acquisition, it would be nice if they state they are actively reviewing some targets rather than just stating still considering how best to create shareholder value.

Warrants have less than 3 years to be exercised now so would imagine they want to get the ball rolling ASAP on something to give themselves as much time to get the share price as high as possible before they are due to expire, although I personally believe they’ll be exercised miles before the deadline anyway to cash up the company.

Not long to wait

I would never rule it out, but like I previously said regarding this one, without any clear link it is as good as plucking pretty much any company out of thin air and guessing it may be them. The only link there is and I wouldn’t really even call it a link, is the fact Boohoo use this company, but that’s it.

A stronger link would be a board member of LSAI or a concert party member being a board member of potential target company

No problem Rob

Your shares won’t be bought from you, you’ll retain your shares on both scenarios and you’ll be able to sell them on market again after the RTO is completed, providing their is sufficient liquidity to do so. If after the RTO volumes remain poor, and liquidity is similar to now, then you’ll unlikely be able to sell many, I know I’d likely struggle to sell my holding in a month with current liquidity levels let alone a day.

If the deal is good volumes will pick up naturally and hopefully after RTO it'll run much higher than RTO price

Like I said in previous tweets, I got my .3p base case RTO price on the fact LSAI have £3.5-4m cash and £4m deferred tax asset, that alone should value LSAI as a shell at around .3p per share - if the management pull off an RTO at a greater price than that even better.

I’m no expert at reading financial statements but in the financials reported March 2022 it stated

Potential deferred tax asset of £3,977,000 (2020: £3,840,000)

The other way around it would be a full cash offer from the public company for the private company, buying the owners/vendors of the private company out and such wouldn’t need to issue any shares to the owners as it would be an outright buy out.

Where as my first scenario, the vendors in the private company would remain shareholders in LSAI and LSAI would remain with a health cash balance as they didn’t use cash to do the RTO but issued shares.

That’s the 2 ways of doing an RTO

Not the case.

The public company would issue shares to the vendors of the private company at an agreed amount and price.

For example, LSAI would negotiate what price they thought was fair for the incoming company and what price was fair for LSAI share holders, they would then issue shares in LSAI to the owners/vendors of the incoming company likely with a lock in for an agreed period usually 12 months from the date of completion of RTO, at the price agreed.

So if they valued incoming business at £10m and agreed 0.5p in LSAI shares was a fair price the vendors would be issued 2 billion shares in LSAI.

If they valued the incoming business at £10m at an agreed 0.4p in LSAI shares was a fair piece the vendors would be issued 2.5 billion LSAI shares and so on and so on.

I’m merely speculating on what price I think may fairly value LSAI as a shell. With the deferred tax asset and cash, .3 probably is fair value, that doesn’t mean to say they won’t do a deal at a much greater price, I’m sure the concert party and management will want a deal as high as possibly also considering everyone is fully aligned.

Not long to wait for an update now as financials due any day this month and also interested to find out current cash balance i anticipate £3.5-3.8m as of today so roughly .13-.14 per share worth.

What could also plausibly happen prior to RTO, which would show massive confidence to market and I’m sure a big spike in share price of management wanted the share price higher, is Wilkinson, Mahmud and Hughes exercising their 500m warrants each early to inject another £3m of cash in LSAI, although I reckon this is more likely to happen on or after an RTO rather than before.

3 pence would be lovely, but it’ll never happen in a million years, yes I meant .3

No problem.

Baring in mind everyone involved including Nigel are aligned at 0.2p, which he also reminded me of in the email, gives me encouragement that they will, eventually, being a deal that does create value and at an equal price or likely higher to their entry.

Can’t see the likes of Hughes and Mahmud having their money tied up for over 2 years and not making some sort of return on that investment. Think we’ll see an RTO at 0.3p+ I don’t see that out of the question at all. Obviously the higher the better and with the £4m deferred tax asset they have on the books and the cash levels I think 0.3p is very realistic

I don’t generally like posting emails that I’ve exchanged with directors but without copying and pasting he said there been lots of activity behind the scenes and they’d looked at over 20 targets some in significant detail, The difficult economic conditions of the past year or so have not made finding good deals any easier though.

He also said ‘I'm pretty confident that we'll identify a deal that creates value rather than doing a poor deal for the sake of announcing one’

And finished with, which I thought was the most interesting part of all - Thanks for your support, we'll do our best to justify that in the coming months.

Baring in mind this contact was in February so hopefully in news window now.

I urge anyone else to reach out to Nigel themselves, he is incredible responsive and usually replies same day!

Lots of ifs and bits and guesswork, but until we are updated it is simply just that.

I have a large holding for a very illiquid stock, but take comfort in the fact that the names on the share register didn’t get to the position they are in by injecting funds into a company to lose money. Something will be done and I sense relatively soon

Think I previously said, I contacted Nigel and he said the results delayed due to auditors backlog and nothing more, their work was scheduled for end of may, and results ready towards end of June hopefully.

Any delay into July and the company will be suspended, but it isn’t the be all and end all, as the shares will be relisted once the results have been released.

There is no time frame for the company to do a transaction, just to clarify that!

Nigel could have said about the auditors just to get me off his back, I’m totally not sure. Reality mine have recently released their results, so any link I thought there may be there may not be.

It’s all just a case of waiting to see what happens knowing everyone involved is aligned with shareholders at a higher price.

Current in situ JORC resource of 29m carats estimated value of $261m at an average price of $9 per carat.

This figure excludes the additional 168m to 344m carats in their JORC exploration target with a value of between $1.5 to $3.1 billion.

Worth a read of this slide from previous mine owner Magnum mining and exploration ltd from 2018/2019

https://www.mmel.com.au/site/pdf/62f69607-2db3-4f48-8102-b6a28abffd91/Institutional-Roadshow-Presentation-Amended.pdf

They state that they were targeting initial production of 3 million carats per annum which equates to circa $27m rev’s at $9 per carat average price and operating costs sub $2/carat.

$27m rev’s pa minus $6m operating costs is $21m/£17m pa PROFIT - now let’s say the 3m carat per annum target is unrealistic, let’s say they only achieve 1m per annum to start, thats still almost £6m PROFIT per annum, shows the potential and likely why Andrew Austin has got involved here as he clearly sees the value.

Management own 45% of shares in issue

Management history of creating shareholder value at Lexington Gold 2p to 10p

Andrew Austin likely one of the most successful investors/founders in recent years invested at 2p.

Tiny Market cap of £4m

Ticks all the boxes for me, not forgetting their other Zambian licences for REE’s also.

I have eggs in other baskets, I’m not foolish enough to lump everything in one stock.

I very rarely hold anything long term, the only other stock I am holding longer term is LSAI.

The 2 things this and that have in common is everyone involved have plenty of skin in the game, so are all aligned with shareholders.

The other thing is they are both sub £5m Market cap, which is something I look for also, the smaller the market cap the better for me, as these have the potential to do some of the bigger returns, albeit tend to be risky.

Lastly, you say how do I know this is the bottom. I don’t, but for me the fact Andrew Austin is now backing this at 2p, I suspect this doesn’t see sub 2p again, in fact I’ll be surprised if it went sub 2.2p again. I’ve built a holding at 2.4p average and not fussed being in 20% higher than Austin - reckon this does 4-5p within the next 6 months, so not fussed being in a little higher than placing as not concerned about intraday moves.

Not fussed being stuck in an illiquid stock as don’t have any plans to sell at this level and happy to wait it out.

Would rather build a large holding now whilst relatively at the lows, than try and build a decent holding as it’s starting to rise later down the line. Added a couple more clips today also.

Took a relatively large position yesterday for a medium/long term hold. Ticks all the boxes for me and the fact Andrew Austin has come in also, is a bit of a game changer and adds huge amounts of credibility.

P.S - nice couple of large late reported buys towards close

Clearly the same buyer yesterday just before close, most buys we’ve had in a single day for 6 weeks! Bit of volume arrives and we’ll be trading at 0.2p+ again

Exactly right - also the fact that Reality Mine are also yet to release their results and their Data marketplace logo being literally identical to LSAI logo

To many coincidences? We’ll see

Carlsburg scenario would be, all warrants exercised on RTO, no further capital required to be raised which in effect wouldn’t alter the share structure and we could see an almighty move post RTO! I think management know this, if they do it this way, I reckon they’ll get a raise away much higher a while after RTO as it’s so illiquid it’ll fly

Really feels like something is very close here - wouldn’t be surprised to see a deal announcement before results are due in of June.

Chart has also started to turn back up, the weekly chart looks very interesting with a higher low set in and a 20ma/50ma cross about to occur, price breaking above the 50ma