Polo - Beyond Extract

Thursday, Sep 17 2009 by

An Investment Company



The core of the Company's strategy will be to make direct and indirect investments in natural resources companies and projects, both listed and unlisted, that the directors of the Company (the "Directors") consider to be undervalued or have strong fundamentals and attractive growth prospects.

Natural resources companies or projects, for the purposes of the investing policy, are those involved in the exploration for and extraction of, base metals, precious metals, bulk commodities, thermal and metallurgical coals, industrial minerals, hydrocarbons, energy and uranium and include single-asset as well as diversified natural resources companies.

The Company will primarily focus on making investments in companies with producing assets and/or tangible assets such as resources and reserves that have been verified under internationally recognised standards for reporting, such as NI43-101. The Company may also invest from time to time in exploration companies whose activities are speculative by nature.

The Company will have flexibility to invest in a wide range of investments in addition to unlisted and listed equities and equity-related securities, including but not limited to commodities, convertible bonds, debt securities, royalties, options, warrants and futures as well as the acquisition of assets or projects. Derivatives may be used for efficient portfolio management, hedging and for the purposes of obtaining investment exposure. The Company may also have exposure from time to time to other companies within the wider resources and materials sector, including services companies, transport and infrastructure companies, utilities and downstream processing companies. There will be no maximum or minimum limit on percentage of ownership or on the length of time that any investment may be held.

The Company may take legal or management control of a company from time to time. The Company may invest in other investment funds or vehicles, including any managed by Directors or companies associated with them, where such investment would be complementary to the Company's investing policy.

There will be no fixed limits on the allocation between unlisted and listed equities or equity-related securities, cash and/or debt.

There is no limit on the number of projects or companies into which the Company may invest, nor the proportion of the Company's gross assets that any investment may represent at any time and the Company will consider possible opportunities anywhere in the world.

The Directors may propose a special dividend or implement share buy-backs from time to time but the objective will be to achieve returns to shareholders through the appreciation in the value of the Company's shares rather than by means of distribution.

The Directors will not normally hedge the exposure of the Company to currency fluctuations.

Any material change in the investment objective or investing policy will only be made by a resolution of shareholders as defined in the Company's Articles of Association.


Filed Under: Basic Materials, Uranium, Coal,


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Polo Resources Limited is a natural resources and mine development investment company. The Company's geographical segments include BVI/Parent, Americas, Oceania & Australasia, Africa and Europe. The Company is focused on investing in undervalued companies and projects. Its principal investment targets are companies with producing assets and/or tangible resources and reserves verified using internationally recognized standards. It also invests in exploration companies. It invests in companies that are engaged in exploration of gold, oil and gas, coal, iron ore, phosphate and copper, among others. Its investments can take the form of buyouts (with controlling interests) or strategic investments (with minority interests) in both public and private companies. It is also focused on building a portfolio of mineral and hydrocarbon assets. ZAI Corporate Finance Limited serves as an advisor to the Company. more »

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153 Posts on this Thread show/hide all

MrContrarian 9th Jul '10 135 of 153

In reply to marben100, post #134

8.07p? I'm getting 7.21p undiluted. Cannacord estimate (including the deferred component of the proceeds from the Mongolian coal assets) 7.7p [diluted].

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xigris 9th Jul '10 136 of 153

I'm nearer to you Mr C. From Caledon's recent RNS redeeming the 2010 loan notes:


I'm using Polo's current position in Caledon as per RNS yesterday:


Getting a NAV of 7.23 fully diluted

Also feel sure that this is a fire sale of Extract. I don't think SD and co and are daft enough to sell Extract at this point with a JORC upgrade, a DFS and a Mining Licence application all in the next few months.

I admit to being pissed off with Laxey for their timing, even though its making me a tidy profit. I'd prefer more in just a couple of months.

Once Extract is sold, I think I'll sit on the sidelines


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marben100 10th Jul '10 137 of 153

In reply to MrContrarian, post #135

Hmmm... can't see the details of your calculation but I have (as at Friday's close):

Extract @ A$7 £91.7m
Caledon £18.6m
Caledon 2013 convertibles £2.5m
GCM £36.2m
Winsway deferred consideration £13.3m
Working capital + Misc (inclusive of loans to Caledon) £30.1m
[there might be a bit to knock off that for expenses since last October]

Total NTAV £192.5m

Shares in issue 2,316.8m

= 8.31p/share (undiluted)

Where do we disagree?



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xigris 10th Jul '10 138 of 153

I've redone my calculations, and I think I was wrong yesterday - lost track of the amount of cash Polo has

Mark (or Mr C , or anyone else), do you want to have a look at my calculations and tell me if you agree or not?


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marben100 10th Jul '10 139 of 153

In reply to xigris, post #138

Hi Chris,

I think we're close enough not to worry about. You get £190.5m, I get £192.5m - accounted for by minor difference in cash (what's a couple of mill between friends? :0)). My £30.1m is cash + Caledon loan , which you have as £27.8m - that's within my margin of error.

Polo cancelling those shares recently has helped the NAV/share. ;0)

Do you agree that NAV/share (undiluted) is over 8p now? [obv assuming Itochu deal gets done]



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zangdook 11th Jul '10 140 of 153

In reply to xigris, post #136

"I admit to being pissed off with Laxey for their timing"

Reminds me of URU and NWT.

Incidentally, does anyone know what the dispute was that led to the surrender and cancellation of 29,800,000 shares?

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xigris 11th Jul '10 141 of 153

In reply to marben100, post #139

Thanks for checking Mark,

I'll put the link into the header. I suspect the difference in the cash is largely FX related as I took the interims and the money from Winsway and am using Google's exchange rate to calculate the £ value.

Yes, I agree the undiluted NAV/share is over 8p, I do like them cancelling shares (although I'm at a loss for what the dispute was) - the more share cancellations, the better ;-)

What I'd like to know very quickly after the sale of Extract is what SD & co are planning for Polo. I hold GCM and CDN directly and don't feel the need to double up via an investment trust!


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Soundbuy 14th Jul '10 142 of 153

FT Alphaville this am.

NH I have something from our mining sector watcher he says watch the small cap coal stocks because there is a Chinese predator on the prowl.

'An interesting piece of news on my late night search of internet sites shows Asia’s second biggest electricity generator by market value, NTCP Ltd of India (NATP IN) is seeking to buy coal mines overseas and may replace as much as two-thirds of the company’s current imports, around 10mn metric tonnes. NTCP have a $3bn war chest and has excellent access to debt to buy assets in Australia, Indonesia and Mozambique. While this will be for thermal coal, I suspect all coal miners will go better on this story.
The big theme in the sector right now is how any company that has a reasonable reserve allied to current or potential near to medium term production is target for Chinese groups or utility companies
The one company I think this news flow should benefit today could be Caledon Resources. Clearly this is a coking coal producer rather than thermal, the coking to thermal split at the Cook mine is 80/20. However, as one of eighteen equal shareholders in the Wiggins Island Port facility due to come on stream in 4Q13, big steel companies can take a second look at Caledon and its undeveloped Minyango mine. Essar Energy kicked the tyres last year and concluded that as 500,000 tonnes of its production is pre-sold in an agreement with Xstrata, it wasn’t worth pursuing. Cook has rarely produced more than this so the group would not actually get its hands on any of the coal. If Caledon gets a good allocation at Wiggins Island then Minyango comes in to play big time. Another one they should look at is GCM Resources over the border in Bangladesh which has a high thermal and soft coking coal mix. The stock got funky last week on press report within the country saying the government would give approval for the mine development. So far we still await confirmation on this. Wait a minute, doesn’t Polo Resources own just shy of 30% of GCM and Caledon? Isn’t this the company that are to give 3p back to shareholders in a special dividend? Yes it is, must be a screaming buy then.'

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marben100 19th Jul '10 143 of 153

Surprise, surprise, Laxey are out. Looks like their "protection racket" succeeded. ;0)

I expect their shares are now in "friendly" hands. Let's see who owns up to having bought.


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edwards9 31st Jul '10 143 of 153

See the link below, for an article in Saturdays Daily mail abount Mellon & Dattels recent share purchases:


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KeithM 4th Aug '10 144 of 153

In reply to marben100, post #139


So taking account of the 3p dividend and the sp at 6p am I right in believing that I'll get 8p of assets for 3p?



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marben100 4th Aug '10 145 of 153

In reply to KeithM, post #144

No, you'll get around 5p of assets for 3p. You get 3p of your 6p back and, after paying the SD, the assets per share will be around 5p. Of course, this assumes that the SD goes ahead, which appears likely but is not guaranteed.



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marben100 5th Aug '10 146 of 153

In reply to marben100, post #145

Further to my last, the dividend of 3p has been confirmed this morning, with an ex- date of 18th August, subject to receipt of proceeds for the sale of Extract shares to Itochu (to be approved at an EGM to be held tomorrow in Toronto).

Moreover, a share buyback programme has been put in place, which should reduce the discount to NAV that the shares trade at when they go ex-

Both items excellent news for current shareholders.



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xigris 7th Aug '10 147 of 153

Thanks to RAPINVEST in another place for confirming shareholder approval of Polo's sale of Extract.

I'm currenty out of Polo, but am looking to re-enter at some point in the future. I suspect the history of deep discount to NAV will repeat itself.

Interesting thoughts about Gold as a possible use for Polo's spare cash after the special dividend.

SD & co have made a nice profit for me this year - I'll keep this thread going as I hope that they'll do the same again in the future.




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marben100 26th Aug '10 148 of 153

So, with the discount to NTAV now approaching 40% again, time for me to start buying again...

FWIW, here's my view on what's happening with the SP. ISTM that Weiss were trying to gain control of Polo with the aim of forcing a liquidation and return of all cash. It appears that Dattels & co's manoeuvring has stymied this attempt, so Weiss will have to settle for profits from their divvy plus disposing of their holding. We can see from recent announcements that Weiss are selling down, so must have given up on their aim of gaining control.

That means that there is a huge overhang until Weiss have disposed of their holding, artificially depressing the SP. Whilst Polo now have the authority to buyback shares, I suspect they're not going to do any favours for Weiss!

I am confident that Polo's management will be able to deploy their considerable resources to make good returns for shareholders. Not least by participating in placings by promising looking companies (as they have done with considerable success in the past), which are not readily accessible to retail investors. With a discount in the 40% region, this looks like a very attractive opportunity to me but I shall add slowly because who knows how far Weiss's selling can depress the price before Polo and its directors start buying? ;0)



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xigris 26th Aug '10 149 of 153

In reply to marben100, post #148

Cheers Mark,

I have updated my spreadsheet to take into account the Extract sale.

I make it about a 35% discount, and if (when) Polo drops below ~3p I'll start joining you. (with a concomittant reduction in my CDN)


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Fangorn 17th Sep '10 150 of 153

GE&CR note out.
Polo Resources - Cash Rich and Narrow Coal Focus: Buy at 3.73p with 5.19p Target Price.

"Our valuation of Polo is derived from the current market value of its investment portfolio holdings with major upside coming from the long awaited permitting of GCM's Phulburi coal project in Bangladesh. Taken at face value we value Polo at £ 126.1 million or 5.19p per share based on Polo's share capital of 2,429.7 million shares. However, we believe Polo's investment in GCM would receive a major boost should GCM's Phulburi project gain development consent and thus, depending on the conditions of this consent, we speculate that a positive result could support Polo's price up to 9.34p. At 3.73p we recommend Polo a buy with a 5.19p target price."

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marben100 15th Sep '11 151 of 153

In response to this post on the Aminex/Tanzania thread:

So what do you think Mark, is Signet a candidate for listing?

Guess so! Look forward to reading the circular and reading more detail there. Yup, Polo directors should benefit nicely from their earlier investment in Signet, but given how much money they've helped me make, I shan't begrudge it too much. ;0) Their substantial personal holdings in Polo keep their interests adequately aligned with mine, I feel.



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xigris 15th Sep '11 152 of 153

Thanks for bringing this up again Mark.

I'm sorry that my day job and other commitments prevent me from posting here as often as I'd like. I've edited down the header. I don't want to mislead anyone with out of date info.

All the best,



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