Polo Resources: Update 27/06/13; Topped up holding to 3.5%
Polo Resources (LON:POL) (2.5p) has announced that having completed its in-fill, depth and strike extension drilling programme at its 90% owned Nimini gold project in Sierra Leone it expects to publish a mineral resource update before the end of March. It also announced that:
"based upon the success of the 2012 drilling programme it will be commencing a resource expansion drilling programme with the objective of significantly adding to the expanded resource defined by the 2012 programme".
Polo's share price has been pretty disappointing since it went ex-dividend 2p a share in September 2011 but seems to have stabilised since the announcements from the Company in the middle of December when the share price hit a 6 month low of 2.3p.
3.3% of the JIC portfolio is invested in Polo Resources and so far it is recording a loss of 16%! I'm sticking with this one though as I believe the management have a proven record of making successful investments and I like the fact that when they realise the profits they return the proceeds via dividends; in September 2011 they paid a 2p per share dividend following on from the 3p per share dividend in August 2010. The latest published NAV per share is 3.85p per share, a 50% premium to the current share price. Hopefully the resource update when it comes will help the share price on its way.
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9 comments
I Bought into Polo as a result of Investors chronicle recommendations. After the recent Signet transaction the company said they were not going to distribute cash to shareholders, rather the emphasis is on Capital growth. Since then the shares have lost about 3p or so.
On the bright side (hopefully) the 18 months for turn around mentioned earlier have another 6 to run.
Presumably as Michael Tang got a seat on the board (and therefore remuneration) from his investment he does not need such a return as ordinary stockholders would expect from ownership.
Psychologically I cant bring myself to sell yet and realise a 50% loss.
Cut both Polo and Agriterra last December; To be honest not even on my radar screen anymore. Once bitten twice shy! Probably would be more interested in Agriterra at these levels but.....
Polo Resources (21.5p and 2.8% of JIC Portfolio). GCM resources in which Polo has a 29.8% stake has announced that Michael Tang, who recently became Co-Chairman and Managing Director of Polo, has been appointed Executive Chairman of GCM. Neil Herbert, Mr. Tang's predecessor as Managing Director at Polo has been appointed as a non-executive of GCM along with Guy Elliott, who is also a non-exec at Polo.
Conclusion: We know that Michael Tang is committed to realising the value within Polo's portfolio of investments. With Polo management take tighter control at GCM this looks like the first step towards expediting the development of GCM's Phulbari coal project in Bangladesh. This must be seen as good news for Polo, where the share price stands at a 40% plus discount to NAV and a 46% discount to the 40p that Michael Tang paid for his 11.7% stake in May. Happier Holder!
I have this morning increased the holding to 3.5% of JIC portfolio. See www.JohnsInvestmentChronicle.com
It's been a long way down since these levels last year. Has it hit bottom?
Polo Resources (21.8p and 2.9% of JIC) I last wrote about this stock on 15th May following the Board changes and the buy-in to the Company by Mettiz Capital, the investment vehicle of a Mr Michael Tang. Mr Tang, the new Co-Chairman and Managing Director bought 31.8 m shares (11.7% of the Company) from the other Co-Chairman, Stephen Dattels. The important fact is that Mr Tang paid 40p per share, a huge premium to the prevailing price in the market. In a statement he said "Polo has three important investments in coal, gold and oil and gas, all of which have potential to substantially enhance shareholder value in the next 18 months and as a result I consider that the current Net Asset Value understates the potential value of the Company's interests".
Conclusion; Mr Tang clearly has great confidence in the assets that he has bought into at Polo and also in his ability to realise value. Before I knew that he had paid such a huge premium I reduced my holding at 24p. I concluded my post on 15th May by saying I would look to buy back the shares I had sold; I have today taken advantage of weakness in the share price to increase my holding back up towards 3% at 21.45p. (See Transactions)
WWW.JohnsInvestmentChronicle.com
Polo Resources (27p and 2.2% of JIC); I was a little trigger happy yesterday reducing my Polo Resources holding down to 2% at 24p. I am however a little annoyed that the Company only told half the story in its statement at 11.38 am. A couple of hours later at 2.00pm it issued a further statement saying that Mettiz Capital, the investment vehicle of Michael Tang, the new Co-Chairman and Managing Director, had bought 31.8m shares (11.7% of the Company) from the other co-Chairman, Stephen Dattels. This leaves Stephen Dattels with a 3.92% stake in Polo and gives Mr Tang a total interest of 14.55% of the issued share capital. The really important point was that he had paid 40p per share, a massive premium to the prevailing share price of 23p and made a very bullish statement "Polo has three important investments in coal, gold and oil and gas, all of which have potential to substantially enhance shareholder value in the next 18 months and as a result I consider that the current Net Asset Value understates the potential value of the Company's interests".
Conclusion: It would have been nice if the Company had produced the whole story in its first statement and also if all shareholders had had an opportunity to tender stock to Mr Tang at 40p! Not sure if there is anything I can do about that, so now to look forward. Clearly it is good news that Polo has a new active shareholder who is committed to creating value over the next 18 months or so. At 27p there is plenty of upside to the stated nav of around 36p and Mr Tang has backed up his belief that the nav will increase by spending £12.7m buying shares at 40p. Happy Holder and may look to add back to holding!
Polo Resources (20.75p and 2.4% of JIC portfolio) has just issued a drilling update at its Komahun gold prospect in Sierra Leone. Neil Herbert, Executive co-Chairman and Managing Director says they are very pleased with the results, which together with the results of previous holes drilled will be included in the Mineral resource estimate scheduled for publication in June.
Conclusion: The Polo share price is on its back at the moment having been hit by a falling oil price, a falling gold price and falling expectations for world economic growth. It is the worst performing stock in the JIC portfolio and perhaps I have been guilty of letting the heart over rule the brain. Clearly I should have given up on this one earlier but I do like the business model and the management, who have made substantial returns for shareholders in the past, (in the last three years the company has returned 50p to shareholders through special dividends). Polo shares now stand at about a 40% discount to net assets and cash makes up about 40% of the market capitalisation. So I'm not going to bail out at what I hope is the bottom and look forward to some news, perhaps the June Mineral Resource estimate, to get the shares moving in the right direction. Hanging on!
Polo Resources (23.5p and 2.8% of the JIC portfolio) announced results for the year ending 31st December 2012. As at 31st December, and indeed the 8th March 2013 the Net Asset Value per share is 36.2p. Net cash at 8th March stood at $34.56m (£23.2m) or approximately 25% of the NAV. The statement recaps the major activity of the second half of last year; encouraging further exploration at Nimini's Komahun Gold project and increasing the holding in Signet to 48.2% where progress is described as encouraging.
The Company describes in detail the progress in each of its investments and expresses confidence that the portfolio will deliver value upside in both the near and longer term.
Conclusion; The management of Polo have a proven record of creating value and returning realised profits to shareholders; in August 2010 they paid a 30p per share dividend followed by 20p per share in September 2011. The shares have been disappointing since I have acquired them for the JIC portfolio, down some 20%. It is currently, I think at pretty much rock bottom with the shares standing on a 35% discount to net asset value. As we move through 2013 I would hope that the discount will close, and indeed the NAV start to rise, with further success within its portfolio, particularly Signet and Nimini. Unhappy holder but hanging on!
Good article, John.
This is also in the tips section of this weeks Investors Chronicle. Well worth a read in addition to this article. Looks like it could be a good year for Polo.
Alex