Amalgamated Resources

  1. 1,853 Posts.
    ARC - Quite some happenings going on at this WA miner. The MD is `removed' another director resigns and just recently the company secretary Andrew White resigns (although it isn't clear whether he just threw in his job and kept his directorship - no mention of his resigning that).

    Over 25 redundancies in the past 6 months and their main mining contractor who was found to be inefficient has been replaced.

    Whilst results for the first 6 months to Dec. 2001, where a sour turnaround of the promises of the previous 12 months (perhaps the books were cooked too much and some correction has been made since), the figures aren't all bad.

    If one looks at cash from operations, they were able to generate $5.2M for the half year - not bad against a reported loss after I/Tax adjustments of $1,946M

    When one looks closer one see's that much of the loss is due to the write-off of previously capitalised cost.

    If one were to CONSERVATIVELY value ARC, the following number would apply;

    $000's

    Net Assets Dec 2001 $39,767
    to be conservative
    take off the capitalised
    costs still on the B/Sheet $18,794


    This would leave an
    adjusted Net Asset position
    of $20,973

    Add: ONLY 1 years
    cash from operations $10,422


    Total Worth Conservatively
    of ARC is $31,395


    Divide by No.of Shares 128,108


    Value per share $0.2451


    Current Market Price $0.07


    Seems to be a lot of upside here.

    In terms of liquidity, the working capital position is a negative $1,458M. Given that they generate nearly $10M from operations, and that they are in the middle of management and operational changes, it is conceivable to accept that this negative W/Capital position will be corrected in due course.

    With changes made and redundancies as announced, and focus on core business, one should see a return to profitability with a flow-on of an even higher cash from operations.

    Check it out. This could be a winner for a medium term investment.

    Extrapolating these number out to a 5 year scenario, the shares would be worth $0.9772. Not a bad return in 5 years.

    I purchased some ARC yesterday at 7.5cps; this is the only parcel I have.
 
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