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  1. cara

    11,296 Posts.
    Money for nothing? Dig into ASX resource plays
    Tim Boreham

    Criterion Columnist
    AN offer of something for nothing usually emanates from a Nigerian web address, or one of those breathless late-night home shopping channel propositions.

    Yet it’s not hard to find battered ASX resource stocks trading not just below net tangible asset value, but below the level of their cash holdings. Or at least close to it.

    Take Karoon Gas (KAR, $2.42), which carries a circa $590 million market cap compared with its December 31, 2014, cash holdings of $680m, the proceeds from selling its Browse Basin assets last year.

    That means holders are being paid for the privilege of exposure to its Kangaroo offshore venture of Brazil, which is shaping up as a 6000 barrels per day proposition.

    The market assumes the black sludge will stay in the ground and that may well be the case if oil prices don’t tick up.

    Similarly, Otto Energy (OEL, $0.098) sits on cash of $31m and will pocket a further $US108m ($147m) after selling its Galoc field in The Philippines. Given Otto’s $112m market cap, its East African assets (admittedly lesser ones) go begging.

    Burkina Faso gold developer Gryphon Minerals (GRY, $0.078) has cash and investments of about $25m and a market cap of around $30m. This leaves a derisory valuation for its 3.6 million ounce Banfora project, which is progressing.

    Fresh from taking over African copper developer Blackthorn Resources, Intrepid Mines (IAU, $0.125) retains cash of $70m after a $110m buyback.

    Intrepid’s market cap is less than $50m. In these cases, investors don’t trust management’s ability to further the projects, or simply don’t see them standing up at current commodity values.

    Altona Mining (AOH, $0.105) returned 15c to shareholders after selling its Finnish copper assets for a cool $111m. The company still holds cash equivalent to 9c a share which means there’s little or no value attributed to its Little Eva copper project, near Cloncurry in Queensland.

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