UK 17:38 Friday, 23 October 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
A statement today from the disgraced AIM rule breaker, Dave Whitby of Andalas (ADL) - formerly ramptastic CEB Resources - begs a stack of questions. Not least is "how soon will Andalas go bust?". The rampers may love this but this bonus podcast sees me fire off a raft of queeries for Dave, his army of advisers and for this POS company.
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Comments
Drunken Sailor
The biggest question is how does this constitute an RTO? The fundamental principle of an RTO is that a little fish swallows a bigger fish. This generally is done by a paper swap, where more than the initial number of shares are issued to “buy” the bigger fish – the total number of shares must more than double, unless there is a cash consideration, which there won’t be. So with a market cap of £11m, the bigger fish has to be “worth” more than £11m. That means putting the option, on which nothing has been paid, into a company and then buying that company for more than £11m. A placing would then need to be done at the acquisition share price or better. Your estimate of $3m (£2m) is probably on the light side as this would need to fund the option payments and give at least 18 months worth of normal running costs, but let’s go with it. So let’s say the acquisition price of the company holding the option is £12m (paid in new shares at an acquisition share price at the closing price before suspension), whoever buys into the placing with £2m ends up with 8% of the equity in a company valued at £25m, which does then have the cash to exercise that option. The placing money funds the whole of the option and the running costs and the placees get 8% of a 30% farm in! Who is going to be mad enough to do that? It can’t be bucket shops looking to flip for the reasons given. If the project is sexy, why not just buy the option for a pittance and put the money in directly and get 100% of the 30%?
To maintain the AIM listing they do not just have to produce the document, fully signed off by various experts – including some sort of CPR that is less than 6 months old on the asset, plus the accountants certifying 18 months plus cash amongst other things, which means the placing needs to be fully agreed and only conditional on EGM approval and admission, they also have to have held the EGM and got shareholders approval (at least 2 weeks notice from production of the admission document) before the 6 months is up.
Sadly there is no way an admission document will ever see the light of day, as it would have been an absolutely fantastic read. Don’t worry, if I am wrong and it does get produced, I will read the whole thing for you.
Tom Winnifrith
DS
Nope on AIM various class tests not just market cap to define RTO
t
Drunken Sailor
Gross assets test – what is an unpaid farm in option worth? ADL Gross Assets at 31 Oct £1.4m, ie more than the work programme
Profit Test 0/0
Turnover test 0/0
Consideration test as discussed
Gross Capital test — what is the gross capital of an unpaid option?
Admission doc will make fascinating reading whichever way they go, if it ever sees the light of day.
Drunken Sailor
Sussed it. Nothing to do with Class Tests. It is a fundamental change of business (which AIM rules put under RTO but is not really and RTO in the normal sense). They are directly involved in the operation of this well – having read all of the RNS it looks like they are doing everything at the moment.
So with net current assets of just over $1m at end Oct, by the time all the fees are paid on getting the admission doc done that will be down to just about nothing. The placing is going to have to be quite a bit bigger than thought, as it will need to give them enough money to survive as an oil and gas exploration company for at least 18 months with all the risks, liabilities and contingencies that involves. Admission docs have been signed off in the past that did not give 18 Months cash and the results have generally been catastrophic, Will ADL get away with just raising what they need to exercise the option and PLC costs for 18 Months? We will see if there is ever an admission doc. The CPR is not complete yet – what sort of COS is that going to give? If they are drilling into a known field that has produced lots in the past then COS will be high, but if this is virgin territory then it will be quite low and therefore very high risk as a one trick pony at a time when a lot of small oil and gas companies are going bust. It is no wonder they need 3 brokers on board.