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Independent Resources down 30% but valuation insane

By Tom Winnifrith, The Sheriff of AIM | Tuesday 14 March 2017

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.

No doubt the spivs are on the ramp again but shares in Independent Resources (IRG) have dived by 30% to 0.415. That is because the stock has today on ex-rights on the open offer announced today. If you buy now you do not get to take part in a 2 for 3 offer at 0.065p! So do the maths again.

On a fully diluted basis if all warrants and options were exercised there would be c7.8 billion shares in issue and with all liabilities settled and all proceeds banked there would be £3-£3.5 million cash in the bank. At 0.415p the fully diluted market cap is thus £32 million.

So if you buy today you are paying c£29 million for a worthless Tunisian asset and a share in an Egyptian asset. Nostra Terra (NTOG) also has a share in that asset and some far higher quality US assets - and cash and is valued at £2.4 million. I am not saying Nostra is cheap but on balance I would rather be long than short.

But whilst I appreciate that the aggressive promoter James Parsons who now runs this company has a following you cannot turn water into wine on AIM and so a£29 million valuation on hope and his CV is excessive.

We are also told that 507.25 million warrants at 0.12p have also been exercised. These warrants are - I gather - owned by clients of Beaufort Securities who took part in a placing at 0.08p in December. One cannot imagine that they will be long term holders.

Finally we are told that Grayson Nash part of the old board who said on March that - in return for 75 million options at 0.065p - would stick around "on an interim basis" has quit. I guess eight days is indeed an interim basis.

The valuation remains insane.

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