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URU Metals – A company that prefers to mine its shareholders than the actual shiny stuff

By Cynical Bear | Monday 1 May 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.


I won’t claim to be a mining expert and will leave the technical analysis to Gary Newman who is much better at that sort of thing (see HERE); however, with the odd looking share movements and the Zorbas connection, I couldn’t resist digging through past RNS’s to find something ridiculous and what was clear is that this isn’t really a mining company at all, unless you think rinsing shareholders of cash counts, of course.

I base this allegation on two key strands of evidence.

The first is the following series of statements about the plans for its main Zebediela asset from its past results announcements. Have a read and see if you can find anything odd before reading on:

Results for year-ended 31 March 2014

“Our plans for 2014/2015 include investigation of the occurrence of magnetite in both the Oxide and the Sulphide Zones.  Further work will be predicated on the results of this investigation.”

Results for year-ended 31 March 2015

“Our plans for 2015/2016 include investigation of the occurrence of magnetite in both the Oxide and the Sulphide Zones. Further work will be predicated on the results of this investigation.”

Results for year-ended 31 March 2016

“Our plans for 2016/2017 include investigation of the occurrence of magnetite in both the Oxide and the Sulphide Zones. Further work will be predicated on the results of this investigation.”

For the love of God, what were you doing each year? Why on earth didn’t you get off your arse and do some mining??

The cut and paste work was actually a bit sloppy in the 2016 report as it went on to talk about its strategy for the year ahead but used the same heading as the previous year: “Strategy for 2015/2016 Consolidate and Invest”

Quality!

I know, I know it has actually, finally started its magnetite testing with an announcement coming out this week but any miner that takes three years to undertake one minor step towards the actual exploration of this mine doesn’t seem like a winner to me.

I think the man on the Clapham Omnibus would probably think that the most likely explanation here is that, as the nickel price has plummeted, the mine itself is now not economic, despite its ridiculously high NAV that it is fond of quoting, unless the magnetite can be proved and the capex can be reduced by the acid leaching process it is starting to explore.

But why wait so long to do it?

The second strand of my evidence is the never-ending placings which have increased in pace recently allowing in part for URU to make its odd-looking investment in Management Resource Solutions (MRS); however, the nail in the coffin for me is the fact that it has three joint brokers namely Northland Capital, Beaufort Securities and SVS Securities.

Having three joint brokers seems like an unnecessary expense for this AIM tiddler other than the fact that it would have struggled to survive without drawing on as many different pools of mug punter cash as possible.
 
Off the top of my head, I cannot think of another AIM company with three brokers although please let me know in the comments section if you do as I can add them to my ‘not-to-watchlist’.
 
Either way, any AIM company that needs that much help to raise funds is not one for me. My advice – stay clear.


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