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Nyota Minerals – mega ramp & joke valuation following discounted, ‘keep the lights on’, placing?!?

By Tom Winnifrith & Steve Moore | Tuesday 9 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.

Last week Nyota Minerals (NYO) was “pleased to announce” a placing to raise up to approximately £93,880 (approximately Australian$120,000) at 0.02p per share. Despite this thus looking very much a ‘keep the lights on’ raise, the shares have currently reached 0.07p. Hmmm…

The ‘keep the lights on’ view is reinforced by the announcement including that “the placing provides the company with additional working capital to progress the review of alternative acquisitions”. This follows a quarterly report to end March having shown period end cash reduced to A$57,845 and an estimated A$150,000 spend in the now current quarter.

That wouldn’t leave much “to progress the review of alternative acquisitions” then! – with this required after the proposed reverse takeover of restaurant ‘yield management system’ business Bigdish Ventures was terminated, including because “the substantial costs to be incurred by Nyota in complying with the requirements of the ASX Listing Rules and AIM Rules were not acceptable to Bigdish when compared with other potential options”.

Hmmm. The termination announcement saw it noted that shares in Nyota would remain suspended in Australia “until such time as the company has made submissions to ASX that its level of operations are sufficient to warrant the continued quotation of the company's securities and its continued listing”. Natch, that not a concern to AIM though – the shares there restored to trading, and 281,640,550 new shares scheduled to be admitted tomorrow.

AIM does though have some rules – and Nyota’s 4th April EGM approval to exit its exploration interests saw it then “classified as an AIM Rule 15 cash shell, pursuant to which it must make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 within six months”.

This all compares to a prospective market cap of more than £1.6 million (and this before a £200,000 loan to be converted into shares “at a later date”).  So the fully diluted market cap is £1.8 million for a company with essentially no cash. An AIm shell is worth at most £300,000 plus cash. So that suggest that this stock is more than 80% overvalued.

The rampers insist that there is an exciting RTO ahead. Maybe. But why should the vendor sell his business for shares which are so grossly overvalued? Only a desperate vendor would do that. If there is an RTO it will be at closer to 0.02p (fair value) than 0.07p. Do not buy the twitter and BB ramp story - sell. 

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