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Strange share price action at Blenheim Natural Resources

By Gary Newman | Wednesday 14 June 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.

Blenheim Natural Resources (BNR) isn’t exactly on my list favourite AIM companies to invest in, but even I have been surprised by the recent sizeable drop in share price.

I last covered the company here at the beginning of May, just after the placing to raise £1 million by issuing shares at 0.45p, and suggested at the time that it might be worth a trade – at one point it was up around 40% - but that I didn’t consider it a long term investment at that stage as there were still too many unknowns.

Currently its attentions are focused on lithium projects in Mali, although these are still at a very early stage and include a couple of prospecting licences via its 30% stake in Nashwan, plus an option to invest in an exploration licence at Dieba, via a company called Xantus.

There has been a fair bit of unrest in the West African country of Mali in recent weeks, relating to a referendum on July 9 which will see changes to the constitution – this was originally put in place as part of the peace agreement in 2015 that saw an end to the conflict there. This has resulted in demonstrations and clashes with the police, and in the background to all that there have also been a number of attacks by Al Qaeda affiliated groups, so there are some concerns about the stability of the country at the moment.

But given the stage that Blenheim are at – it would be different were it already producing as there is always a chance that there could be implications for natural resources licences – and the fact that the share is popular with private investors, alongside its larger holders, it seems unlikely that this turmoil would have had any effect, let alone caused a circa 30% drop in share price in just a few days back to the current level of around 0.6p.

There is also a possibility that leaked news relating to the Dieba option could be responsible, certainly if some had got wind of a decision not to take up the option to acquire 30% of the licence for a payment of £175,000 plus 60 million shares. The option expires at the end of June, barring any further extension, but so far there is no indication from the company that it isn’t going ahead with the investment as planned.

In terms of RNSs, I would also have expected to see TR1s from both David Lenigas and Thomas Short, who were holding 3.01% prior to the most recent placing – they may well have taken a pro rata amount in the placing to maintain their holding at the same level, but a couple of recent warrant exercises would have pushed them back below the 3% threshold, and therefore would surely be notifiable.

Whatever is going on here, something doesn’t add up and it feels ‘wrong’, so if you are invested or are looking to put money in, then I would be very cautious until the reasons for the drop in share price become apparent. 

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