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Frontera – new Broker must mean placing ahoy

By Nigel Somerville | Thursday 13 July 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.

AIM-listed Frontera (FRR) has announced the appointment of WH Ireland (WHI) as broker to the company. I’m sure they will be very happy together, but in the wake of a series of loan conversions to wipe out debt you might wonder if it is placing ahoy. The good news is that they even tell us that it is!

Frontera’s share price went beserk earlier this year on BB rampings and news of its Georgian assets. Actually, the main bit of news seemed to me to be that they had stopped exploring because of talks about joint operations or a farm out, but this is the very same exploration which had been (after the fact) been announced as delayed and now delayed again. Anyone might be forgiven for thinking that Frontera was less than keen….

Of course, since then we had the FY16 results which saw accumulated deficit of a whopping $479 million and cash in the bank of just $41,443 after restricted cash of $471,137 were taken into account. Not much cash, then, in the face of a net cash outflow of $8m from operating activities!

The debt many have been expunged, but there is still a cash need to service.

We had the “retirement” of Steve Nicandros from executive duties (but he remains chairman) on Tuesday morning, replaced by  Zaza Mamulaishvili as CEO. Fresh blood? I think not – he is a founder member of the company.

While the stock has collapsed from 155p when it joined the Casino to the current 0.18p, Mr Nicandros was keen to mention the “many significant value creation milestones” that had been achieved under his watch. Quality!

And so with the same mindset we can now enjoy the corporate tummy-tickling from Mr Mamulaishvili of broker WH Ireland:

Frontera is pleased to appoint WH Ireland Limited as the Company's corporate broker.  Engaging this reputable brokerage house represents an important milestone in bringing our Company to a new level.  We look forward to working with them to provide better engagement with existing and new shareholders.

I look forward to the “new level”. Does that mean a new record low share price?

I wonder how Mr Bagot feels about describing WHI as “this reputable brokerage house”?

But the obvious thing is the placing which is coming. Why else would they refer to WHI “providing better engagement with….new shareholders”? How big will the discount be?

If you are mad enough to hold this stock, good luck to you….

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