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Nyota - run for the hills!

By Nigel Somerville, the Deputy Sheriff of AIM | Sunday 6 August 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.

Tom Winnifrith has already castigated Peterhouse, broker to AIM-listed (but no longer ASX-listed) Nyota Minerals (NYO), regarding its role in the non-payment on a £200,000 loan note to which it apparently acquired on May 3rd. The apparent reneging on a firm commitment seem bad, but I fear things are far murkier.

The story from Nyota goes as follows:

1)      3 May 2017 – Peterhouse appointed broker, has the Bigdish loan assigned to it and arranges a (tiny) placing which needs EGM approval, as does the conversion of the loan.

2)      17 May 2017 – slipped into an RNS was that the agreement to assign the Bigdish loan to Peterhouse had lapsed.

The EGM result was announced on 3 July duly confirmed that the convertible loan was indeed owned by Bigdish, but that proposals to convert it had failed to get through the EGM as a resolution on which the loan conversion was predicated failed.

Well hang on, how did the transfer to Peterhouse fail? Let’s take a closer look at the text of the 3 May 2017 RNS:

 In conjunction with the Placing, Peterhouse has today entered into a binding agreement pursuant to which Bigdish Ventures has conditionally agreed to assign the Bigdish Loan to Peterhouse, subject to a payment by Peterhouse to Bigdish Ventures.

So is it “binding” or “conditional”? Seemingly, it is both!

And according to Winnileaks, the deadline day for the payment of the £170,000 Peterhouse was coughing up to buy out the loan was April 28th, yet we were told on May 3 that Peterhouse has today entered into a binding agreement. Which is it?

Then there is the 11 May Statement re share price movement which told us that

The Board of Nyota Minerals Limited (ASX/AIM: NYO) notes the recent rise in the Company's share price and trading volumes and advises that other than the matters announced on 3 May 2017 in connection with, inter alia, the placing, it is not aware of any specific reason for such movement and volumes.

Bearing in mind that the transfer of that loan still hadn’t happened (and 6 days later it was announced to be all off) are we really to believe that statement from the Board? It seems to me that this was the point that the wheels fell off and the whole corporate mess that followed, including the Nomad resignation started. But all we were told was that “other than matter I connection with, inter alia, the placing” the board knew of no reason for the shares rising.

Maybe not, but that’s not the same as announcing that the assignment to Peterhouse still hadn’t happened. If I’d been buying shares (and I certainly wasn’t!) I’d have wanted to know that Peterhouse STILL hadn’t paid up so that I could sell.

It has a horrible smell to it of everybody carefully looking the other way. How on earth did Beaumont Cornish sign off on that RNS as Nomad?

As for the EGM result, it was all binned anyway. The company stated:

A substantial amount of time and costs have been expended in working through the complex issues that were the subject of the Meeting and it was disappointing that the number of shareholders voting was not as high as expected.

Meanwhile, Bigdish is left holding the baby. My guess is that there are hardly enough coins for the meter left in the coffers, so Bigdish would appear to have little choice but to hope against hope that something comes up so that it can get out.

Meanwhile, with Nyota’s ASX listing cancelled from 3 August and both its AIM Nomad and Broker set to resign on 17 August, it is hard to imagine a stock market renaissance. With the stench of that loan conversion and in the current climate I simply cannot see a new Nomad stepping in to replace Beaumont Cornish.

Quite why it tok so long for Beaumont Cornish to man up with a resignation I know not. Perhaps it was simply that the cash will run out by them - or earlier, since Beaumont Cornish reserves the right to bring forward its resignation date.

On that basis, with little chance of raising cash the writing on the walls:

 Run for the hills: sell.

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