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Conroy Gold : Just how little cash is left: potential 28% stock overhang and its placing ahoy (again)

By Tom Winnifrith | Tuesday 10 October 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 forgot to ask one big question at the Conroy Gold & Natural Resources (CGNR) GM on Friday - when is the next placing? But before we come to that - and the answer must be soon - there is a little matter of possibly the biggest stock overhang on AIM. The TR1's are flying thick and fast.

We have had two from Andrea Gonella. Once the owner of 6% of the stock he lobbed out shares late last week forcing a TRI on Monday morning. We had another this morning revealing that our friend from Central America had sold another 100,000 shares but he still has 390,000 left. Of more concern to Conroy is that Patrick O Sullivan sold 175,000 shares on Monday but still has 3 million left. Ouch and double ouch. WSe dso not know what the two men will do next but potentially that leaves c28% of the issued share capital that could hit the market. Bear in mind that normal daily volumes are c100,000 shares and that is one hell of an overhang.

Then there is the cash position which must be dire. The last reported numbers were at November 30 2016 and showed cash of 8,573 euro and total current assets of 35,472 euro. There were current liabilities of 2.2 million Euro but most of those liabilities are not really current but a few ( the electricity bill etc) will have been. That Professor Conory had to advance the company loan in the first half and post the period end tells you cash was sod all eleven months ago.

Since then the unavoidable operating expenses will have been at least 170,000 Euro ( based on first half numbers) and there has been a few Euro spent on exploration. We know that the £148,000 raised from out of the money warrant exercises by Prof Conroy and his sidekick Maureen Jones were immediately recycled to repay loans from the dastardly duo so that leaves an inflow of 240,000 Euro gross (call it 210,000 Euro net) from recent placements to Conroy's pals.

That implies that net cash/current assets as I write is - even poost placings - essentially bugger all. Which means that there has to be another placing PDQ and with (dire) full year numbers imminent you can bet that little Jon Bellis of broker Beaufort is scuttling around the City trying to organise a bailout. But the history of Conroy placings is not a happy one - they are always done at a steep discount and with such a massive potential stock overhang out there this one will not buck that trend. Indeed if you ran a bucket shop would you want to participate at all, whatever, the discount until the Gonella/O'Sullivan stock overhang situation was addressed? I would not.

And that makes the shares, at 19.5p-22p utterly uninvesteable. Sell.

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