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Metal Tiger taking advantage of metals fatigue

Published: 12:03 11 Apr 2016 BST

Paul Johnson
Metal Tiger ... ready to pounce

If the contrarian investment style is for you, meet Metal Tiger plc (LON:MTR), the hyperactive investor in strategic natural resource projects.

On the face of it, now seems a crazy time to be investing in mining projects, but not as crazy as it would have been investing four or five years ago.

The company in its current guise has had the virtue of starting late and perhaps missing out on a few years of the painful cyclical sector bear market.

It was in the middle of 2014 that Brady Exploration, an oil and gas shell smarting from the failure of a deal in Nigeria, mutated into Metal Tiger, the aspiring mining finance house that now boasts major investments in Botswana, Russia, Spain, Tanzania and Thailand, as well as an actively traded portfolio of junior mining equities.

Among the juniors to be backed by Metal Tiger are Ariana Resources (LON:AAU), Eurasia Mining (LON:EUA), Kibo Mining (LON:KIBO) and ECR Minerals (LON:ECR).

It is widely acknowledged that calling the absolute bottom in any market is difficult, if not nigh-on impossible, but at least Metal Tiger has missed those first desolate years that followed the mining equity bust, and as a late comer to the party it is not sitting on substantial losses.

Indeed, as executive director Paul Johnson told Proactive Investors in the second half of last year, it got off to a flying start in the investment game.

“We spent some time sorting out the business into the third quarter of 2014, but then we invested £150,000 in Kibo Mining at 1.5p” he said.

Within days it was trading up to an intra-day price of 12p. The team at Metal Tiger live and breathe the markets, and they weren’t going to miss an opportunity like that, even if there had been a strong element of luck in the timing.

So, in early January, only a couple of months later, Metal Tiger cashed out of its initial Kibo shares, crystallising what it called a “significant return” much of which was rolled back into Kibo via early conversion of 10mln 3p warrants that were attached to the original placing. As with all the company’s major equity investments it retains a material stake in Kibo.

“The Kibo transaction gave us some working capital, and we wanted to reinvest it quickly and efficiently. We rolled some of the money into an investment in Eurasia Mining,” continued Johnson.

That generated another short-term profit to the tune of £180,000, most of which was then ploughed back into Eurasia through early warrant conversion, after production mining approvals were granted to Eurasia for its West Kytlim platinum mine in Russia.

Metal Tiger has also invested £250,000 in Ariana Resources, which is now breaking ground on the construction of a Turkish gold mine at the Kiziltepe project.

As they used to say on daytime top 40 radio, “and the hits just keep on coming”.

Moving into 2016, the company made a strategic investment into Australian Stock Exchange listed MOD Resources (ASX:MOD), its joint venture partner in Botswana.

It invested A$350,000 into the company, acquiring a 4.92% stake, at A$0.006 a share; at the time of writing the shares trade at A$0.0240, four times the price at which Metal Tiger bought in.

In February, it checked out of ECR Minerals, selling shares for £180,000 and banking a profit of £80,000, though it retains 500mln warrants that it can exercise at any time up until November 2018 at a price of 0.04p.

In the same month it acquired a 28.25% stake in ISDX-listed ZimNRG, paying £50,0003 to grab 19mln shares.

This was cited as the first step in the broadening of the Metal Tiger network of interests in other publicly listed companies through transactions providing Metal Tiger a significant proportionate holding. 

“Metal Tiger is currently working with a number of ISDX and AIM quoted companies to form strategic working relationships and provide a network of channels through which investment initiatives and opportunities can be channelled. ZimNRG (MetalNRG) is the first such relationship to crystallise,” Johnson said at the time the deal was announced.

Johson said the company would also consider opportunities in other related sectors if the board considers there is an opportunity to generate an attractive return for shareholders. This would include natural resource technologies and fintech opportunities offering leverage to resource identification, processing, recording, storage and trading businesses.

So, trying to guess where Metal Tiger will invest next has become a whole lot harder; far simpler to just invest in Metal Tiger and buckle up for the ride.

It has many irons in the fire and Johnson recently indicated that the company's main focus at present is the high grade silver-lead zinc mine a couple of hundred miles north west of Bangkok, which it is determined to bring back into production, particularly as it is a “phenomenal opportunity vis-a-vis our market cap even now.”

The natural resources investor has paid $80,000 (£56,637) in cash plus $50,000 (£35,398) in Metal Tiger shares to the mine owners in order to have a clear shot for three months at performing due diligence on the mines and working on a formal joint venture agreement.

The parties are now at a very advanced stage of discussions with a view to forming a joint venture agreement at the earliest opportunity. 

History suggests that Metal Tiger will move quickly and act decisively on this project, and its focus on it will not stop it from considering other investment opportunities.

To quote Johnson: “We don’t have a crystal ball, and if we did it would be cloudy, but the broad outline is that we are going to invest in resource opportunity aggressively during this sector bottoming phase. The plan is either to develop and sell, develop and drop, develop and partner, or develop then list or spin out.”

It may be contrarian to say so, but there’s probably never been a better time to do it.

Alastair Ford contributed extensively to this article.

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