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Hambledon Mining: Are investors missing a trick?

Hambledon Mining: Are investors missing a trick?

Are investors in Hambledon Mining (LON:HMB) missing a trick? Well it would appear so if the current share price is anything to go by.

The stock is changing hands for 1.6 pence, which is a 25 per cent discount to 2 pence offer tabled by African Resources for 60 per cent of Hambledon.

There has been some upward movement from the 1.2 pence at which Hambledon was trading before the approach. But frankly Hambledon should be trading much closer to the offer price.

There will be some suspicion that African Resource, led by 47-year-old Ashar Qureshi, is getting Hambledon on the cheap. Certainly those who bought a year ago when the stock was changing hands for 4 pence will think this is the case.

But let’s consider what will happen if the offer fails to get the requisite support (and this is what the share price is currently suggesting).

Well, then Hambledon loses out on a supportive investor, access to new sources of much needed capital and technical and in-country experience. 

A source close to the deal told me: “If successful, the company will retain its listing and our aim is to work closely with the management team in ameliorating its current situation. 

“We will give it access to capital that has up until now not been available, transform the performance of the current portfolio through our technical and in-country experience as well as acquire additional assets.”

Remember the ride for investors thus far has not been a smooth or happy one. 

Its main asset is the Sekisovskoye gold and silver deposit in the Glubokovsky region of East Kazakhstan. 

Production in the last quarter was down 21 per cent at just under 6,000 ounces of gold with output from the open pits constrained by reduced tailings dam capacity.

Meanwhile, the recent strategic review has suspended underground operations so as to conserve cash.

There is also litigation between Hambledon and the Kazakh authorities regarding an environmental issue with production, which is on-going. 

In short, the past year has been an uphill struggle for company – and the next 12 months looks equally challenging if the management has struggle on unaided. 

Investment, help and guidance will, my insider at African Resources’ tells me, also allow Hambledon to make the most of the deal to acquire Akmola Gold, which has two gold deposits in northern Central Kazakhstan.  

“African Resources believes that the Sekisovskoye mine and the Akmola assets present attractive growth and value opportunities,” my insider concludes.  

“Hambledon has the potential to perform if it can alleviate the issues regarding its operational record.  

“African Resources believes that the change of structure will be viewed positively and subsequently a more palatable solution to the environmental situation will be found for all parties, thus securing the future of the company.”

Remember the offer closes on November 23. For more information go to www.hambledon-mining.com.

 

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December 24 2012
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