Analyst Barney Gray says the oil miner, which counts AIM quoted Tomco among its peers, offers investors the opportunity to gain “early stage exposure” at a “very attractive” initial valuation.
Prior to its planned London float Greenvale could be worth up to $40mln, Gray claims.
That valuation, which equates to A$0.30 per share, represents a significant premium to the price in Australia - where Greenvale shares currently change hands at just A$0.08.
Grey reckons any dilutive effect from new shares issued in the AIM IPO will be more than offset by the next phase of the company’s growth which will be enabled by the relatively modest injection of capital.
In a note to begin his coverage of Greenvale ahead of the AIM listing Gray gives the stock a ‘buy’ recommendation with a A$0.30 target.
Greenvale’s main assets are interests in three shale oil tenements in Queensland.
The AIM IPO comes after Australia’s rules for oil shale have been relaxed and at a time where extraction technologies are making significant advances.
“With improved technology now close to commercialisation, the inherent value in oil shale including low cost entry, low reserve booking costs, relative lack of reservoir risk and easily definable economics, makes it increasingly attractive to large integrated oil companies,” Gray said.
“Consequently, we see strong commercial logic behind Greenvale’s strategy to develop its core assets to a sufficient level in order to attract the attention of the oil majors.”
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