It could only be a matter of a few days now before shares in MetalNRG PLC (LSE:MNRG) start to enjoy a substantial re-rating.
The occasion will be a legal hearing that will take place on in the fourth week of September which ought to decide once and for all an issue which has dogged sentiment towards MetalNRG since April of this year.
Back in April the company was constrained to rescind a deal it had struck with BritNRG after it emerged that the deal ought, under law, to have been put to shareholders.
Accordingly, BritNRG now owes MetalNRG just over £1mln that was earlier paid over, and lawyers for MetalNRG are fairly confident that the upcoming judgement will legislate for that money to be returned.
If that is the outcome, not only will MetalNRG’s coffers enjoy a significant boost, but months of uncertainty will have come to an end.
In such circumstances, share prices have a habit of ticking upwards, although with legal battles it doesn’t always pay to be premature.
After the summary judgement is released, a few loose ends will remain – including an ongoing appeal in the courts of Scotland by a former director of MetalNRG, Pierpaolo Rocco, and issues that will become before an employment tribunal that also relate to Mr Rocco.
Nevertheless, MetalNRG’s chief executive Rolf Gerritsen remains cautiously optimistic that the company’s legal issues will soon be resolved.
“Our legal team is anticipating a positive outcome,” he says, justifying that belief in part because the opposing party hasn’t offered any real defence.
That being so, there remains the question of the £1mln that MetalNRG is owed. Does BritNRG actually have the cash? That’s not entirely clear, although BritNRG says it does. And if that’s true, then under the terms of any court order that’s issued, it will have 14 days to pay that money over. If it fails to do so, then MetalNRG is likely to appoint a liquidator.
All things being equal though, it won’t come to that, and the world for MetalNRG will look a very different place at the end of next week.
With the court case resolved, MetalNRG will be able to get back to concentrating on the two main strands of its business – the waste to energy portfolio that it’s building up, and which will shortly be generating cashflow, and the gold exploration opportunities that has in Arizona.
Gerritsen is hopeful of significant movement on both before the end of this year, although he says that the main focus of MetalNRG for now is the waste-to-energy partnership with EQTEC which already has one project in Italy that’s close to generating cash.
“We will be commissioning the plant in the next few months,” says Gerritsen, “and we will then be revenue generating.”
He expects MetalNRG’s annual net income from this Italian project to be of the order of between £200,000 and £250,000, a sum which should cover most of the company’s running costs going forward.
At the same time, shareholder loans that have been provided to get the Italian operation up and running can be refinanced on favourable terms once the cash is coming in, and then recycled into further projects. In that way MetalNRG hopes to build up a sizeable portfolio in a relatively short time.
And although that will be the main event, drilling on the Arizona gold project is also planned for this year, meaning that a raft of positive newsflow is likely to come in before the end of December.
Will that all add up to a re-rating? Nothing is guaranteed. But the ducks are all lining up, and the shares certainly are poised for a rebound. Watch this space.