By David Haselhurst, ninemsn Money
May 21, 2008,
Companies with very low-priced counters are down near the bottom of the pile because they've under-achieved on their earlier promises and they probably have a huge amount of issued paper weighing down the market.
Such a stock is Acclaim Exploration NL (AEX.AX) , which has dallied about for more than a decade on mineral exploration in Western Australia and darkest Africa with a conspicuous lack of commercial success. Times are changing, however.
At .022c a share, Acclaim carries a market capitalisation of $13.22 million. At the end of the latest March quarter it had net cash of $1.45 million, plus saleable investments with a market value this week of $9.9 million, or net cashable assets of $11.35 million.
The saleable shares comprise a holding of 22.5 million Metals X Ltd (MLX.AX , 0.430, -0.010, -2.270%) trading around 44c each. Metals X is refurbishing Tasmania's Renison tin mine with the world tin price now around record levels at $US24,850/tonne.
In addition, of Acclaim’s 650.87 million issued shares, 40 million were issued at 10c but paid to 8c, so a further 2c call is due in the future which would garner another $800,000 cash. (Since it is an "NL" or "no liability" company, the holders of the contributing stock could walk away, but the company could then auction the balance to recover any call due.)
So, when we add up the cashable assets, there's not much of a premium reflected in the current share price for the company's gold and uranium prospecting projects in South Africa and the central African country of Guinea. These are assets that may well be unloaded to realize further cash.
For, last week Acclaim revealed a new direction with a deal (announced on May 14) to farm into various oil and gas projects in Texas. They comprise:
* The Maria Prospect, with the right to earn a 25% leasehold estate and working interest in oil, gas and minerals on 1991 acres "sandwiched" between the 40BCF N SW field (1992 discovery) and the 80BCF Lions Field (1996 ordheim discovery).
* The right to earn a 57.75 interest in the 1600-acre Galveston Bay prospect with a well to test four primary objectives with a total unrisked reserve potential of 12.6 BCF of gas equivalent (risked reserve potential is 5.54 BCF).
* A 25% interest in a production well on the South Sprint field plus two planned wells with a total unrisked potential of 42.16 BCT of gas (or a risked potential of 5.88BCF).
Consideration to be paid will be 140 million Acclaim shares, plus 70 million options exercisable at 4c by June 30, 2010, plus the payment of $US750,000 for its share of the South Sprint prospect.
The company has also agreed to place 150 million fully-paid shares together with 150 million free options (exercisable at 4c by June 30, 2010) to raise $1.5 million. The placement will be made to clients of the London-based equity fund, Aegis Partners Ltd.
Acclaim shares have traded down from a high over 5.5c in the past 12 months to a low of 1c before recent recovery. At 2.2c, and with a new direction into oil and gas, the shares have potential to attract a wider field of punters.
The first well ”” on the Maria prospect ”” is due to spud within two weeks, company sources reveal. The initial test well will be drilled to a total depth of 14,000ft to test two know productive sand strata with potential production assessed as within the range of 30-50BCF of gas equivalent.
I took a plunge on 200,000 Acclaim shares at 2.2c, or a total outlay of $4400 plus brokerage.