|Fri, 25 Jan 2002 20:43:43 +1300
Not easy finding information about this company, here is what shares mag has
said about them in the last couple of years. Since these articles the group has been gaining
in strength and many of its investments are reaching the stage where they will be floated.
The management say good times are on the way
Lion Selection Group (LSG)
Sep 2000, p42
Looking for gold stars
Floated on a sea of cash, Lion Selection has been slowly recovering from the great gold crash of 1997. Over the past three months, Lion's share price has popped up from around 73 cents to 85 cents, largely as investors take a fresh look at a classic portfolio investor.
The concept behind Lion was to raise $100 million and invest in a selection of promising junior explorers and producers. On the negative side, no one has taken much notice. On the positive side, Lion has been able to leverage up its investment position, attaining a far better position than if values had been higher.
As the resources sector continues its "trickle down" recovery, Lion should emerge favorably as an investment that gives maximum exposure to a spread of assets, including 18.7 per cent of Sedimentary Holdings, 12.7 per cent of East African Gold, 13.9 per cent of Austindo Resources and 58.2 per cent of unlisted Havilah Resources.
Jul 2000, p50
Lion, unlike most resource stocks, is not an explorer in its own name. The structure is more like a technology investment fund, with a spread of investments in a number of stocks. The theory is that one or more of the bets must eventually pay off; it's just a question of when.
A sniff as to how the game should work came in mid-May when one of Lion's favored stocks, East African Gold Mines, won a legal action in Tanzania that should enable it to develop the 3.5 million ounce North Mara discovery. Lion owns 12.7 per cent of East African, with some very distinguished company, including AngloGold (12 per cent) and Macquarie Bank (14 per cent). The East African announcement was enough to push Lion's shares up from 70 cents to 78 cents, on the way back to the 12-month high of 92 cents.
For the normally taciturn Widdup, the newfound interest in his company was enough to prompt a prediction that the resource worm has turned. He acknowledges that Lion got off to a bad start when it raised $100 million just before the mid-'97 gold price crash. But with a patience that must have been tested at times, Widdup kept most of the cash in reserve as he waited for the market to turn.
Widdup, a former senior research analyst at JB Were & Son, told The Australian newspaper that "we raised money with minutes to go on the clock in the resources cycle".
He now says the resources clock (which is a bust at 12 o'clock and a boom at 6 o'clock) is at about 3 o'clock. In other words, the worst is over and mergers and cash takeovers are under way before the boom begins again. He argues that now is the time to revisit small resources.
Lion is doing just that. It has invested $71 million of its initial raising in 12 companies, six listed, six unlisted. Five of the selection have new projects on the drawing boards. They are East African, Sedimentary, Austindo, Lafayette Mining and Havilah Resources (unlisted).
The market likes the structure, lifting Lion from 70 cents in March to 80 cents and on the way back to a 12-month high of 92 cents.
For investors curious about which way the investment mood will turn over the next few months, Lion is an excellent start to regaining a resource exposure. It has quality management, a patient approach to genuine portfolio investment, a share price that remains around cash backing and all the blue sky in the world.