TRF - Trafford Resources

[Nero64]

In a trading halt pending the announcment regarding placement of new shares.

Is this when they announce an offer of .60c per security and the sp falls rapidly or is it something else.

Any ideas?

 

[musicman74]

i do doubt that when a asian investor bought over 6 million shares the day b4 , i hope anyway lol holding shares myself, im suprised there hasnt been more talk about TFR having a trading halt

 

[dadzi]

Yeah, I'm wondering which way it's going to go aswell. If it's a share issue that all existing shareholders can participate in, that'd be good for me because I'd be keen to top up my current holdings at the cheaper issue price. Then again, if it's a share issue that is preferential to institutional investors, then, as you suggested Nero, the SP may drop rapidly, in which case I can once again top up my holdings for cheap. For investors with a long-term perspective it can only be a good thing really, as the company is generating a great return on its investments (namely, their awesome investment in ROL and soon to be awesome investement in IFE) and I feel as though any money I give them will be put to good use. I've felt for a while now that the TRF price is undervalued based on how the market has treated it after the ROL in-specie distribution, and this announcement could well be the catalyst that places TRF in the definate BUY section of my watchlist once again. I've been looking for another cheap way into the company after I missed that great buying opportunity that presented itself after the ROL distribution, as I was overseas on holidays and my partner prevented me from trading in order to fully enjoy the break - it was my mistake for listening to her haha.

These are only my opinions by the way, I invest on my own behalf and do so based upon my own research - you should do the same.

 

[McCoy Pauley]

As I understand the announcement, the trading halt will be in place until the earlier of the specific announcement being made or tomorrow so I imagine the questions/hypotheticals will be resolved shortly.

 

[Nero64]

Just trying to make sense of the announcement.

The offer is for institutional and sophisticated investors @71 cents.

I have been buying in and out of this share since Feb 2nd. Does that make me eligible. They don't mention any dates.

I am just reading the pdf posted on the ASX site.

 

[McCoy Pauley]

Nero64 - if you have to ask the question, then my guess is that you're not a sophisticated investor as this term has a statutory meaning pursuant to the Corporations Act 2001.

 

[dadzi]

Lol, McCoy Pauley, sometimes it's more helpful to explain things to people as opposed to basically telling them that they're wrong without offering any clarification. In fact, in my opinion, clarifying stuff like this is the whole point of forums like ASF!

Nero, it took me a while to figure out why I was not considered a "sophisticated investor" given that I've known all about particular companies before they've undergone capital raisings, and as you stated, I'd been trading these companies for several years and considered myself a sophisticated investor. As McCoy Pauley stated, the term "sophisticated Investor" has a statutory meaning pursuant to the Corporations Act 2001, specifically, Chapter 6D of the Act. The Act requires that when a company wishes to raise capital by offering securities in exchange for cash, the company needs to issue a prospectus disclosure to investors. However, companies are excluded from the requirement to issue a prospectus disclosure if they are offering securities to parties who fall under section 708 of the act. Subsections 708(8) to 708(20) of the Corporations Act define particular parties to whom a company may issue securities to without the need for a prospectus:

a 'sophisticated investor;' which is defined where:
the minimum amount payable for securities is at least $500,000; or
the collective amount invested in the same class of securities adds up to $500,000; or
a qualified accountant certifies the net asset worth of $2.5 million or gross income for each of the last two financial years of at least $250,000 per annum.

Now these are definitions I sourced from the internet so they may be outdated and I'm not stating them as absolute facts but I think the jist of this information is correct. Basically, it all boils down to how much cash you are investing, ie. according to the Corps act, cents buy sense. So if you are investing or have invested greater than $500,000 in TRF, you are likely to be considered a "sophisticated investor". If not, you’ll miss out in involvement in this capital raising.

I hope that helps .

 

[Miner]

Lol, McCoy Pauley, sometimes it's more helpful to explain things to people as opposed to basically telling them that they're wrong without offering any clarification. In fact, in my opinion, clarifying stuff like this is the whole point of forums like ASF!

Nero, it took me a while to figure out why I was not considered a "sophisticated investor" given that I've known all about particular companies before they've undergone capital raisings, and as you stated, I'd been trading these companies for several years and considered myself a sophisticated investor. As McCoy Pauley stated, the term "sophisticated Investor" has a statutory meaning pursuant to the Corporations Act 2001, specifically, Chapter 6D of the Act. The Act requires that when a company wishes to raise capital by offering securities in exchange for cash, the company needs to issue a prospectus disclosure to investors. However, companies are excluded from the requirement to issue a prospectus disclosure if they are offering securities to parties who fall under section 708 of the act. Subsections 708(8) to 708(20) of the Corporations Act define particular parties to whom a company may issue securities to without the need for a prospectus:

a 'sophisticated investor;' which is defined where:
the minimum amount payable for securities is at least $500,000; or
the collective amount invested in the same class of securities adds up to $500,000; or
a qualified accountant certifies the net asset worth of $2.5 million or gross income for each of the last two financial years of at least $250,000 per annum.

Now these are definitions I sourced from the internet so they may be outdated and I'm not stating them as absolute facts but I think the jist of this information is correct. Basically, it all boils down to how much cash you are investing, ie. according to the Corps act, cents buy sense. So if you are investing or have invested greater than $500,000 in TRF, you are likely to be considered a "sophisticated investor". If not, you’ll miss out in involvement in this capital raising.

I hope that helps .

Dear Dadzi
Excellent explanation and thanks

If I may add that even if one qualifes to be a sophisticated investor does not get automatic entitlement to get an offer to subscribe under that category.
One has to get registered as a sophisticated investor with a particular broker like Paterson, MPS or any one you name it for future raising, seed money itself.

When time comes it will be the broker/ fund raiser who will approach the sophisticated investor for his or her money. There is a game and it is entirely discretionary with your own broker whether he or she offers you to subscribe in a capital raising.

If it explains further I was registered with Bell Potter Securities ( I was not a sophisticated investor).

They used to give me tips ultimately the prices always fell. When real time comes they never advised me of their quota including their own shares. But I thanked them later when saw many of their floats went south including their own IPO.

 

[Nero64]

Yeah thanks for clearing that up dadzi.

TRF used to trade inline with IFE and ROL. I watch all 3 and feel TRF is at a discount to the others.

Time will tell but it has its fingers nicely spread across a few high yielding assets and it only needs 1 or 2 to deliver for it to prosper.

 

[kermit345]

Anyone have some insight into why TRF is trading at a price that seems to me like its extremely undervalued?

Just on some basic calculations below I think they are extremely far from their underlying value, basically trading at a 28% discount.

Traffords Major Investments:
Robust Resources (7,200,000 shares @ $1.88 = $13,536,000)
Ironclad Mining (22,000,000 shares @ $1.33 = $29,260,005)

Makes Total Investments of $42,796,005
In addition to this there is cash holdings, unfortunately the most recent figure I can find is $4,186,000

Totalling Value of $46,982,005

If this is divided amongst the shares on issue for TRF (latest I could find was 48,700,000)

This values the company at roughly 96 cents, currently they are trading at 69 cents.

Now I understand some of my figures may be out (and please update if you have more relevant figures as I think my cash and shares on issue figures are from July 09) but it does show that even on just its actual investments, it is trading considerably below its holdings value.

Just wondering on peoples thoughts?

 

[prawn_86]

Most/a lot of LIC's trade at a discount to their intrinsic value. I guess it is just based on the fact that their share holdings are risky and/or volatile so the markets gives it a discount for if they fall.

 

[kermit345]

given the outlook for robust and irconclad though, the discount seems a bit extreme to me. If robust/irconclad go up further TRF will be at more then a 30% discount.

 

[dadzi]

Yeah I agree Kermit, sure, Robust hasn't released any great updates recently and it's SP has been lagging over the last month or so, but IFE is heading towards production and its SP has almost doubled over the last few months.

I feel that after TRF completed its In-Specie distribution of ROL, traders have forgotten that ROL was a secondary asset of TRF's compared to IFE, which will be the real money maker IMO. TRF is down another 6% today, and unless I'm missing something, I personally believe that it is undervalued and I'm stocking up my holdings at these prices.

 

[kermit345]

Given my calcs above and the SP today at 63 cents, The stock is now trading at a 34% discount to what i've roughly calculated to be its per share value on holdings alone.

I mean even if LIC's usually trade at discounts, surely one of this magnitude is much too great of a discount considering the reasonably positive results its investment companies have posted recently.

If I had some spare coin I would be adding to my holding, unfortunately I don't at the moment. Hopefully the window of opportunity to buy at these levels stays for a little while so I can jump in the coming weeks.

 

[jonojpsg]

Yep kermit I'm with you on this one. I have held IFE and TRF recently and have trimmed back to holding TRF as it does seem to be well under what IFE should value it at. Given the great valuation that IFE will be at once it starts production (assuming all goes well) I can't see TRF being less than $1 by years end and more like $2 (based on my calcs of IFE hitting an MC of $250m or SP of $6ish).

Then looking further down the track, if ROL can prove up something that might even begin to approach LHG (say ROL valued at $1bn) then well blue sky is the limit

 

[jonojpsg]

Yep kermit I'm with you on this one. I have held IFE and TRF recently and have trimmed back to holding TRF as it does seem to be well under what IFE should value it at. Given the great valuation that IFE will be at once it starts production (assuming all goes well) I can't see TRF being less than $1 by years end and more like $2 (based on my calcs of IFE hitting an MC of $250m or SP of $6ish).

Then looking further down the track, if ROL can prove up something that might even begin to approach LHG (say ROL valued at $1bn) then well blue sky is the limit

Well, another BIG hit on Romang Island (82m @1.5g/t Au eq) although not particularly impressive grade Still with widths like that, there's gotta be MAJOR tonnages in the offing when they get to their first JORC.

Anyone familiar with LHG deposit who can provide comparison of widths/grade?

Again this demonstrates the undervalued nature of TRF with two highly prospective projects that they have a key holding in, apart from any other holdings they have.

 

[kermit345]

I did some quick calcs today again Jono, focusing on their stock holdings only and ignoring cash (TRF).

At the time of doing the calcs these are the details I used:

ROL) 41.4mill shares on issue, $2.03 share price, so 84mill MCAP
IFE) 40.3mill shares on issues, $1.34 share price, so 54mill MCAP
TRF) 48.7mill shares on issue, $0.66 share price with 13.75% stake in ROL and 50.53% stake in IFE.

TRF's current value in ROL = $11.6mill
TRF's current value in IFE = $27.3mill
Total investment value = $38.9mill representing $0.799 per share
So currently trading at 17.40% discount, and if SP reached valuation would be a 21.06% return.

I also calculated that if TRF keep the same stakes in ROL and IFE, but their MCAP double, as well as TRF issuing 25% more shares, it looks like the following:

ROL MCAP = $168.1mill
IFE MCAP = $108.0mill
TRF Shares in issue = 60.9mill

TRF's value in ROL = $23.1mill
TRF's value in IFE = $54.6mill
Total investment value = $77.7mill representing $1.276 per share
So would be a 93.33% return on the current share price.

Obviously this is a very simplified method of estimating future value, but with the potential that ROL and IFE have it gives you some understanding of where TRF could be pointing towards. Not to mention i doubt they would increase shares on issue by 25% over the next 12-18 months (which is the kind of time-frame you'd hope ROL and IFE start producing major returns, IFE because of iron ore prices and ROL because of its increasing exploration success)

 

[jonojpsg]

No question kermit. Note your calcs might even be under, as I'm pretty sure TRF hold 7.6m shares in ROL still after distribution which would give $16+m value rather than $11.6m

For mine, I'm banking on IFE being the star performer as if they can actually get 2Mtpa shipping out by the end of this year, they will be way over $100m
MC, or should be given they will be making at least $50m a year net cash at $80/t IO price which looks in the bag.

Of course China or Europe or US could still go belly up and we'll all be stuffed so keep your nose to the ground and eyes peeled

 

[jonojpsg]

I have a question regarding the proposed extraction of gold from the deposit that IFE and TRF are going to mine at Weednanna.

How exactly will the gold be extracted from ore that is going to be sold as iron bearing ore? That is, will it have to go through a processing plant, and if so, how does that affect the ore in terms of then selling it as iron ore?

Or am I confusing the issue because the gold intercepts and the iron intercepts are actually separate and distinct, in which case it will simply be a matter of coordinating the mining process to deliver the different blocks of ore to the different end points?

Would appreciate any informed responses

 

[condog]

It appears to be the later, they will be targeting small high grade deposits of up to 9m with 24g/t. rather then processing all the ore for gold. Much more work to be done yet to determine exactly how they will tackle the issue and its viability imo. Certainly its a bonus as the DSO is fantastic in its own right, depending on the outcome of the insane and stupis RSPT from Ms Gillard PM.