By Doc Holiday
Metal Tiger really hit the ground running in 2016 with a colossal rise in price from 0.90p to highs of 5.70p giving the company a market cap of nearly £30million. Given the pace of news flow and the unsustainable share price it’s my belief that the reality of trading on aim could come back to haunt investors failing to apply proper money management. The company intends (and has) delivered a high return for shareholders by investing into highly prospective opportunities through Metal Tigers trading arm which sees trading short-term opportunities whilst building robust core assets that offers longevity to Metal tigers Investment term.
What does this company actually do and what does it mean for investors? Well quiet clearly whatever the strategy is one could argue it’s working however, as time goes on and the foaming of excitement subsides we try to evaluate what the company really has got going for it. The management team at MTR has executed a number of undervalued resource companies listed within the junior markets, much as this has been with a great deal of success given the returns from Kibo Mining, New World Oil and more recently Conroy Gold etc,. The business has seen a steady increase in there existing and closed positions across the markets, the tiger cubs (retail rampers) have lapped it up as the business has gone from strength to strength however, the ultimate question one should ask is how much has the company actually netted.
The results of this are somewhat unknown as investing companies would be stupid to fully show its hand when only holding a pair of two’s and whilst the flurry of RNS’s appear to hold a great disparity the reality sadly is the tangible value of the core assets coupled to the trading arms warrant bank and current cash is not enough to prop the share price up at 4p+. Having reviewed the potential of MOD Resources and it’s Thai assets one really has to consider the cost to a company to bring the early stage projects into production. I anticipate master at arms Mr Johnson has further ingenious ways to promote the story which in turn may present another opportunity to buy, at current levels and with a stasis looming the risk / reward has to be considered.
I’ve supported MTR through its early days, its model and intentions were well placed however, the gulf between a £3m valuation and a £30m is just to far not to recognize the risk. At 4p I’d look to take profits whilst casting a watchful eye over the company as it back tests lower levels, In light of transparency anything above 2p prior to its rise could have been seen as a leap of faith thus a firm base above that level surly has to still be seen as an achievement.