Today saw Paternoster Resources (LSE:PRS) announce two new investments with strategic partner RiverFort Global. With the company’s shares still sitting at 0.1p despite significant institutional backing, are retail investors missing out on a major opportunity?
Alongside RiverFort, Paternoster has invested $350,000 in fellow natural resources sector investor Linkwood Holdings, and another $300,000 in AIM-listed waste gasification to energy player EQTEC (LSE:EQT). It is the business’s first investment since it raised £4.5m at the end of last month to allow it to work closely with RiverFort to identify opportunities in the natural resources sector. The raise included an allocation of up to £180,000 to private investors via the Teathers app.
On today’s new deals, Paternoster chairman Nicholas Lee, said: ‘We are very pleased with the overwhelming support from investors for our recent equity placing that has enabled us to raise new investment funds to implement our strategy of working closely with RiverFort. We are now actively focused on deploying these new funds in attractive investment opportunities.”
Paternoster and Riverfort Global Capital – a specialist provider of financing to the natural resources sector – agreed a strategic partnership back in January to co-invest in a range of opportunities. As part of the agreement, the firms raised £850,000 from both institutional and private investors and Andrew Nesbitt, a member of the RiverFort team, joined Paternoster’s board as a non-executive director.
In April, the pair announced their first move, investing around £250,000 into a portfolio of income-yielding investments arranged by Riverfort. This included firms like Jubilee Metals, Amur Minerals, Lions Bay Capital, and Artemis Resources.
Given that Paternoster’s market cap still only sits at c.£6m, its ability to raise £4.5m last month in an oversubscribed placing is a real testament to the amount of goodwill it is generating in some regions of the market. Indeed, as can be seen below, the company has already attracted a great deal of institutional support, with significant backers including Miton (18.2pc), Canaccord Genuity’s discretionary business (8pc), Ashworth Global (3.7pc), and Sigma (3.3pc).
Alongside the numerous investments already delivered this year, the placement also reflects the success of Brian Kinane since branching out on his own with Riverfort Global.
Paternoster presumably still has plenty of cash left over from the placing with which to make investments. Given that it is an entirely new proposition that has broken off from its past, it is interesting that shares failed to move today and still sit at 0.1p. If the institutional backing and any future news manage to prompt a re-rate, then this price could end up looking very cheap.