£100m On The Table
By Zak Mir
It is always noteworthy when a small-cap makes the mainstream press, and especially so when it is on the occasion of potential M&A news, if only on the basis that any deal which emerged could involve large, or international players.
This is what we have been witnessing at Amur Minerals over the past few weeks, with the stock nearly doubling in the wake of confirmation that the company which owns the Kun-Manie nickel sulphide asset located in the far east of Russia, noted the recent press speculation that a potentially interested party has valued AMC at an indicative price of up to £100 million. It is certainly unusual that the potential offer price is written up in lights. Also intriguing is the way that the share price of AMC is at 3.5p, almost exactly half the 7p level that £100m would achieve. Given that it has been confirmed Amur is in play, it may be worth investing in possible scenarios going forward.
For instance, one would assume that the waiting game currently in progress is the company attempting to haggle the best takeout price. With regard to this the 7p / £100m price tag may be the focus, but estimates of what Kun-Manie could be worth range from 10p to as much as 15p. In addition, the price is not necessarily based on what the asset is currently worth, but also the strategic value represented by a sizzling Nickel price.
The Russia Factor
Also to be added into the mix is the Russia factor. For a country famed for its Oligarchs and the influence of the State, no deal of a major asset is likely to be able to bypass such factors. On this basis, if the initial bidder is not Russian, it would be very surprising if Amur has a takeout which is not from a domestic source, or one embedded to the national hierarchy.
The Old 44p Peak
All of this rather invites the idea that Amur’s M&A story will complete in not one but two stages: an initial bid towards 10p, and then a counter knockout offer of something in the region of 15p. If all of this sounds somewhat optimistic, it should be remembered that the shares traded as high as 44p in 2015p, before the EV revolution, and when Nickel was not such a hot commodity. In fact, if Amur was trading in line where Nickel was in the middle of the last decade, the shares would be near that 40p zone again – $23,000 a ton, versus a peak near $2,000 a ton then. This implies that anyone paying 15p or even 20p a share could still turn a decent profit, once they put the cash in to develop Kun-Manie.
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