I'll skip the introduction to the company and get straight to the point. Molopo Energy has approx $68 million in cash with little to no liabilities. Comparing this to the market cap of circa $39 million, this makes an interesting, typical Ben Graham type of investment.
The cash burn rate is very, very slow relative to other players within the same industry. The interesting one about this one though is that it has a potentially identified catalyst to unlock value. Two members of the board are from activist backgrounds who together own around 30% of the company. One of the members, who works for a publicly listed company have disclosed their intent to unlock this value for shareholders. The matter went to court but the court ruled against them. Despite this, i still believe the stock may re-rate, maybe not today, or tomorrow, but someday.
If you have read some of my earlier posts, i have mentioned that i don't buy into resource companies due to the nature of their business model. However, given that it is trading at less than liquidation value, the dynamics are different.
Please note that this does not constitute personal advice and that i have a financial interest in the company.
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