UK 19:12 Wednesday, 28 October 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
When I commented on AIM-listed URU Metals (URU) at the end of August, following the “disposal” of its Zebediela nickel asset to TSX-V listed cash shell (with no cash) Blue Rhino, now Zeb Nickel (TSX-V:ZBNI) the shares were 405p and I said sell as it was an accident waiting to happen. By mid-September they were down to 320p and I still said sell. Now, following after-hours full year results to March, slipped out at no-one-is-watching o’clock on deadline day (never a good sign) – and showing it had net current assets of MINUS $1.5 million – the shares are down again, to 270p – and in my view they are still monstrously overvalued and a sell.
For a start, this “disposal” was not, in my book, a disposal at all: URU took shares in Zeb Nickel as settlement – which are almost exclusively held in escrow – and now has the majority stake in the Canadian outfit.
Secondly, once the shares in Zeb Nickel were released from suspension at 75 Canadian cents a pop, the direction of travel has been very much south: they are now just 23 Canadian cents – quite a collapse. So URU’s 41 million shares are now worth just £5.5 million – and URU can’t sell them as all but C$ 471,500 worth are held in escrow.
In the meantime, URU’s market capitalisation is £5.1 million: add on the working capital deficit of around £1.1 million and we are up to £6.2 million for a holding apparently worth £5.5 million – a premium of some 13% when surely to goodness it should be a discount as the Zebediela asset in South Africa is nowhere near production. But even if URU could trade its shares in Zeb Nickel, what do you think would happen if it tried to offload a meaningful amount to correct its balance sheet issues, given that according to marketwatch.com the average daily volume is just 14,680 shares per day – or around £1,900 worth?
And then there is that death spiral, with its most generous conversion terms (for the loan shark) at just 85p per share – a monstrous 68.5% discount – continually extended for no apparent reason, and when conversion does eventually come there will be an equal number of warrants at 85p issued on top. By my maths, the total confetti issuance from that will be around half of the existing share capital. And as we all know, death spiral loan sharks don’t do it for the shares – they do it for the cash and that means a boatload of freshly minted confetti hitting the market when the loan shark converts, as it looks to bank its gains.
And that means the downdraft on URU’s shares will accelerate at least towards 85p in due course.
So not even considering the woeful record of boss John Zorbas, URU’s shares are still an outright sell.
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