UK 09:59 Sunday, 25 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.
Shares in Xtract Resources (XTR) have fallen 20% to 0.24p today on the company’s disappointing interim results. Xtract has been one of the most hyped stocks of 2015, rising from a low of 0.07p to a high of 0.45p on 1 June. Following the inevitable pullback in advance of 29 June’s placement, the share price settled in a range of 0f 0.215p to 0.3p, only to start rallying again last week. Cynics might wonder whether this was a pre-results pump ahead of today’s dump. Certainly anyone who bought in at yesterday’s high of 0.324p is now nursing a hefty loss, within half a trading session. The question now is can Xtract regain its momentum?
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Comments
Davecandle
Ben – your piece seems to ignore the fact that they received the proceeds from the £4.4m placing post period end so cash should be ok in the short to medium term
Ben Turney
@Davecandle – I don’t think that is correct. In the announcement it says (with reference to the Manica purchase):
“On 3 July 2015, the company raised £4.4 million from the placement and issue of 1,466,666,665 ordinary shares of 0.01p per share at 0.30p per share in order to satisfy the cash consideration.”
That surely means that cash has already been allocated/paid to cover the cash element of that deal doesn’t it?
Davecandle
Ben – here’s the going concern para from today’s RNS.
The interim financial statements have been prepared on a going concern basis. The board believes that there are sufficient funds available to continue to meet liabilities as and when they fall due for a period of at least 12 months from the date of this announcement. The group held cash balances of £2.96m as at 30 June 2015 and an additional £4m in funds from the 26 June 2015 placings which were received by the Company during July 2015.A portion of these funds will be used to acquire the Manica project in Mozambique as well as the completion of the bankable feasibility study.
Ben Turney
@Davecandle – Yes, there appears to be no problem with it being a going concern, as I say, but that doesn’t justify the current market cap. The profit forecast downgrade is a warning that at least one more placement is coming to satisfy Manica.
As I say above, the “portion” of the funds to be used for Manica = £4.4million.
Davecandle
Not saying I disagree on the market cap point, just saying that with £4m cash in July and almost £3m at period-end, they have enough to satisfy Manica even if they don’t get any project finance.
I do agree that they need the Chepica profits to pick up too though to fund other costs
Ben Turney
@Davecandle – but the point is £4.4million of that is going out of the door imminently for Manica, $2million will go to Aurochs 3 months after completion of the purchase and $1million will be kept to cover a capital gains liability. All in that equals c.£7million.
Given that the company is losing c.£1.3million a half operationally (which might come down, dependent on Chepica performance), another fundraising will be necessary just to give the company a prudent cash balance, to act as headroom.
If there are any further operational issues or unanticipated costs, the company has very little wriggle room to cope with those.
Davecandle
ok, last comment from me but you’re getting £ and $ confused.
The cash costs for Manica are about $7m and they had about £7m in July, so quite a bit of headroom.
I agree that if Chepica doesn’t deliver as JN hopes they may need to raise funds which is quite likely but not sure why you’re banging on about Manica. I’m more irate about the fact that JN said that Chepica made profit of $150k in May yet total revenue for the half was £118k. I can’t work that one out – any illumination would be appreciated.
Ben Turney
@DaveCandle – On that last point you are correct. I have made that mistake in my previous comment. You are right the £4.4million is earmarked for the cash consideration of Manica (it was bloody annoying jumping between the two currencies two writing this piece – companies really should present their figures using one denomination).
Given we don’t know the most recent cash position of the company, but we do know what the cash burn was (less placement inflows), that July’s £4.4million is earmarked for Manica and that there have been unforeseen operational troubles (including a significant downgrade in the profit forecast), my point still stands that this company looks like it will raise money again before it is self-sustaining.
Re. May’s Chepica profit, yes that caught my eye as well. I do plan to pick that up. 18 June’s RNS seems to contradict today’s figures
wildrides
Whatever ………………… I staying in ………. I am confident it will come back to me again with this one . Dave’s clearly holding a candle for it.
Davecandle
Been doing more research here and have a question for Ben or Wildrides – probably old news but would like to understand it a bit better..
It looks to me that Jan started the process of selling Manica to Auroch while he was at PAF and they ended up getting $850k (not sure if Aus or US) and then 8 months later he bought it back for XTR for about 10x as much – what’s the story there? And who are MTI – they seem to get on the right side of deals, would love to find a way to invest in them?