Brought to you by Bulls N’ Bears
Doug Bright
Venus Metals Corporation has kicked off a formal strategic review of its portfolio and has engaged a top corporate gun, Sydney-based amicaa Advisors to initiate a formal strategic review of the company’s Western Australian mineral assets.
As a renowned consultant, amicaa has a strong reputation as a boutique investment management and corporate advisory company with extensive experience in mineral resources, particularly in Australia.
The review is expected to sift through various options to maximise shareholder value, from asset deals to broader strategic or structural plays.
A standout asset for Venus is its one per cent royalty over Rox Resources’ two-million-ounce Youanmi gold project, which was independently valued at $40 million as recently as December.
‘The Venus Board is confident in Venus’ unique portfolio of assets, their value and their future potential.’
Venus Metals Corporation managing director Matthew Hogan
If Youanmi moves into construction and production as planned, that royalty could transform from a paper valuation into a steady stream of cash that lands in Venus’ bank account without the company having to lift a shovel.
A second significant consideration, on top of that royalty valuation, is Venus’ hefty 50 million-share stake in Rox Resources, the company driving Youanmi forward.
That holding is worth about $30 million at Rox’s recent 60 cents share price, representing a significant liquid stake in a developer heading towards a potential final investment decision and construction start in the coming quarters.
Linking the inherent values of those two assets gives Venus around $70 million of positive exposure tied directly to Youanmi and that is without taking the value of the rest of Venus’ extensive exploration ground across gold, base metals and specialty minerals in WA.
This is where the timing of the strategic review gets interesting. Venus is currently in the sights of an unsolicited on-market takeover bid from Queensland-based QGold, which has made a final offer of 21 cents a share for the company.
Not surprisingly, the board says the offer values the company at about $41.5 million, with absolutely no premium and significantly undervaluing the entirety of its combined assets.
Notably, the highly opportunistic bid is slated to close tomorrow, Friday, 30 January.
However, by launching a strategic review at this time, Venus is effectively putting up a big “under new valuation” sign for the market, which might also serve as a potential bulwark against other future opportunists who might sally forth with lances lowered in the hope of spearing easy fish.
Venus Metals Corporation managing director Matthew Hogan said: “Venus’ decision to complete a Strategic Review is an important step in the Board’s ongoing focus on value maximisation for all shareholders. In light of the current on-market takeover offer by QGold Pty Ltd, with an implied value of approximately $41.49m, which the Venus Board considers to be highly opportunistic and not reflective of the underlying value of Venus, the Venus Board is confident in Venus’ unique portfolio of assets, their value and their future potential.”
The planned review by amicaa Advisors will explore the full range of possible asset sales, spin-offs, joint ventures, or even broader corporate transactions that could unlock more value than the current share price suggests.
Importantly, no decisions have been made yet, and there are no guarantees that any particular deal will emerge from the process. In fact, the review could even confirm the company’s current strategies, holdings, valuations, and position.
By embarking on a formal, detailed analysis and possible rationalisation of its entire portfolio, Venus is signalling that it senses there is a disconnect between market perception and asset reality.
For punters, this appears to be a classic resources play laced with plenty of potential upside. A company with substantial assets, a potentially lucrative royalty and a strategic stake in a near-term gold developer is bringing in experts to unlock hidden value.
With the gold price still flexing its muscle and development assets back in style, Venus’ timing may prove to be just as valuable as the rocks it has in the ground.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
