Shares in Polo Resources (POL), a natural resources investment company recently featured in Simon Thompson's Bargain Shares 2013 portfolio, continue to offer compelling value. Not only do they trade at a 36 per cent discount to net asset value, but management has a track record of making winning investments and returning the cash to shareholders - Polo has paid out $185m (£123m) in special dividends over the past three years.
Management is now refocusing the portfolio towards gold, oil and gas based on perceived demand fundamentals, and we can't disagree with this strategy. Polo has steadily increased its holding in Signet Petroleum from 21.7 per cent to 48.2 per cent as the company evaluates new prospects offshore Namibia. Meanwhile, Polo has made substantial progress advancing its 90 per cent-owned Nimini gold project in Sierra Leone, where recent drilling has uncovered a potentially game-changing 450 metre extension to the Komahun deposit. An updated mineral resource estimate should be published by the end of June and positive news from either project could provide the catalyst for a positive re-rating.
However, all is not rosy in the land of commodities. Polo recently recorded a $5m write-down on its investment in Canadian iron ore explorer Ironstone Resources, but this holding only accounts for 3 per cent of the company's book value.
POLO RESOURCES (POL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 23.25p | MARKET VALUE: | £62.7m | |
| TOUCH: | 23-23.5p | 12-MONTH HIGH: | 36.5p | LOW: 22.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 36.2p | NET CASH: | $26.9m | |
| Half-year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | nil | 8.74 | 0.38 | nil |
| 2012 | nil | -8.77 | -0.38 | nil |
| % change | - | - | - | - |
£1=$1.49 | ||||
