value pick, page-12

Good questions paper. Pre GFC they appear to have hit a high of 4.2c in 2007. Since GFC they have not even gone close to recovering, in fact they appear to have sunk below 1c and until last week pretty much stayed there. No real reason that i can see for that except flying under the radar. No bells and whistles can do that sometimes. So while other companies who have less potential have recovered and then some, LGO has been trading well below asset value. Thats at least one reason i see potential. The placement well above SP is another.

As to the assets, since GFC they have added the investment in a coal field soon to come into production in Indonesia as well as an investment in a coal company in NSW. Both those investments are set to increase thanks to the placement. There have also been moves to commence drilling the onshore oil site in WA - mostly held by EGO, 11% royalty for LGO. Thats scheduled for 1st quarter this year. They were also granted a 21 year lease in August over 22,000 acres of an area with previously producing oil sites in QLD, 50% interest with Brisbane Petroleum. They can already enter a previous well, and are proposing a 3D seismic.

Then you could add in the potential that now exists for Brisbane Petroleum to go to IPO, 20% interest held by LGO. No updates as to when that might occur, but market conditions have imporved enough that if it is going to happen would likely be this year. The same can be said for LGOs really big play - the 250m IPO of Offshore Oil. As far as i can tell its been promoted around the traps. Its really only recently that market conditions have been suitable.

I cant see a whole lot of downside, still only talking a market cap of $5m. But as always its up to the market to take notice and decide.

HC, having a look for a new top 20, last one i can see is in the annual report. At that stage top 20 held well past 50%. Since then Bell IXL appear to have sold their shares to Starlight Holdings who now have close to 9%.