Jindalee shareholders to reap a Chinese pay-offBARRY...

Jindalee shareholders to reap a Chinese pay-off
BARRY FITZGERALD
November 2, 2009
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The least controversial foreign investment decision has proved lucrative.

IT SAYS something about local investors that they waited until the start of the spring racing carnival to cash in some of the gains made since the rebound from the global financial crisis got going in mid-February.

Naturally enough, speculative mining stocks, being what they are, got beaten up more than most in last week's flight to defensive sectors of the sharemarket.

But that was not the case for Jindalee Resources.

It's just become a defensive/speculative mining stock, if there is such a thing. And it's all thanks to the least controversial foreign investment decision made yet by that mysterious bunch of Canberra bureaucrats that call themselves the Foreign Investment Review Board (FIRB).

The board last week waved through a proportional (70 per cent) $1.02-a-share takeover bid by China Guandong Nuclear Power Holding Company for Northern Territory uranium hopeful, Energy Metals.

Jindalee owns 40 per cent of EME or 46.8 million shares.

So its eventual (70 per cent) acceptance of the takeover bid will deliver it some $33.4 million.

That's all very interesting given Jindalee's market capitalisation (fully diluted) is no more than $35 million.

Remember that it will still hold 14.04 million EME shares, plus a $9.3 million stake in Western Australian gold explorer Alchemy Resources and a bunch of lesser interests.

Add that lot to the group's EME holding, and Jindalee leaves its $35 million market cap well and truly behind.

All up think something like a (fully diluted) asset backing (shares and cash) of around $1.54 a share (pre-tax) for a stock that closed on Friday at $1.01, up 4¢.

The key now is what next? After some long chats with tax advisors, Jindalee will be looking to distribute some goodies to its shareholders, keeping some of the cash to pay for a new set of opportunities.

A fully franked dividend and/or a distribution in-specie of the Alchemy shareholding and some other shareholdings is on the cards.

Either way, there is going to be a substantial portion of the EME success returned to shareholders.