The Canadian venture stock market ghetto can be a plank-walk for investors. Only elite management teams, and the downright lucky, often create value for their shareholders.
For reasons unknown, on May 3, 2019, a small yet significant team of mine financiers took over management of a small shell company, LNC.V, which immediately caught my attention as a prospector and speculator in mining ventures for the past 40 years. Who is involved, and what they have done in the past, could bode well for this tiny company’s future prospects.
A subsequently filed Management Information Circular on SEDAR revealed the board of directors of LNC has been restricted to just 3 members, including Gilman and Granger. These gentlemen have arguably led billions in mining transactions globally working with CIBC and CEF for over a decade. The third nominee, J. Anderson, is a powerful M & A lawyer with over $30 billion in transactions under his belt.
This leads to a number of questions, a few of which I will ask:
- Why would Gilman and Granger take control of a tightly held shell company with a low share capitalization?
- Why would a powerful M & A lawyer join Gilman & Granger in a shell company?
- Is the historical deal size these gentlemen have been involved in, indicative of what might come?
- What kind of company is planned?
Some speculative deductive reasoning and lateral thinking may provide some insight. A royalty company seems unlikely as that is a crowded and competitive space. An exploration company seems unlikely as the path is too long and risky. Perhaps these gentlemen want to build a mining company? If so, the path forward may be by buying producing assets being spun out, or participation in brown fields opportunities, or M & A, like a reverse takeover of private assets. This begs the question: could a pipeline of deals be in LNC’s future?
LNC had 40,303,565 common shares outstanding at June 21, 2019. Gilman holds 6,000,000 shares. Granger holds 1,911,576 shares. At a recent price of 45 cents, the company has a market capitalization of approximately C $18 million.
Without more material information, LNC is a shot in the dark, however, given the history of LNC’s new board members, should corporate plans be disclosed at the August 06th special and annual meeting, today’s pricing may soon seem like a bargain.
Disclosure: I have taken an initial position in the shares of LNC and may buy or sell at any time and without notice. I have no affiliation with LNC of any kind. The commentary is entirely my opinion based on my research and experience.