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Blenheim Natural Resources (BNR) has always been one of the more popular shares on the AIM market, but given its performance to date it is hard to see why that is. Since it changed its name from Coburg Group back in September 2015, it seems to have been very popular with certain share commentators and individuals on Twitter and other social media who have a bit of a following, but anyone taking their advice on it as a great investment will undoubtedly have lost money in the vast majority of cases – probably at the expense of some of these 'share experts' being able to cash in themselves, as is often the way with these tiny AIM companies.

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Over the past week or so, the company has suddenly become very popular again, and this time the focus has been on its BrandShields investment and crytpocurrency. Companies which change their name on a regular basis immediately arouse suspicions, and in many cases they have been a complete failure in their previous incarnation. In the case of Blenheim, it is about to change its name yet again, and will be called Two Shields Investments in the future – so that will be three different names in little more than three years. When it comes to investing in African minerals the company doesn’t exactly have a great track record of success, certainly if we go back to the days of its holding in African Eagle Resources. But a lot does seem to have changed since then, and former chairman Chris Ells is about to step down and be replaced by Charlie Wood as executive chairman, who does have experience in natural resources and holds the same position at fellow AIM listed Mayan Energy (MYN). Sandy Barblett has also been appointed as a non-exec director, and as well as having experience in minerals in Africa, he also knows the technology sector which Blenheim is trying to get into.

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Looking at Blenheim’s current operations you could be forgiven for thinking that it had simply picked out the three most popular buzzwords with private investors at the current time and then gone off and invested in those, as currently it holds shares in companies with interests in cobalt, lithium and cryptocurrency/blockchain! That may all sound interesting on paper, but are any of these investments actually any good and do they add significant value to the company? Cobalt may be all the rage at the moment, as are most battery metals, but I remain very sceptical about the value of the investment in Cobalt Blue Holdings – a company which was only formed on October 16 2017 and is registered in the British Virgin Islands – where it acquired 25% in return for 300 million warrants at 0.1p and 250 million at 0.65p. It also has the chance to acquire a further 24% of the company for £800,000 in the next couple of months. Currently Cobalt Blue has been granted four exploration licences in Cameroon, and whilst it all sounds great with talk of resources contained in nearby licences, I would definitely question how a newly formed, tiny company with virtually no cash got its hands on these licences if they are so good! The company does also have interests in lithium in Mali, via a 40% interest in Xantus Inc and 30% in Nashwan Holdings, but things are at a very early stage with these prospective licences – which is why Blenheim managed to buy into them so cheaply. Previously there was a lot of emphasis by some on the importance of Xantus and it was made out to be some sort of renowned company in the sector – the truth was very different though as it was only incorporated in August 2016, and the last accounts at the end of October 2017 showed gross assets of just $722,000. Blenheim paid the equivalent of £850,000 for 40% of it though!

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So personally, I wouldn't exactly be getting too excited about either the cobalt or lithium at the moment. For the time being at least though, excitement around the natural resources projects seems to have been replaced by a focus on BrandShield, a company which it bought a 7.22% stake in for $1.05 million back in December, and then increased that to 8.95% for a further $200,000 a couple of weeks back. The BrandShield business does actually look interesting and it has been working on its technology since early 2014 when it raised $1.4 million in seed money for the venture. Initially it set up technology that could detect counterfeit sales, trademark infringements and brand abuse across a wide range of platforms, and it does appear that there is demand for the product, with monthly sales showing strong growth – although I’ve yet to see actual figures – and some large customers using it. But what seems to have got people really excited is its work with cryptocurrencies, and in particular its own ICO in the form of MyShield tokens. A white paper on this was leaked and some were being very selective in highlighting certain bits of the document and suggesting that Blenheim was worth multiples of its current market cap of £4.8 million, based upon the value of the coins it is entitled to as a shareholder in BrandShield. Those same people though were rather disappointed when Blenheim issued an RNS before the market opened, giving a far clearer picture of the situation, and rather than rocketing the share price stayed pretty flat and is still around 0.4p to buy. Although any profit that Blenhiem might see from these coins is nowhere near as instant as people were suggesting, the potential does appear to be there as the founders will receive 200 million coins between them (17.9 million to Blenheim), with 5% of them coming on the day that the tokens are generated, which is expected to be at the end of Q2 or start of Q3. The rest of the tokens will be vested over the next year, and although these coins will initially be sold at a discount, they will be priced at $0.2 in the final stages of the issue. That on paper values Blenheim’s share at $3.58 million, but that is of course assuming that all goes to plan. But the reality is that many of these ICOs fail – by the end of 2017 roughly two-thirds of ICOs failed to report funding figures, which suggests that they failed to meet their goal.

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So there is certainly risk attached to MyShield - and one of the main purposes of the ICO is to raise funds for future operations, so if it was to fail to raise the amount of money expected, then that would have a negative impact on the business and it would likely need to seek funding from elsewhere – thus requiring Blenheim to put in further money to maintain its share of the business. Currently though I think we have to give MyShield the benefit of the doubt until the ICO takes place and the real figures are known. Based on the latest investment into it, that suggests that BrandShield is valued at around $11.6 million at the moment – it is hard to see why the other investors would allow Blenheim to increase its stake at below market value, so we have to assume that it paid what was seen as the going rate for its extra shareholding. Certainly to me it is this part of the business where I can see the potential for value being added in the shorter term, as I still view the mining projects as incredibly speculative. The company has never been one to burn through large amounts of money in admin expenses, and given that it recently raised £1 million at 0.4p it should have plenty in the bank to keep it going for quite a while – assuming that operations at its cobalt and lithium licences don’t increase dramatically. Whilst I personally won’t be rushing to invest in the shares, I can see potential value here from this level and it also strikes me as the sort of company which will potentially see large share price spikes on anything perceived as good news – at least up until the 0.65p area and above where there are an awful lot of warrants to cash in still. So I can see why some might consider this a speculative buy from the 0.4p share price area.

This first appeared on ShareProphets. Are you missing the likes of it, Tom Winnifrith's bearcasts & more. Access for less than 2p an article HERE

Filed under: Blenheim Natural Resources, Purplebricks, Pathfinder Minerals, Vipera, TomWinnifrith.com

2018-03-26 11:46:56

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