Wednesday, July 09, 2014

Resurge Mines and Minerals Ltd
BSE Code: 533017
Financials and other Statistics:
## CMP: Rs.2.66 in BSE and Rs.2.40 in NSE, as of 9th July, 2014.

## Face Value: Rs.10 (not Re.1),

## Book Value: Rs.26.49,

## Market Cap: Rs. 57.87 Cr, down from Rs.1500 Crore in 2008.

##  IPO Price Band: Rs.263 - Rs.272 Per Equity Share

## IPO Issue Date: Aug 11, 2008 - Aug 13, 2008

Major Triggers: 
(i) Mahalmiriya (Bauxite) Mines in Maharashtra, has got the approval from the authorities. The mining could start post monsoon, after some issues regarding the lease agreement gets solved.

(ii) The mining is already taking place in the Soapstone Mine, Dhelana, Rajashtan.


(iii Yelwan Jugai Bauxite Mine in Maharashtra and Satarda Iron Ore Mine are expected to get fast approvals from the  the current NDA government led by Narendra Modi.

(iv) The book value of the share of the company is Rs.26.49 and the market cap is only Rs.52.50 Cr. The market cap of the company is less than price of the machineries purchased by the company till now for the mining operations. So, you are getting the business of the company, Free? 

a) Environmental Clearances
(b) Forest Clearances, etc.
No mining can take place without getting such clearances, even if the government allots mine to any company or business concern--it is mandatory. 

(v) The mining sector stocks are likely to boom in the coming days, after the recent landmark, Supreme Court verdict. At present even the stocks like SVC Resources Ltd (BSE Code: 512449), which are from the same sector is trading multiple times its face value of Re.1 (now Rs.10). Another stock, NMDC Ltd having face value of Re.1 is trading at Rs.173.65. Whereas Resurgere Mines and Minerals Ltd, having a face value of Rs.10 (not Re.1) is trading at Rs.2.40 in the NSE. Is it  not surprising? 

Clarifications of baseless Rumours: 
(a) The promoters holding came down due to GDR and other issues. It did not come down because they directly sold shares in the market. 
(b) At present there are three directors of the company and they are: 
## Subhash Sharma: Chairman & Managing Director
#  Mayur Shah: Ind. Non-Executive Director
## Alok Ambastha: Ind. Non-Executive Director
(c) One of the auditors did not want to sign the balance sheet, but the subsequent auditors had no problem. The said auditor, went to the media without informing the management of the company, which by any standard is a breach of trust and constitutes a type of criminal conspiracy; though the management decided not initiate any legal action against the said auditor. 
(d) The company during the last few years, was affected due to mining ban in many states of Indian union, besides, the UPA government had a very unfavorable policy towards the Iron Ore exporters and dealers. However, in future, as the mining policy gets changed the company hopes to do well.  
(e) Inspite of getting approvals, the company could not start the operations in Mahalmiriya (Bauxite) Mines in Maharashtra because of some problems in the lease agreement. Also, mining generally does not take place during the monsoon season, because they are open fields. 

Conclusion: Accumulate on dips and keep holding for a target of Rs.9-10 in the coming days. This is a turnaround story. On the downside, it can fall maximum upto Rs.2.30. In the NSE the price is already Rs.2.40. 
Also, note that some panic selling due to vested interest groups, is going on, which will not be sustained in the long run. 
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