On 22nd October 2018 we ran an article entitled “Speculating on Aveng”, ( click here to read it ), in which we suggested that buying R10 000 worth of Aveng at 5c a might be a worthwhile for s. As we said in the article, we do not usually advise speculation in , but that if had a spare R10 000 this could be a good punt.
At the time (October 2018) we invested our R10 000 and bought 250 000 Aveng shares which were then trading for 4c each. The share then fell to as little as 2c – which halved the value of ouron paper, but we remained confident of the and underlying of the and held on to our shares.
This year (2021) the company decided that it needed to raise more– which it did by way of a in February 2021. In that offer it gave existing the opportunity to buy a further 103.12203 shares for every 100 Aveng shares they already had – at 1,5c per share. We decided to by investing a further R3867 and so we ended up with a further 257805 shares (250 000/100 X 103.12203), and our came down to 2,73c per share (R13 867/507805). This rights issue raised R300m for Aveng which it used to pay down .
Then in June 2021 the company decided to do a second “follow on” rights issue, also at 1,5c per share but this time for only 11.47941 shares for every 100 held to raise a further R100m. This rights offer allowed us to take up a further 58293 shares at a total cost of R874. Once again we followed our rights and today we have 566098 shares which we paid a total of R14 741 (R10 000 +R3 867 + R874) for – which is an average cost of 2,6c per share (R14 741/566098).
This chart shows Aveng’s dark days when it was desperately selling offand trying to bring its debt under control. As part of that effort, it eventually and reluctantly undertook two rights issues at prices which were a fraction of its (NAV) in order to raise a further R400m. Clearly, these right issues significantly the holdings of existing shareholders, but they offered an opportunity for private investors to make a tidy .
Now with its recent “voluntary pre-close” published on 30th June 2021, the company has reported that it has finally returned to – after 8 years of making es. Its two remaining businesses, Moolmans, which does mine construction in South Africa and McConnell Dowell, which does construction in Australia are looking good with strong order books. Here is the relevant extract from our ’s statement for 30th June 2021:
Since this statement at the end of June, the share price ticked up to 5c on this announcement – which means that our investment of R14 891 (including dealing costs) is now worth R28 305 – a gain of 90%.
In our opinion this share will continue to perform well now that it is back on a sound footing. We fully expect the share price to continue rising in the future and we have nearly held our shares for at least the full three years required byto have our gain treated as a “capital gain” – an important consideration for private investors.
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