Lion Selection Group (LSX) is a Listed Investment Company (LIC) primarily focusing in on the junior explorer end of the Australian gold and minerals market. LSX has been listed on the ASX since 2013. The executive chair is the founder Robin Widdup and he owns 12%. His son Hedley is the CEO. (Yes that’s his name, Hedley Widdup).

Many say gold is likely to remain elevated or go higher partly because of the USA/Trump uncertainty and the on-going grey war between the US and China. There is little doubt China wants, among other things to break the US reserve currency status, and their gold buying is part of that strategy.

LSX assets looks like:

Cash                           $47m

Asset Portfolio                   $53m

Les tax                           $1.4m

NTA (post tax)           $99m.

The NTA represents 70 cents a share, and LSX sells for around 56 cents, a discount of around 20%.  M/cap is around $78m.   It also has accumulated losses of $34m.

The unlisted part of the portfolio is valued at $7.3m. It is noted that this has been revalued down by $2m in the last 12 months, so there does appear to be some asset value transparency operating.

The largest of its listed investments is Saturn Metals (STN) which has a heap leach project Apollo Hill near Lenora in WA. I recall talking to the CEO Ian Bamborough last year and what stood out for me was although it is a low grade deposit, there was an analogue project in WA of around the same grade and size that was up and running.  (Cannot recall the name of the project).

LICs no matter how attractive their NTA discount, can trade at considerable discounts to the NTA for long periods. This is especially the case when management is taking excessive fees.   In July 2024 LSX removed their management fee structure (was taking 1.5% of NTA pa + performance upside) and replaced this with salaries for the management team combined with share based performance options. It is expected this will save around $200k/yr. Not with-standing the fees taken last financial year was $2m  – a not inconsiderable amount.

 Contrast this with one of the worst of the ASX LICs fee gougers, that being Thorney Opportunities (TOP).  TOP were taking a 1.5% base fee and annually ripping out 20% performance fees with NO HIGH WATER MARK.  A high water mark was recently introduced when it is thought CEO Alex Waislitz finally realised if he continued fee burgling the company, then mathematically there would be soon no assets left to manage.  TOP and its sister scam TEK are an ethnically based investment group designed to make participants rich. Just not you.   

So getting back to LSX. If cash is cash then the mining portfolio investments are valued at 37 cents, and these then can effectively be bought for 23 cents at the current market share price. Sounds like a square deal.    

With an overall 20% discount to NTA as an investor you potentially have the benefit continued gold strength combined with investor confidence feeding into a narrowing of the NTA gap. This was the situation with another LIC, HM1. Some 2 years ago it was trading at around a 25% discount to NTA (taking an average say of pre and after tax NTA for comparison purposes) and then, partly on sentiment change this now trades at a discount of around 10%.

You would have to be hypoesthesic (loss of touch sensation) to be unaware of the current gold orgy. Contrast to around 3 years ago where at the Diggers and Dealers someone added up the market caps of all the ASX lithium stocks and gold stocks (or similar metric, cannot exactly remember) and at that time lithium was bigger than gold.     

Driven by the gold price, well regarded producers were the first to feel a share price surge, and in time there will be further mergers & acquisitions, then say higher risk African miners further increasing in value and at the fag-end of it all, the gold explorers and orgy wallflowers like LSX.  I am told it is possible to arrive at an orgy late, still have a lot of fun and not catch a FTD (Financially Transmitted Disease).  By way of stock trends -  in the last 10 months the LSX share price is up around 25% and the discount to NTA has narrowed from 29% to 20%. With a still sizable discount to NTA, experienced management and a large cash buffer, buying LSX could be considered a lower risk gold stock entry point.   

Though who really knows, you could do all things right and reasonable and still end up with the investment equivalent of spotty dick.