I agree @ stevegreenycom the question you ask is a good one: why is LSX sitting on 50% cash and not participating in the great Aussie ASX gold orgy.    Why are they not using their jumbo to drill and  grind like crazy bastards?  Why is their ball mill idle? Why does LSX stand as a glum flaccid spectator whilst all the others are grunting and pumping on the floor, having all the merger & acquisition fornicating fun?  I can think of two related reasons:

•  a few years ago they got caught in Indonesia with the usual Indo three card trick. They were initially warmly welcomed, spent lots of money and when they struck gold things turned out like a scene from “The Treasure of the Siere Madre”. Their former good buddies turned out to be a 100 times more treacherous than the Humphrey Bogart character, Dodds. Eventually they did get their money out, however it left them scarred and now have a rule they will not invest outside Australia.  I guess you could say it was something akin to what Resolute Mining has just experienced in Mail, except I don’t think Hedley was tossed in prison.    
• The Chair Robin Widdup has been round gold investing for many cycles and knows just how fickle these booms can be. He once said: “The less investors know about an investment the more keen they are to invest” Describing the idiot mania that periodically grips “investors”.    

I suspect the above adds up to very cautious, perhaps too cautions management. Their last deal was just last week where they put a tiny $1m into Medallion Mining (MM8) as part of a capital raise to get the Ravensthorpe mine up and running. It looks attractive with all the financials there to see on the MM8 website.    

With junior mining stocks you are of course swimming with sharks. However in the interactions I have had with Hedley over the years I have found him to be pretty good.  There is an episode of Money of Mine where you can hear him talk along with John Forward from Lowell.  

WATCH: Hedley Widdup features on Money of Mine • Lion Selection Group

With respect to the latest stock market minerals mania, the ASX gold orgy it would be all too easy to shoot your load and leave. Self-satisfied in the knowledge you have not caught a STD (Share-market Transmitted Disease). But what if there is so much more fun to had?   Everyone wants to be rich, and no one wants to be one of the inevitable thousands lined up outside the Clap Clinic clutching a sore and weeping willie.

Tough call.

(I think I should say at this point Scoonie has no memory of ever attended an orgy in the Roman sense. Nor has he any current plans to do so).

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.