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Spitfire Oil Ltd

  • BY: Andrew Hore |
  • POSTED: 13/11/2008 |

Griffin Mining has acquired Citadel Equity Fund’s 39.2% stake in Spitfire Oil for £2.5m.

Coal to liquid technology developer Spitfire joined Aim in July 2007 at a valuation of £25.5m, when it raised £10m at 60p a share. These are the shares that Citadel is selling so it has made a large loss on the investment. The latest transaction is at 15p a share. The current share price is 10.5p, which values the company at £4.47m.

Mladen Ninkov and Roger Goodwin are both directors of Griffin Mining and Spitfire Oil.

There is no compulsion on Griffin to bid for Spitfire because it is a Bermuda registered company and not subject to Takeover Panel rules. Ninkov paints a picture of the strategy behind the purchase of the Spitfire stake by Griffin but it is difficult not to think it had more to do with a large stake coming on to the market and how that would have affected the Spitfire share price. The payment won’t make much of a dent in Griffin’s cash pile.

Griffin, which mines zinc in China, argues that Spitfire will help to spread commodity risk.

Spitfire intends to develop the Salmon Gums lignite deposit in Western Australia and to convert the lignite produced into fuel oil. There is an inferred resource of 500m tonnes of lignite. It is estimated that 69 litres of oil can be produced from one tonne of the lignite.

Spitfire had cash of A$14.1m at the end of June 2008.

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