BY CHRIS BARTON
Heritage Gold is mining e-stock euphoria to help fund its gold and cobalt prospecting business.
The mineral exploration company has seen its share price more than double to a high 24c since it announced in December that it was investigating new investment opportunities in high-tech communications and other areas of business.
Managing director Peter Atkinson insists Heritage Gold is not changing its business and that the high-tech move is simply a way to raise funds for its mineral operations.
"We want to set up a structure to assist the flotation of companies and maintain a modest investment. It keeps us in minerals and provides benefits to our shareholders."
The structure Mr Atkinson is referring to involves finding a high-tech company, acquiring its shares and then preparing it for a New Zealand stock exchange listing through a subsidiary of Heritage.
The guinea pig for this bold experiment is E-cademy, an Australian software company set up a year ago to develop "distance education" software. Heritage plans to acquire the shares of E-cademy through its newly set-up subsidiary, E-analyst. Which is where things get tricky.
A week ago, Heritage directors distributed 55 million shares in E-analyst to Heritage shareholders in the ratio of one E-analyst share for every three Heritage. The cost? Nix - "the distribution will be treated as a dividend of nil value."
At present there are 73.6 million Heritage shares on issue plus 24.75 million options exercisable by March 1 at 25c. Although some options cheques did arrive last week, Mr Atkinson does not expect - with Heritage trading yesterday at 17c - that all options will be exercised. He estimates Heritage shareholders will get about 30 million E-analyst shares.
Next - after due diligence evaluation and shareholder approval - E-cademy assets will be transferred into E-analyst through a further paper share transaction. Sometime in the next few months the intention is for E-analyst to list through Barton Capital Corporate - a subsidiary of Australian listed investment bank Barton Capital Holdings.
If all goes according to plan, E-analyst gets an injection of capital to expand, four E-cademy directors see a paper fortune grow, Heritage shareholders get a free e-stock ride, and Heritage itself holds the balance of whatever is left over - "a modest equity" - from the original 55 million issued shares. Neat.
There are, however, a few questions. Like who were the lucky few who got in on a five million placement of Heritage shares at 10c a share, just prior to the E-analyst distribution? Mr Atkinson said he did not know who the shareholders were and the placement, which raised $500,000, was for operating costs, existing mineral projects as well as new business opportunities.
There's also the question of just what is E-cademy (www.e-cademy.net) and what are its prospects for generating revenue. Distance learning via the internet is not a new concept. In fact, anyone with a web site and a bit of nous can set up a streaming audio and video session to deliver a lecture around the globe.
What sets the software apart, according to E-cademy director Wayne Johnson, is its speed in delivering streaming video content over dial-up connections and its database technology. The latter allows the sender to monitor who is tuning into the lecture and provides interactivity - allowing lecturers to ask questions online and see how well their students are understanding their teaching.
Mr Johnson also points to analystbrief.com - an adapted version of the software for business use. It allows shareholders to virtually attend annual general meetings via the internet, cast votes and ask questions. The software is due for release next month.
Mr Johnson said listing via Heritage was much faster than the six to nine-month process of a full front door listing and avoided many of the complexities of capital raising and issuing a prospectus. An Australian Stock Exchange listing is expected to follow the NZ Stock Exchange's.
While Heritage's Peter Atkinson agrees much would need to happen - such as changing NZSE rules about what constitutes a shareholders' meeting - he believes analystbrief.com could transform how sharemarket investments are made.
He also sees analystbrief.com technology as a way to end selective disclosure of company information by making details available to investors on equal terms. Analyst briefings, for example, could not only be broadcast live over the internet, but also archived online for playback anytime.
Mr Atkinson is also philosophical about the potential of e-stocks, pointing out similarities between high-tech and mineral exploration.
* Chris Barton has (unfortunately) no links with Barton Capital.