Extract Group, the mining services specialist that remains behind after enX acquires Eqstra’s profitable industrial equipment and logistics operations, probably won’t get enthusiastically shovelled into deep-value portfolios — yet. Eqstra’s share price implies that Extract is worth about 25c in the market’s mind — compared with a hard net asset value of more than 120c/share. The cynical market valuation is perhaps understandable. The commodity cycle is at a delicate juncture and work for the mining services company is not exactly in abundance. At best Extract’s prospects, to the casual observer, might be viewed as binary. Aside from the commodity cycle, Extract — despite some slick rearrangement of what was almost R3.2bn in external debt — remains highly geared, with some tough legacy contracts to see out. The critical difference now, of course, is that the gearing is friendlier in that enX injects R1.4bn into Extract via a R101m placement of shares (giving enX 20% of Extract) as we...
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