Caldecott. The reason i get so frustrated with your daily broadcasts of impending doom is that you are blinkered to any positive outcome.
For example, lets take your theme this week: Your view that the company is about to do a capital raising. You naturally assume this is a negative and seek to remind/scare investors with your usual rhetoric of 'founders'/30 years/the local word on the street routine...
Taking this weeks example. There is a quite plausible scenario that would Â see a placing as a major positive.... for example let say KLG can / has found a new local JV partner. There are various ways the partner can enter. The easiest to envisage is a scenario where they take the place of freeport and earn into 75pct of the operating company (ksk).Â
Alternatively seeing how cheap the holding company is they could look to mount a takeover. However the risk of that is that a tender offer (at say 5p for arguments sake) fails as long term shareholders (im including myself there as 4 years is a long time for me) refuse to give up the shares for that price.Â
Â The half way house (and the option i would negotiate on) is to agree to a JV along freeport lines but to insist on a large placement at KLG (say 20pct of the share capital).Â
As a JV partner you then get 80pct of the KSK (75%+25%Ã—20%). Whats more your 20pct can be bought at a discount to the current share price but be instantly in the money on the annoucement of the transaction (as KLG which is arguably trading way below fair value rises very sharply to reflect new partner and renewed prospects)
By constantly talking down the stock you are naturally increasing the dilution in that example.
Again just my thoughts but plurality of thought, rather than a one sided discussion should lead to better informed investors and perhaps new fresh blooded shareholders.
The other thing to remember is that you knew from the grapevine sometime in the second half of last year that freeport had pulled out of the JV. You told us that. And that is the logical moment that VSA would have started getting the report together.
'The notion that the report was written last autumn doesn't come across a plausible considering all the things that have happened since and all the updates to the report that would have been needed.'
But that is exactly why I think it was written towards the end of last year and has been sitting on a desk instead of being published. All of a sudden the word has gone out to publish it and somebody forgot to revise or update it.
While I think about it the annual report normally carries a statement that the company has enough cash to last for the next twelve months. If I am correct about the $500,000 balance at beginning of February management will not be able to make that statement by the time the annual report is written (the AGM is usually held in June and the annual report is circulated in May). This may be another factor prompting management to make a move sooner rather than later to raise more capital and would explain why the broker article appears now despite that there really isn't anything newsworthy in it.
Typo in my previous post. Should be money in the company, not company in the company.
I recon management didn't need this type of report until the company was within six months of running out of cash and with no new partner in serious discussions. The clock is running. Private placements take time to prepare. The fact that the share price lies 40% below the TSX-V minimum issue price means that something has to be done to lift the share price sufficient to satisfy the TSX and to attract even the most bullish investors to put more company in the company. I am not a trader and let my bank take investment decisions so I am not used to small cap company tactics with retained brokers. A complete novice. So I come at this thinking aloud and willing to be corrected by anyone who can come up with something plausible. The notion that the report was written last autumn doesn't come across a plausible considering all the things that have happened since and all the updates to the report that would have been needed. The only thing that makes sense to me is that management have tried but failed to attract anyone into serious negotiations and are now facing a cash crunch within a six month horizon and knowing how much time it takes to prepare paperwork and tick all the boxes need to get something going. A broker article penned by a compliant firm seems to be the best they can come up with. I don't deny that there are positives in the VSA report, not least that someone has had a stab at resource delineation and made an in-house estimate of what it might be worth.
Long term holders know that on a normal day you can sell 10000 shares on line and often none at all. The recent churning has made the stock much more liquid but once the selling starts it will be very hard for those not quick enough to dump shares in quantity.
'Do you agree that the interest is positive as its supporting a growing SP?'
The can't be many readers of this board who aren't under the impression what's going on is pump and dump. The support for the sp is welcome but what happens when the traders take a reasonable profit and move on?
It puts the long holders in a difficult position. Should they hold on for the retrace or beat the traders to the sell button and buy again at the bottom?
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