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Well, we all knew this was coming, so had ample time to get out, if it was a concern. The placing price might have been better if it had been implemented 2 or 3 weeks ago ,but it was always going to be at a discount and the actual discount to Frisday's close is not great. The only unfortunate thing is not so much that PI's were not given the chance to participate as in a rights issue, but it has been done via a placing where the institutional investors will flip the shares once they can make a quick buck. This wouldn't have happened if they had been able to find an institutional funder such as Orion, but I would have expected Haydn/Graham considered this and it wasn't a viable option. EML is still a very small company and that is the price to be paid for investing in such a small company at this stage of development. Personally I will take the inevitable fall on Monday to augment my holding here. Buy into the opportunity as opposed to looking at the negative side.
Let's hope so Lew
Westie
With EML & ARCM im hoping we have a fantastic year, commodities is where its at!!!
The placing is not a surprise as it was intimated at before Christmas. It does disappoint me it's at a discount and that us PI's haven't been given the chance to partake despite Hayden intimating to the contrary.
So whilst we might see a temporary drop on Monday, the value in our project will be seen after finance, when construction starts and beyond. The fantastic figures re our future potential haven't changed. A longterm hold still.
I said a month ago i would not begrudge a placing at 6. 5.75 is close enough. Now we can move forward and the share price can rerate. its only a small % of shares issued. Yes we would have all liked a small discount to 8 - but that is the city thats crooked not Emmerson. Not their fault. The placing was quick and clinical - take longer and involve PB - it might have caused more of a discount as more people had longer to short it - legal or not. Assuming they are going to use the money positively - this is positive. We have only been over 5.75 for 6-7 weeks. Like most others my ave is mid 4s. The path is now clear for a rise into double figures which is where we should be with the project at the current level of development.
There is one thing different about EML they told us about the raise back in December we knew it was coming, i am disappointed that PI's didn't get chance to participate however as HL said this would be considered. Im also uncertain about how I feel regarding the move back to AIM market. One thing is clear to me is that EML do have a chance to be very successful but we PI's must hold long term to see any real value out of this. There should be no need for further raises, lets get finance sorted and finally progress and see some real value for LTH who have stood by this company.
Lignum-ok , i do agree in what your saying there and in fairness they should have raised at 7p given the stock was trading at 8p..
The system is rotton but at least with this share they've been doing placings higher up.Hopefully there will come a point where no more cash raises are required and the company is self sustaining..
I'm also in horizzonte LV and have sympathy, sometimes investing in smaller companies feels like one kick in the knackers after the other, and yes PIs are treated as bottom feeders.
EML has behaved no differently than other companies, compared to some I thought the price of the raise wasn't too bad, but I guess that's conditioning for you. Companies must feel somehow that it's cheaper overall to go to people like Shart Capital (not a typo). So my beef wouldn't be with the company but the system.
What can we do as individual investors? The only thing I can think of is to sign up to things like primary bid and let the EML know we're signed up.
Good luck everynody and just like the previous raise this will soon be a distant memory and we should be sitting on a much higher share price.
Well Mike Bassets This is my opinion of what the fuss is all about:
The company had reached a valuation which was very well underpinned by its prospects - in SP terms let's take 7.5p where it was happily trading. Clearly leaks of the raise caused the decline to around 6.5p where all buying demand was quickly met with supply.
We now have a placing at 5.75p which on my reckoning means a loss to existing PI's of 7.5 less 5.75 = 1.75p = 23%. This is a transfer of value IE: A LOSS suffered by PI's with the lost value transferred to the placees.
This is Robin Hood in reverse. Money taken from the poor to feed the rich. Like RH going into the forest & telling all of the peasants that they must give some of their wealth to the Sherriff of Nottingham just cos that is the way it always has been & we must keep him happy.
To my mind this is a rotten system that we should all rail against. Man the barricades is what i say.
lignumvitae - that's the reality of AIM , this happens on most stocks. Not sure what your point is because the company has been raising cash at higher up share prices since floatation which is the way it should be (next one if needed i hope is at 9-10p)and we'll probably be able to buy at the placing price or slightly above so not sure what all the fuss is about?
Lignum- I think you have got the wrong end of the stick here. 5.75 pence is only a slight discount to the current share price - there is always an incentive when a company wishes to raise a 7 figure sum. More importantly, the £5m raised today is fundamental - spend that £5m wisely now, which is what the board intend to do, and you add significant value to the project, improving the excellent economics and making the project even more attractive from a debt financing perspective, as well as a strategic partner perspective. The BOD never suggested that this raise would be at a discount to the current share price - they stated that the 30-35% of equity needed to construct the mine would be offered at an increase to the share price and I have every believe this will happen. Sit tight and by the summer, this raise would have made perfect sense. Rome wasn’t built in a day. £5m when looking at the medium to long term value of the project is minuscule.
It beats me as to why so many PI's are so forgiving of effectively being robbed of value.
Immediately before a placing the owners of the company are its shareholders. Any fundraising that excludes existing shareholders other than by invitation to participate is a transfer of value from existing holders to new holders to the extent that the raise is at a discount.
What this is actually about is the effective DEATH OF PRE-emption.
This bookbuild took just two hours to complete on a Friday evening and so, to me, this demonstrates that the placees fully understand the process and the value that they are purloining from pre-placing holders.
All of this nonsense of new institutional investors buying into the investment case ignores the reality that clearly many of the placees are there only for the very short term and will flip there shares very smartly and, in so doing destroy momentum.
This negative effect upon the SP causes holders to question their value assumptions and this creates further selling pressure.
And the culprits? The advisers who place without receiving implicit commitment from placees that they are there for at least the medium term. After all the advisers know exactly who the placees who flip their shares are and, if they were to make clear that they are not prepared to place to persistent offenders, ie lock them out of participation then the practive would stop.
But, of course, too often the placees are clients of the advisers and so there is, to my belief a potential conflict system.
Private investors are the lifeblood of junior companies but are excluded from any real influence and ripped off every step of the way. In the case of extraction industries such as this this extends right through, in many cases to the final fundraise that enables a company to move into production.
Non pre-emptive placings nowadays are not the preserve of Aim or other small companies. They are becoming common in much larger concerns but, in those instances, the discounts tend to be very narrow and placings are sometimes at a premium.
So, in my opinion, PI's should not be so forgiving at being trodden upon as if slugs found in the garden