The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
More on Atalaya ... I said yesterday, "The first couple of weeks (after consolidation around 100p on 21st October 2015) look rather chaotic, on 2nd November the price was 69p".
I've delved a bit more and it seems there was another explanation for the chaos:
"Ashwath Mehra's Astor Management AG is suing Atalaya Mining for €15.9 million ($17.5 million) plus damages over payments linked to Emed Mining's 2008 acquisition of the Rio Tinto copper mine in Spain, the London-listed miner told investors on Monday November 2.
Shares in Atalaya – formerly Emed Mining – dropped by as much as 17% on the London Stock Exchange after the miner announced the claim."
https://www.metalbulletin.com/Article/3502576/Mehras-Astor-Management-sues-Atalaya-Mining-for-175m-over-claim-linked-to-Rio-Tinto-mine.html
As far as one can reasonably tell, this lawsuit was totally unrelated to the consolidation.
Just to add, JM in AGM presentation earlier this week ... discussing no short term need for main market listing ... singled out Atalaya as one of two companies for which he reckoned AIM is working well.
The other is CAML (Central Asia Metals)
Glencore may not come back, but there seems 20% lucrative free float to be mopped up on lower price with out exacerbating the SP.
Not sure that the low share number psychology is working for me - my lowest holding is for 52 shares - and that is one I am looking to actively increase.
My head seems to focus mainly around total value (i.e share price X number) - when they get below about £1000 I start to get a bit twitchy. This is possibly why I was relatively indifferent to the share consolidation, is it makes no difference to the overall value.
Neither of these applies to HZM though.
OK thanks
I’ve never heard of that before but I can see that the psychology of a share price is a strange and wonderful thing.
Small investors (e.g someone with 10,000 shares today or 500 shares after consolidation) might feel Psychologically that it’s hardly worth hanging onto 500 shares? Hence they sell ……
Just something I’ve personally come across in various share groups, you don’t need to explain to me the £ amount is the same, I Know & I have also explained this to numerous people in the past.
"I believe it will unfortunately wipe out smaller holders ‘
How will it wipeout smaller holders Lawrence?
Hi Webbo: "Can anyone give me a couple of shares that have risen after a consolidation, as I can give you loads that have dropped heavily."
Well here is one. Atalaya (ATYM) did a consolidation in Oct 2015 and seems to have fared quite well since.
The reasons they gave in RNS, and the numbers involved, appear strikingly similar to what is being suggested for HZM (ATYM 1:30 from 3.5p as opposed to HZM 1:20 from 6.7p)
"2015 has been a very exciting year for the Company principally through the re-establishment of production at the Riotinto Copper Project. The Company will now be focusing on ramping up production and becoming a significant European copper producer. Accordingly, in order to better reflect the prospects for the Company and to help reinvigorate its presence in the capital markets, the Board is proposing a share consolidation and change of name."
"The Company's current issued share capital consists of approximately 3.5 billion Existing Ordinary Shares. The number of shares has resulted from a number of capital raisings since the Company's incorporation in 2004 in order to fund its operations, including most recently the issue of approximately 2.1 billion shares to raise capital to help fund the development of the Riotinto Copper Project and capitalise certain borrowings from cornerstone Shareholders. The Board considers that the current issued share capital is considerably higher than similar sized companies on AIM and the TSX and it believes that this affects negatively investors' perception of the Company. Accordingly, following consultation with certain of the Company's Shareholders, the Consolidation is being proposed in order to reduce the number of Ordinary Shares that are in issue to a level more in line with comparable AIM and TSX listed companies. The Directors believe that the Consolidation may improve the liquidity and marketability of Ordinary Shares to a wider range of investors, including institutional investors. The Board is hopeful that the Consolidation will make the Ordinary Shares a more attractive investment proposition."
"At the EGM, the Directors are inviting Shareholders to approve a Resolution which will authorise the Consolidation. The share capital of the Company will be re-organised by consolidating all of the issued and unissued Existing Ordinary Shares on the basis of one New Ordinary Share for every 30 Existing Ordinary Shares."
The consolidated share price on 21st October was about 100p (up from 3.3p). The first couple of weeks look rather chaotic, on 2nd November the price was 69p, then on 1st December it was back up to 95p. Then there was a gradual increase, the price broke through 200p in January 2018 and is now 370p.
I'm getting those numbers from the chart at https://atalayamining.com/share-price/ but it's a bit of a sketchy chart and probably not very accurate. If anyone can give a more detailed and informed account, it would be interesting.
I would have preferred 10:1
Fulmar29, I have to agree with you with regards share consolidation, I had a bad experience with REM now KDNC and the only purpose I could see for it was to hit investors for more money down the line (which they did lol)
If you look at URU who did 1000:1 which after consolidation gave an SP roughly 50p & now trading at £4.50 it’s not always bad.
HZM are not working on a share consolidation for the purposes of raising money (Extremely Positive) as we are now Fully Funded with huge Contingency built in having just raised $633M for complete mine build & turn key operation, so I do believe it will be extremely positive for the SP, I believe it will unfortunately wipe out smaller holders and lead to an illiquid share but it will place shares in stickier hands which helps investors who are here for the long haul and a higher share price.
I don't see the point of a consolidation now after the money has been raised.
The share price is relevant to results and profit and the Mcap will find its true value. If this is penny share or £ share makes no difference.
Webbo-they have told me historically that they want more North American investors-they know (and it is widely recognised) that US investors do not like penny stocks. That may appear irrational to us Brits, but it is a fact. They have also said they want to see more trading on the TSX. So I guess one reason is to attract more US institutions Personally not worried about the consolidation-but I do note your point that it may make it easier to dilute us again at some point.
It's all just psychological. People have a habit of looking at share prices rather than market caps, in reality the share price is irrelevant as it is the mkt cap, balance sheet, and profits that make a difference.
So given it is all about psychology which statement sounds riskier:
'I am putting £100,000 into a company that is 7p a share, expecting it to rise to 21p'
Or
'I am putting £100,000 into a company that is 140p a share, expecting it to rise to 420p'
Even people that understand the fundamentals of business are influenced by gut reactions. Ask the above question to a non investor and see what they say.
been involved with and observed many consolidations-all dropped a bit initially (MMs play on the insecurity) and some spiraled downwards -others rallied and a few multi-bagged-hopefully this will do the latter.Still a Verm JV for me
My view is that it depends on the reason for the consolidation. I have seen a company effectively forced into a share consolidation following a "fire sale" fundraising round where it was even debatable whether the company survived - that one carried on down (back into sub £1 territory).
With HZM the dilution in the fund raise was higher than many would have liked - but the fund raise was to pay for the project getting built, rather than just hemorrhaging money to survive.
20:1 does seem quite extreme though - I wonder if this was picked to ensure that the sp remains above £1 even if there are problems along the way. At the current so, after consolidation the price should be around £1.50, which gives a but if a buffer against any (hopefully temporary) declines.
Guessing they wanted to overcome the hurdle of being deemed a 'penny stock' - sub £1 - though the term is applied very differently in reality.....ie high-risk, more speculative type investment etc....
Makes little odds TBH.....
just a question. why are we going 20:1 which will leave 190m shares in issue. Would have been more comfortable with 5:1 leaving 761m in issue or even 10:1 at a push. More chance of market manipulation and also the dreaded dilution further down the line.
Can anyone give me a couple of shares that have risen after a consolidation, as I can give you loads that have dropped heavily.
If we are going to the FSTE main market like some people have suggested. AAL have 1338m shares in issue, BP have 19574m shares in issue. LLOY 69747m shares in issue etc. So I don't see it just yet.
That's my take, right or wrong. Any constructive feedback is welcomed.