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The only explanation I have for the recent share price action is that the company knew there was a substantial willing seller, and they jumped in with the buyback to take advantage of the liquidity.
I think the seller is still around, and I'm waiting for some very big sells to print at about 39p to balance the book.
After the seller has cleared, I'm guessing that SLP will move up to at least the recent highs. The PGM basket price is improving all the time, and the business is performing very well.
Did the company know there were willing sellers? I don't honestly know if that is market sensitive and so by announcing the intention to buyback shares, which is nothing out of the norm for this company, it's acted as a brake almost on the share price. Willing investors aware of the improving fundamentals may perhaps hold off buying until the buyback is complete.
I cannot understand why anyone would participate in this particular buyback when it's plainly obvious SLP are undervalued compared to other cash-positive, profitable precious metal companies like AAZ and TSG.
Hi Shareminator!
Well, I can't be definitive, but I reckon the broker snagged more than a million shares on just the first day of the buyback, most of them at a decent discount to 41.68p.
The only way I can make sense of the board is that either there is a massive delayed sale still to appear, or that there has been heavy selling in South Africa, and the shares are flowing here.
All a bit of a puzzle, to be honest.
Proposed Share Buyback
Sylvania Platinum Limited today announces that the Company intends to acquire up to 4.2 million ordinary shares of USD0.01 each in the Company ("Ordinary Shares") under a share buyback, under the terms and authority of the Company's Bye Laws. The Company is offering to acquire these Ordinary Shares at a price of 41.68 pence per Ordinary Share representing the 30-Day value weighted average price ("VWAP") as at the close of day on 20 September 2019.
The Company has instructed Liberum Capital Limited ("Liberum") to acquire up to 3.0 million Ordinary Shares in the Company and has offered to buy back up to 1.2 million Ordinary Shares from employees in the Company, excluding Directors.
The Programme will run from the date of this announcement to 27 September 2019. The maximum number of shares that may be purchased pursuant to the Programme is 4.2 million shares, which represents approximately 1.45% of the Company's issued share capital. The share buyback will be funded from the Company's current cash balances.
It is intended that the Ordinary Shares acquired under the Share Buyback Programme ("the Programme") will be used to fulfil the current shortfall in shares held in Treasury to cover the bonus share awards and options of 4.2 million shares, which vest over the next five years.
Given the limited liquidity in the ordinary shares, the Company may not be able to benefit from the exemption laid down in Article 5(1) of Regulation (EU) No 596/2014, whereby the Company would not purchase shares at a price higher than the higher of the price of the last independent trade and the highest current independent purchase bid on the trading venue where the purchase is carried out. Furthermore, a buyback of ordinary shares on any trading day is likely to represent a significant proportion, or possibly all, of the daily trading volume in the ordinary shares on the London Stock Exchange (and is likely to exceed the 25% limit of the average daily trading volume as laid down in Article 5(1) of Regulation (EU) No 596/2014).
There is no guarantee that the share buyback will be implemented in full or that any repurchases will be made.
I wonder if they don't make enough repurchases what the next step will be? 41.68p looks too cheap to me, not much of a premium to the current price nor does it factor in the basket price flirting with $1700. 45-50p is coming in the next month or two, patience is all that's required.
GLA
Thanks for link to article Rax. I used to read Dominic Frisby's articles on gold a lot and not sure why he dropped off my radar. Good to see he's still writing articles on precious metals.
Shareminator - translates into a SLP PGM basket high too. With Rh $5,400, Plat $950 and Pall $1,650, basket price is a couple dollars over $1,700 per Oz.
Article regarding platinum and what factors will encourage a price rebound
https://moneyweek.com/515211/platinum-price-make-a-comeback/?utm_campaign=money-morning-newsletter&utm_medium=email&utm_source=newsletter
Yesterday was a fantastic buying opportunity. Today still looks ridiculously cheap.
Platinum at 950
Palladium at 1650
Rhodium at 5325
Rhodium price now at new multi year high of $5100 according to Johnson Matthey price tables at 0930 New York fix.