Shaun Day, Greatland CEO gave an upbeat presentation to over 800 London South East investors. Watch the full video here.
A little while ago I found a high correlation of PRE SP with the FTSE350 Mining Index - it remains pretty high at +90%
All boats rise with the tide they say - so the FTSE350 MI, which today is up 12% since the Oct 7 low - should also pull up PRE.
The effect of rising supply uncertainty and prices for REs is also helping to boost the SPs of most RE companies in the last 2 weeks - RBW by 9.7%, MKA by 7.6% and LYNAS by 13.9%.
But PRE is up by much more than any of these - a whopping 47.5% gain since Oct 7 is quite astonishing in the absence of any real news. The FTSE350 MI rise and general uptick of RE prices and commodities indices should have taken PRE SP to just 87p or so. So why the huge jump to 105p?
Could be Cop26 in the offing, could be a hatching takeover bid - but my bet is on a simpler cause - I think there's a significant PRE RNS or annoucement in the immediate offing and there's a leak somewhere.....
Of course we might all be wrong - what if it's nothing more than yet another cycle of pump and dump?
Theorist: Thank you for spending the time to reply at length. You're right that there are many problems just looking at a day's worth of trades - particularlywith lags and order splitting. I'm reminded of Donald Rumsfeld's 'known unknowns and unknown unknowns', etc. You're also correct to say you'd need to collect quite a lot of sensitive and private data to be authoritative on the causes of share pricing movements.
However, since you mention the spread as a significant issue - have a look at the PRE spreads on Oct 14. They went from .6p at 10:48am to 6.6p just one hour later. When it was .6p (indicating high liquidity) O buyers piled in with a block of 16 buys for 20,000 shares. At 10 seconds to noon, a block of 12 consecutive AT sells drove the spread to the day's max at 6.6 with 40,000 shares sold.. I know MM's have to make their money on the spread, but I still find the "blockiness" of trading in PRE very odd, and the wild swings in liquidity too.
I do think a lot of PRE SP ups and downs have their roots in the current doldrum stage of PRE development, with ongoing absence of news or investment results.
While the cat's away - the mice will play.
Theorist/NBerzins: You have to agree that 14 Oct PRE trading breaks the recent pattern of daily small volume/low trading.
So, here's some basic Oct 14 trading stats for you:
258 trades and 0.75M buys+sells vol (we'll ignore all the ? trades)
Overall Buy/Sell ratio 100% - even Steven. AT Buy/Sell ratio is negative sentiment at 66%. O Buy/Sell ratio is positive sentiment at 120%
138 AT trades - 75 sell/63 buy. 109 O trades - 25 sell/84 buy .
75 AT sell trades were 75% of all sell trades - but at 160K, only 33% of sell vol
63 AT buy trades were 42% of all buy trades - but at 104K, only 27% of buy vol
25 O sell trades were 25% of all sell trades - but at 235K, 66% of sell vol
84 O buy trades were 57% of all buy trades - but at 277K, 73% of buy vol
So on the face of it AT trades accounted for only 22% of the day's Buy+Sell vol, but more than half the total number of trades. Whereas, O trades accounted for 78% of the Buy+Sell vol with less than half the total number of trades.
You can see that the 75 AT sells moved only 160K shares, but the 25 O sells moved 235K
Also that the 63 AT buys moved only 104K, but the 84 O buys moved 277K
Average AT sell size 2125 Average AT buy size 1654
Average O sell size 9384 Average O buy size 3306
Now, if we were working on the premise that PRE AT trading is somehow aimed at triggering O traders to buy and sell their PRE shares, then these AT sell trades are triggering 4 times their vol in O sells, but AT buy trades are triggering only 2 times their vol in O buys - which looks a lot like someone building a stake.
So, if that's not the case - can either of you offer some other interesting theories to explain 14 Oct trades, or is it all just chaos....?
Theorist :...or you could just download the PDF free from numerous academic sources and use the £40 odd you just saved to buy 50 shares in Pensana?
Wow!! - 600+ pages ....tell you what.... I'll read yours - if you'll read mine:
"Chaos Theory and the Science of Fractals, and their Application in Risk Management "
Tania Velasquéz, Copenhagen Business School
Have a look at the masses of AT trade sells over on ADVFN PRE - boy these guys are trying so hard to sell the SP down this afternoon - but the fundamentals seem to be holding up the offer price very well. Pretty substantial volume both sides today too - but the buying goes on - feel the pain shorters....
DP: some support for your views here, but in the longer run they see Pesnana, Raindow, Mkango as a fortunate sign the supply issues will be tackled:
NdPr Rare Earth Oxide (China) US$94,021/t vs US$93,480/t - Risk of substitution unless production ramps up.
Industry leaders fear that soaring rare earth prices may trigger a roll out of alternative technologies and minerals for EVs and wind turbines. Neo Performance Materials’ CEO Karayannopoulos has warned ‘that the industry should be very careful not to kill the goose that laid the golden egg.’
Automakers contributing 50% of global sales have stated they are limiting rare earth use. Roskill forecast rare earth demand to increase 22% pa until 2030, with $6bn of investment needed for new supply.
Conclusion: Automotive manufacturers are programmed to cut costs and thrift wherever possible. The problem as Tesla discovered is that powering motors without permanent magnets impacts performance and range. Rare earth prices have been expensive enough for some years to encourage substitution but the reality is that it rarely works as well as using the key rare earth oxides.
The greater risk is from a simple lack of availability but fortunately a new breed of REE processes and processors are coming closer to fruition such as Rainbow Rare Earths*, Mkango*, Pensana and others. *SP Angel act as financial advisor / nomad and broker.
Here's an interesting overview of RE supply issues in the pipeline:
China: have you seen what's happening to aluminium prices right now - up 25% since Sep 1? China produces more than 50% of the world's aluminium and some major Chinese producers have already had to scale back output. Aluminium broke the $3000 level this week for the first time since 2008 - and forward pricing is steadily escalating for the next 6 months.
Lag times for RE pricing/supply are probably longer, but the scramble to beat future supply shortages must surely already be underway and that's going to drive up prices pretty soon I'd have thought. Nd and Pr are already +70% on the last year, and the current market tightening is only just feeding through.
China is now 3 months into much the same sort of energy crisis as the UK - but for different reasons. A major drought has badly hit China's hydroelectric generation output at the same time as coal prices have rocketed, doubling in the last year. This is compounded by a combination of state control of electricity pricing, and country-wide state-imposed environmental targets for the amount of power used per unit of economic output (energy intensity).
Every province in China is now ranked by the Chinese government as red, yellow or white. White means the province is meeting its target for cutting its energy intensity, yellow means the province is cutting but not meeting its target, and red means they are actually increasing, not cutting energy intensity. These targets have real teeth - red provinces are now ordered to use less electricity for the remainder of 2021 - they are effectively having their output rationed.
Metal producers are particularly badly hit - they face a cut in production of 40%, and other industries in the yellow provinces 10 to 20%. China's steel production for the last Q 21 for example will be down 9%, cement 29% and aluminium 7%.
All of the light rare earth miners/refiners are in red provinces in the north, and all of the heavy RE miners are in red provinces in the south, so they face similar output restrictions in future unless they too improve their energy intensity. This may be one of the drivers for the recent plan to consolidate all of the 6 major RE companies in China into 2 mega-corps - one in the north and one in the south.
We can expect to see China RE supply hit by both shortages and price hikes in the short and medium term. China does have RE stockpiles, but these are primarily in the lower value RE's, not ND and Pr. They also plan a huge green switch to EVs in the next decade which will mop up home production and stocks of Nd and Pr.
All of which builds strong upward pressure on Nd Pr prices. Every price increase strengthens Pensana's business and economic case. Time is close to running out for HMG to get its finger out and secure the UK's RE supply chain.
Investment Bank Liberum sees significant upside in Pensana as one of only three UK Companies to meet the climate leaders gold standard. Pensana has been picked by Liberum as one of the five stocks, and the only small cap, that it considers climate leaders in the UK and Europe ahead of COP26. COP26 is approaching, and with it, a focus on different countries' ambitions to decarbonise their economies' Liberum writes in the note titled Strategy, Accounting, and Sustainability: Our COP26 top stock picks.
The note states that when breaking down net-zero targets into industry-specific guidelines, the gold standard is the Science-Based Targets initiative. Pensana is one of only three UK companies the bank selected as meeting the criteria for overall climate leaders in Europe. 'The Pensana site will be the world's first processing hub for rare earth metals and the first one located in a Freeport' Liberum writes of the Saltend project in Humber.
'What makes Pensana particularly interesting as an investment is not only its strategic position in the decarbonisation value chain and its location as Europe's preferred supplier, but the cheap market valuation so far' it states, compared with Lynas and MP Materials. 'As a long-term investment, we see significant upside for the stock going forward.'
To read Liberum's note in full:
Mumbles/Sundrum - as far as I can find out AHK is a largish (3000 employess worldwide) Knight-family-run tech services and consultancy outfit serving the metals and mining sector. Mainly offers testing, analysis and lab-related work. Has no company officers common to LCM, LCMG, Hypromag Ltd. So as far as I can tell not much involved in RE supply chain development. Companies House have no less than 13 limited companies registered to AHK, and it has been around since the 19C.
As for the Liverpool group bias - now there's s a group of individuals with fingers in many pies. A lot of the links arise from academics and researchers at Birmingham U and various spin-outs. There's LCM Ltd based at Ellesmere Port (31 officers in the last 5 years - 25 resignations), LCMG Group seems to be another holding company owned by LCM, Hypromag (RE Magnet Recycling based near Chester) has board members including Prof Allan Walton of Birmingham U, and has been granted funds from Innovate UK's RaRE project to investigate end-to-end RE magnet production and recycling in UK, including researching the requirements for a UK hydrogen decrepitation magnet recycling factory. Mkango have also invested funds in Hypromag in support of this.
Allan Walton and Professor Emeritus Rex Harris of the University’s Magnetic Materials Group , lead the only research group in the UK focussed on processing and recycling of permanent rare earth magnetic materials. Both are on the board of Hypromag.
UKRI has also awarded the University of Birmingham £4.3m to establish the RE magnet recycling plant, which will be located at Tyseley Energy Park (in Birmingham).
You can't beat high-ranking academics when it comes down to networking and contact management aimed at securing grants and funding - they've been immersed in research councils, govt quangos, grant-awarding sources , etc for decades. It's all a bit piecemeal though, and mainly targeted at EVs, whereas Pensana is much more integrated in it's approach - from a hole in the ground in Africa all the way through to recycling wind turbine binnacles, and it's far better located behind the Red Wall to receive investment and grants.
Anybody any idea why every morning this week there's been a flurry of tiny O buys - 15 or so all within 1 minute for between 2 and 40 shares?
Also there's an O trader dumping substantial sells (39K so far today) who's sell price is always to 3 decimal places. I know Hargreaves Lansdown broker service prices like this for ordinary punter (I nearly said dumb punter there - wash my mouth...) trades - any other nominees who do this?
Tony - re:falling wedge. I use MarketScreener for a couple of my holdings - PRE being one, and it's difficult to see anything but an accelerating fall on the dynamic interactive chart here:
Wind back the chart range setting from 200U back to 25U to cover the last 4 weeks and you'll see what I mean -what do you think?
See link for full story:
The government is aiming to eventually consolidate all its rare earth miners and processors into the two huge firms, one in the north and one in the south, the people said, asking not to be identified discussing a private matter.
The one in southern China will oversee medium-to-heavy rare earths, and the other in the north will control all light rare earths, the people said. It’s unclear when the merger will be completed.
Beijing has been restructuring the industry for years into six large state-controlled groups. By consolidating, it hopes to maintain its dominance in the production of the strategic metals, of which it controls 70%, as the U.S. and Europe look to develop their own production and supply chains and diversify away from China.
Several state-owned miners, including Aluminum Corp. of China, will restructure their assets, China Minmetals Corp.’s rare earth unit said in a filing to the Shenzhen Stock Exchange on Thursday evening. That’s the first step toward the consolidation into two giant entities, the people said.
Very slow trading today on tiny volume. Currently it's 4:1 sells:buys, Vast majority of sells are AT but they're failing to move the SP down - it's up on the start of day, despite the selling.
Daytraders: give up and find another playground - the MM's now seem to have a different view on where the SP should be headed to yours.
Tiny volume again, very slow trading - but it's 4:1 sells:buys. Vast majority of sells are AT, but the bid/offer is still up on the open, suggesting the SP is under positive pressure..
Day traders need to give up and look for other birds to pluck - at long last the MM's seem to have turned...
Tony: The conspiracy theorists must be gradually getting the message that Pensana is no early Christmas pantomime.
Very quiet trading today - less than one buy every half-hour. Looks like the sellers are aiming to get in cheap before the end of play maybe. Tiny volume suggests the rampers may have at last found better targets elsewhere - fingers crossed.