Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
If they're not going to dilute further then they should come out with it. If there's anything else, even news on the Nasdaq front it's best to let things die down and keep shtum for a week. Sales will be fulfilled early next week and things will die down. If he pops up now he's just whipping it all up again.
As long as this doesn't turn into another Bidstack situtation it'll all be good. Bidstack whipped up a whole load of people to support them then when things turned sour it got very ugly. Doesn't help the SP, doesn't help investors. It's just not worth it.
Nobody commenting here did the full DD on Pluto and the deal. I did some digging but it's incomplete. So nothing anyone here can say comes from any position of knowledge unless they have something to do with either company.
It just needs time and no more surprise dilutions. Get to the weekend, let everyone have the weekend off and on monday things will have calmed down, the shares will have gone and things will have bottomed out.
I wouldn't expect a rerate based on whatever BTC's done this week. Best to assume that damage is done. We will hopefully not drop if BTC retraces, and any other shenanigans notwithstanding I would be unsurprised to see this drifting up from mid-week. If gwe get a NASDAQ announcement a week or two after that should be fine. Worst thing that could happen would be a Nasdaq announcement while this is all fresh in peoples heads.
From what I've seen across boards and socials it seems a lot of investors are upset about different aspects of the last raising. Some are taking profit or otherwise reducing ARB positions and allocating some to MARA, RIOT etc. Add to that people selling yesterday to cover their PB discount buys and tomorrow's share issue general sentiment looks more bearish than bullish. You can see it in the way the RSI behaves on the daily and hourly. We're caught in a channel between 231 and 280. If we can hold above 231 and there are no more surprise dilutions sentiment should return some time next week. I'm no longer buying and will reduce my position slightly above 280. Based on BTC sentiment and the stimulus we really ought to be challenging 290 rn. People make mistakes, I'm sure the BoD will learn from them.
Doesn't look quite fully formed from here. RSI is low but the timing isn't quite optimum for a reversal. I'd prefer to see things trundle along till next monday. Then we can have a breakout and head back towards 280.
I said I'd try to post more positive stuff, so here we are.
Looking at the daily chart we appear to be touching the 20MA. If we can hold through the 11th, I imagine there'll be some upward price pressure from early next week as the placing damage dies down subject to BTC not pooping the bed. Anything above 280-285 is an indicator of a resuming bull trend. Anything below 225 is might be brown trowser time for some. Above 285 is probably worth buying. Below 225 may be worth buying. If we see a drop through the 20MA today or tomorrow I imagine thursday morning's issue will push things lower, after which might be time to buy for those interested. If all goes well we may see a retest of 300 in a couple of weeks providing any surprises on the way are only good news.
I keep some powder dry. Still updating my own investment thesis in light of recent events. Until I've reached a conclusion I'd be tempted to scale in from 305 up or 210 down. HTH, GLA
Also just to add. If people don't like what I'm saying feel free to filter me. Contrary to what people claim I'm not someone else who's been banned. Long time lurker but only started posting recently. As I said in another thread I tend not to post in the good times and think it's valid to raise and discuss concerns. If this makes you unhappy you're better off filtering me out, but then you'll miss out on the analyses I've committed to posting in the good times too. GLA.
I also get that I'm posting fairly negative stuff here. I'm unfortunately not a happy clappy worshipper. I think it's legitimate to voice my concerns and discuss them. I tend not to post in the good times because there isn't much to add. For the benefit of the board I'll share my more positive research on ARB, ZEC and Pluto's holdings when it starts moving up again even if I've sold out by then. I think that's at least fair.
@Wassap yes I'm heavily invested. I'll write to Peter today, the nature of the response I receive will determine whether or not I continue to be heavily invested. In all likelihood I will reduce my allocation because being affected by these actions means my position is at best too big.
Dilution isn't 3%, it's closer 10% with the last 8 weeks or so. We had over $50 million in shares announced in a day. That's insane. I'm not concerned about an individual dilution. I'm concerned with a pattern of dilutions, surprises and what looks like from the outside frankly poor governance. If a company is profitable but cannot keep the lights on without diluting investors it's badly run. Don't be blinded by the fact that BTC is going up. It will go down too, and at that point if overdiluted selling will become more difficult.
Peter talked about the long term in this video. He will know the long term includes crypto bear markets. If he keeps diluting the company will fare worse when they come. Placings are not the only way to raise funds. They literally have a stake in a DeFi business. How they can not look at staking or DeFi-based funding is beyond me. They wouldn't lose their crypto going down that route but would still get the money.
It's probably people selling shares in advance of buying them back at the discount from PB. After that it'll be suppressed due to the new shares being issued on the 11th. This is a consequence of a poorly executed raise and dilution. The price will go up when all this calms down, but without the dilution we'd probably be enjoying higher prices now followed by higher prices later.
Yesterday's flash sale was additional shares to maintain their stake. They didn't have to notify because the dilution was below voting requirements. The Texas money was voted on at a recent EGM, not the prior AGM. The prior AGM vote was about the initial stake in Pluto with the ability to keep up with dilution. The way things were worded suggests a possible interpretation by Argo that they don't need a vote to dilute to keep their 25%, while some investors would argue the vote was for the purchase, which included the facility to raise extra money to maintain their 25%.
The issues aren't the votes themselves, it's the $54.5 million of total placings announced. Some of the money will be used for "Working Capital" - this means they have a negative return on capital employed, or rather are running out of operational money. They will have almost certainly known about both placings when they sold their shares earlier.
There are red flags and sirens everywhere with this action. I firmly believe this is just from poor advice, not malice. This is the kind of behaviour I expect with an AIM stock, not the LSE. Even gold miners sell some of their holdings in bull runs to fund working capital. They should not be diluting investors to pay for things like salaries and office toilet roll. Having said that if they come out with a proper plan to tell investors how they're going to raise money in the future and how much then that goes a hell of a long way towards putting things right. Surprise dilutions cannot be the norm.
The crazy thing is they don't need to sell their crypto to put it to work. For people in the space they seem to be oblivious to DeFi staking and loan raising. They could've had the money in under 15 minutes through DeFi loans against some of their BTC, then paid it back later to sell the BTC when ready. Typically only distressed businesses issue placings at discounts which is where my point about red flags comes from. Crypto mining companies burn cash, they seem to think diluting investors is the best way for them to raise money to keep the lights on. For them it's probably right. For investors not so much.
I'd prefer to believe this is just following poor advice than anything deliberate. It's fast moving, they clearly don't want to sell BTC and are doing what they can to avoid selling it. I can completely understand the desire given where BTC is headed but it's ill founded. They will make crazy bank holding on to BTC till closer to the top, but the company will become so diluted it'll be homeopathic. Unfortunately screwing over PIs with placing after placing is just not the way to run a business. It needs to be balanced. They do at some point need to sell assets or access that $100 million credit facility they told us all about, because right now this month alone we're well on the way to being the $100 million credit facility.
Issuing shares for "Working Capital" is an AIM-grade move. Whomever put that forward as a serious idea needs to be fired right now. It's effectively taking from investors to buy (or in this case not sell) BTC. I understand the issues around selling BTC but the dilutions are going too far. There needs to be a balance between dilution, BTC sales and debt. People here are acting as though dilutions are free money. They are not.
I agree with Mysteryguy that it needs to expand, not convinced diversification really means anything in this space (and I've been in it professionally for a very long time). All price action in this space is at the whim of BTC anyway. Nothing ARB do in this space will protect them from BTC losing 80%+ of value.
They'll need more capital to build the Texas facility. If this is to be funded through raises they need to be upfront about it, lay it all out and put it to a vote. That way investors aren't being diluted to nothing for no reason. At some point BTC will crash and the market will be flooded with shares nobody wants to buy.
The comms are normally on fire but this time was handled terribly. Peter needs to answer the uncomfortable questions about this, honestly and quickly. His video didn't touch on any of the awkward questions about private placing money, how much he knew when the directors sold or any of the other questions if ignored send the wrong signals.
It's not diversification if a crypto miner (price action dependent on bitcoin's) buys into a crypto investment (price action dependent on bitcoin's) incubator.
Diversification would be if they received shares in a regular online payments firm in exchange for helping them work with crypto payments. This is peak ICO BS territory. Every dilution is stealing growth from existing investors. I know ARB don't want to sell their crypto now when they could get far more for it later. That doesn't justify an endless sea of placings eroding value. We're multiples of what our competitors have in terms of issued shares already. When Bitcoin crashes (as it always does) these shares will flood the market. Peter knows all this but they do it anyway. He probably knew about these issues when they put out the vote for the GM. He probably knew about these issues when him and the other directors sold their shares recently.
I'm one of those people who will object to dilution generally, which is why I checked out the numbers. My main concerns with my sums were around that first lot calculation being based on current shares rather than current plus new but the difference is about 0.01% (0.96%/0.95%).
Dumping the full 12.5 mil-worth in one hit in a BTC low would probably have a bigger impact from news rather than actual dilution, but it would make sense to split into chunks of say, 1% for a similar impact to this thursday. 3 further dilution events of around 1% a time would then seem reasonable to me. Tying dilution to contractual milestones that contribute to returns looks shrewd to me.
Just checking some working out. I'm sure I'm wrong somewhere. I wondered if anyone more competent than I could confirm or correct.
Today's RNS talks of 3,497,817 being issued, bringing the total to 368,361,690. The 3 million shares are valued as equivalent to US$5 million, which I work out as about $1.43 per share. The RNS states "up to a further US$12.5m in shares at a predetermined price being payable if certain contractual milestones related to the facility are fulfilled". If we assume the same price (in the absence of any other information) that comes out at roughly 8744542 shares. I say roughly, because there's a decimal point so the price is almost certainly wrong.
The first lot of shares works out at a dilution of 0.96% (3497817/364863573). The remaining (if it's the 8.7 mil) would come to a dilution of 2.37% (8744542/368361390).
Do those numbers seem reasonable to smarter people here? I'd be unsurprised by a minor dip on thursday but I see no major cause for concern. I don't see 2.37% massively impacting share price as long as it's suitably spread out.
@mornington-oz gets it - even at 150p it's 50 bagged. 40% Pullbacks are the norm in a BTC bull run. Without pullbacks it'll just blow off early. ARB will be pulled back by drops and boosted on BTC runs. Long term anyone getting in even tomorrow will be fine. Plenty of profits for everyone.
If you're finding it emotional your position may be oversized. Consider selling a proportion off so you have some powder to re-enter or maybe have your original capital back. If you make a slightly smaller killing but sleep a lot better it's probably a good move.