Member Info for StarBright

I have posted previously about how institutional investors who become interested in UFO will likely look to take positions through a placing rather than by buying in the open market.

This has happened today at Thor Mining - another micro-cap miner with a few interesting projects. They have raised £750k by placing 88m new shares, about 5.5% of shares in issue, at 0.85p. Closing price (mid) yesterday was 0.9p so a discount of 6%. Let's leave the warrants for another day.

The 88m new shares have been placed with:

"· A London based specialist resources investor to invest £600,000.

· Artemis Resources Limited (ASX:ARV), a company with major gold exploration and development projects in Western Australia's Pilbara, of which Thor director Mark Potter is Non Executive Chairman, to also invest £150,000 in the Placing, following up on their initial investment in 2020."

The shares are trading this morning at 1p, up nearly 10% on the day *despite* the placing.

Thor's placing has been better received than that of Alien Metals late last year because there is more credible detail regarding the new investors. It's not a textbook example; it's a shame that the "specialist resources investor" isn't named in the release, although with 70m shares they are above the 3% level so a TR1 is due. The other investor "Artemis Resources" is a trade investor, and it is a clear positive that they are named in this way. The messaging is MUCH stronger than UFO's "strategic institutional investor" for whom we have no way of discerning motivation or intent.

Why is this relevant to UFO? Because it shows the likely mechanism that marque-name institutional investors will take. Rather than buying shares on the open market they are more likely to approach the company indicating their desire to come on board. If a subsequent placing is well judged in terms of pricing and messaging, it can be a positive for all investors. Placings are not always bad!

Some points for UFO investors to bear in mind:
- don't expect genuine marque-name institutional investors to build positions by buying in the market. The posts here about institutions "stake building" etc are unrealistic and should be discounted.
- don't believe anyone who tells you that no more placings are coming because the company is fully funded. Companies will always find a way to accommodate marque-name investors. Companies are on AIM to raise capital - it is what they do.
- don't fall into the LSE parrot trap of placing = dilution = bad. This is not always the case

TLDR; onboarding some real marque-name insto investors through a well-judged placing could be a big plus for UFO. Let's hope that Bill andTP can find some this year.

normbeef's point about recent movement in the US long bond is spot on. It has a profound effect on the relative attractiveness of all other asset classes. That's what we're seeing playing out here at present. But a steepening yield curve (higher longer term rates vs short term) is worse for gold than it is for silver, because of the many industrial use cases for silver.

DGR1980 - the 0.3p strike price for the warrants was set whenever they were issued (presumably years ago), NOT when they were exercised last week. It’s misleading and/or mistaken to characterise the 0.3p as anything other than a historic price.

I found that interesting too. Thank you.

Odd to post about it then...

The reason this happens has been explained time after time on this board and others. Do you understand it..?

Agreed. Max makes a real contribution when he posts about the company’s activities in this way. I appreciate it greatly.

Max - here’s an explanation of what happens when you try a dummy trade for 2m UFO.

The price you see on this site for UFO is derived from quotes posted by 6 RSP’s (MM’s in LSE lingo). Those quotes show the prices and sizes at which the RSP’s will transact. They are subject to a minimum size (“EMS”) which is 300k shares for UFO. For UFO it is common to see some RSP’s quoting for 500x500. The RSP’s are supposed to ensure that they will transact at their quoted prices for 90% of each trading day.

When you enter a market order (an instruction to trade at the market price) your platform polls the RSP’s for executable price and size. Some platforms are better at this than others, but that’s a topic for another day. If your platform is one of the better ones it will aggregate across RSP’s to show you a price at which your order can be filled. When you have been able to secure an online quote for 2m shares it is likely that this is because 4 RSP’s were on the offer at 500k size. If only 3 RSP’s were there your platform would have shown you NT, or whatever its preferred phrase is. It is telling you only that your market order can’t be filled immediately via the online process(es).

However, RSP’s are typically very happy to deal in sizes larger than those for which they offer online quotes, so your order for 2m shares might well have been filled with ease had you placed it as a limit order. As per my earlier post, you can’t conclude on market depth through dummy trades. They will only ever show you the depth available for online market orders. Don't pay too much attention to them...

If you had tried a dummy trade for 5m shares on Wednesday afternoon, you'd have got NT. However this was easily filled at a price just below the quoted 1.15p, showing that plenty of depth was available.

Of course napthman1 is this boards real resident expert in this area. He even knows how to get tomorrow's opening price out Halifax's platform! I'm sure he'll be along shortly to point out my misunderstandings and lack of knowledge...

Summary: UFO has issued £23k of new shares in exchange for £6k. It's entirely immaterial, but the RNS is a regulatory requirement.

As you were.....

It’s not quite that simple napthman1, for reasons alluded to in my earlier post. I’m not sure that I can explain it in terms you will be able to understand though.

I tell you what - here’s a chance for you to further to demonstrate the depth of your knowledge. When are market makers obliged to deal at their quoted price, and when are they not so obliged..?

Max - If you put in a real order at 1.15p for your 2m, I expect it would get hit pretty quickly. 5m filled across two tickets at under 1.15p on Wednesday...

Your dummy trades don’t reveal much (if anything) about market depth, because of the EMS and the limitations of the MM’s obligation. It’s the difference between flirting and converting - if you want to know you have to ask properly, and that means taking some risk.

Another RNS containing no new or material news.

Alien is becoming the corporate equivalent of those annoying/sad people who post pictures of every trivial detail of their lives on social media. Not a good look.

At last a sensible post...!

Yes, but also note: "Latest commit 4db7958 on 24 Sep 2020"

A lot has happened since then.

I think that is right. We have a highly (arguably for good reasons) control-oriented government right now. They don't want people doing their own tests without state control of the results. They don't want people making their own decisions as to what is and isn't safe.

Whilst this means we are unlikely to be buying tests from Amazon, it doesn't mean that the tests wont be needed. Just that access and conduct will be through the state in one form or another. It's not a disaster for ODX, just a change in the shape of the opportunity.

Wrong.

Well, first para is wrong. Last para is pretty much spot on...

MM's are (in all but the very short term) price-takers not price-setters. They neither need nor want to control the price, despite what you read on these boards every day. Their interests lie in finding the price at which both buyers and sellers are willing to transact. Their economics are driven by flow and by the spread, not by exposing their scarce and valuable capital to the vagaries of the market. They don't "want your shares", they want your trades because the combination of your trades and the spread drives their profitability - regardless of the price.

ODX has traded in the 57p +/-10p range since the beginning of November. WIthin this range buyers and sellers have been willing to transact, sometimes with one group setting the pace, sometimes the other. MM's have sat quietly and calmly in the middle of this activity nicking a little from the corner of every trade. Happy days!

You weren’t able to sell shares, or you weren’t able to close a spread bet?

At the risk of stating the obvious those two are not the same.

Good summary. Agree re patience.

Btw - L2 can’t be manipulated here in the way you suggest as UFO is SEAQ only, so no opportunity for layering or spoofing via orders.

napthman1 - I think you have little understanding and - like many on LSE - just parrot empty phrases every time the price ticks up or down. What you don’t understand you are too ready to attribute to malicious schemes and/or devious actors. But this is nonsense. The SP here does fluctuate as you would expect with a thinly traded micro-cap stock. When the price falls it is far more likely to be a simple case of more sellers than buyers than it is to be an outcome of devious scheming.

The different prices will relate only to the timing of option grants, specifically to the SP at the time the grants were made. Who knows what was going on back when these were issued..? My guess is that there were changes in personnel, and share options were being used as deferred compensation as no immediate cash cost to the company.

The key difference going forward is that new shares are issued when warrants are exercised (so some dilution), but not when share options are exercised - the shares have to be bought in the open market. In both instances it is prudent to assume that the shares will be sold after exercise. So - a dilutive issue followed by a sale in the case of warrants, a purchase followed by a sale in the case of share options.

Looking at the share options listed by BB suggests these aren’t a material concern.