Member Info for StarBright

Another one! As I said - a very common misunderstanding...

If the number of shares stays the same (ie no dilution), the percentage change in the share price will equal the percentage change in the market cap. The number of shares in issue makes no difference. No ifs, no buts just simple maths!

Newmont - dilution is an entirely separate issue, that we all hope/expect not to apply here. I have made the assumption that there is no dilution, as did you in your original post.

Perhaps read my 03:28(!) post again? I am explaining something that will be useful for you to understand.

Two common misunderstandings repeated endlessly on LSE are:

1. that low unit price shares ("penny shares") can somehow grow more quickly than shares with higher unit prices, and;
2. that a low number of shares in issue is intrinsically good as it somehow helps a share price to rise

These are two sides of the same coin (or error). What matters is market cap. If market cap rises by (say) 40%, then the value of ALL the shares will also rise by 40%. It doesn't matter whether there are 160m shares in issue or 1.6bn or even 16bn! The percentage rise in the share price - which is what matters to investors - will be the same in all cases.

NewmontOmi: “ Well if you have 10 times more shares in issue, any share percentage rise will be 10 times less for the same increase in market cap when compared to having 10 times less shares in issue with the same market cap increase.”

No!

Let’s assume that a stonkingly good RNS adds £32m to the value (MCap) of OMI:

Scenario 1: 160m shares in issue, starting sp = 30p. New sp=50p, rise is +67%
Scenario 2: 1.6bn shares in issues, starting sp = 3p. New sp=5p, rise is +67%

The number of shares in issue is irrelevant. All that matters is the change in MCap which will act proportionally across all the shares, however many of them there are.

It’s the size of the pizza that matters, not the number of slices. Homer Simpson had something to say about this!

Amazing how often this point is not understood properly....

There is a different/separate point about restricted free float. This *can* increase sp volatility, especially if there is a squeeze of some sort. However, changes in value are experienced equally by ALL shares in the end, so any such impact is transient only.

I agree that it’s too early to see correlation (as such) with the price of silver. But a precious metals rally will absolutely make life easier for those marketing UFO’s silver assets. Long may it continue!

I can explain it to you, but I can’t understand it for you...

You have a confirmation bias that occasional posters here are likely negative, and a tendency to leap into action to defend OMI against imaginary slights. I’m not at all negative about OMI - quite the opposite in fact. It is one of the holdings in my portfolio about which I am most excited at present.

If anyone needs to get real it would be you!

It’s not complicated, certainly not something to struggle with..! We just have different views over what is and isn’t priced in.

I think the market believes that the project is going well so the payment is expected. It is therefore “in the price”. If there was any prospect of the payment being withheld we wouldn’t have seen the sp double since the first payment was made!

You appear to think that the market is applying some level of discount to reflect uncertainty over whether or not the payment will be made, and that this discount will be unwound on confirmation that the cash has indeed moved.

I’m surprised your view is so negative..!

Thanks bhargav. Let me put the question in another shape. What discount do you think is currently “in the price” to reflect the possibility that the payment won’t be made?

My view is that there’s no such discount. The market is assuming that the payments will be made because the company/project appears to making good progress. In which case there’s no payment uncertainty discount to unwind.

If you think there’s an intrinsic upside to receipt of the payment, you are necessarily assuming that the payment is discounted for uncertainty. I don’t think it is. I do think there would be a downward movement if the payment wasn’t made though!

It’s not a positive or negative view on the company in any way. Just a view on what is and isn’t currently priced in.

Payment is irrelevant to sp. If you don’t understand that you shouldn’t be investing in equities.

This share is all about news flow right now. Good news in the drilling update is what we need, and there’s every possibility of that. Rising PM prices will be a tailwind on good news, but won’t in themselves provoke a re-rate.

MisterP - can you explain how the “Small number of shares in issue at OMI very much exacerbates the uptick each time.”?

If OMI had (say) 1.6bn shares in issue - each valued at 2.95p - why would it behave differently?

Cool story bro.

No.

Agreed. Precious metals rally today is good news as it should help with the marketing process underway for UFO’s San Celso and Los Campos silver assets. It’s a lot easier to sell businesses when they have tailwinds.

I suspect that there are plenty of investors here who wish OTP had identified that “bearish descending triangle” a bit earlier.

Is there any evidence that these much discussed short positions actually exist?

- No current (or historic) short positions have been declared to the FCA under the SSR - the regulation which requires disclosure of any short position >0.1% of an issuers shares. https://www.lse.co.uk/ShareShortPositions.asp?shareprice=UFO&share=Alien-Metals
- The shares are reported as unborrowable (because of holder profile / volatility / market cap) so there's no mechanism for implementing a short in any case. Even if the position-taker was going to risk not disclosing it under SSR.
- The major spread betting firms are only permitting the opening of long positions, and report no short positions held by their clients
- Market makers can in theory hold uncovered short positions but its not what they tend to do other than in the very very short-term, especially as the risks associated with the company issuing a good news RNS are obvious.

Watching this share is a little like watching a WWE bout. Every time plucky little UFO staggers to its feet and rises by 3% our resident rampers - resplendent in their glittery budgie smugglers and knee-high boots - jump on any volume from the top turnbuckle and smash it over the head with a folding chair. So the price very quickly falls back.

The pattern will continue until they’ve sold the positions they failed to clear through the recent spike/pump. In the meantime, they continue to provide value alongside entertainment as they seem notably well-informed about everything the company is involved in. It’s good/useful for LTH’s that this information is shared here.

ODX vs Avacta frequent posters are undermining themselves very effectively.

Capacity is the limit here, not orders. I don’t think they will announce orders until the capacity is in place. Not least because those looking to buy won’t confirm their orders until they know the capacity is in place.

Options are just remuneration in these companies. As Rob1967 says, they are there to be exercised. This is a non-story; it tells us nothing new about the company.

Option exercise RNS's always prompt posts on LSE from people who don't understand what they mean.

What does it say (six times...) in the document you linked? “Test kits” or ”test parts”?

"...

The supply of these new test kits is currently limited in the face of very high global demand and consequently it was necessary to contract for supply on an ex-works basis for product manufactured in China in order to secure the required quantity of product and prevent gazumping.

Where product has be sourced on an ex works basis it is imperative that this product is moved at the earliest opportunity to prevent it being sold to higher bidders.

In addition the rising rates of infection in the UK and predicted growth in cases over the coming months, has created an urgent need for these new test kits to support the testing programme in the UK and therefore Air Freight presents the only viable mode for moving product to the UK in time to meet the operational requirements of the testing programme.

In light of these factors the contract was awarded to Air Charter Service Ltd to meet the specific urgent need to transport test kits to the UK, utilising flights from Xiamen, China to London during October 2020."