Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I think the negativity is on time scales.
I was certainly hopeful phase 2 would have been on its way to being done, the share price would be rising rapidly and discussions of a buyout would be flying around almost regardless of their realism etc.
That's a bit different to "Phase 2 will probably happen, eventually, but Agnico look like they are going to spin things out, perhaps especially with regard to phase 3, so we could be here another decade".
Which is admittedly why patient big guys tend to win. I can do the argument for Omi being worth £1, £2 etc. But in the current world, if Newmont & Agnico went "40p~ for you lot to clear off", I expect the shareholders would take it like a shot. At this point possibly even 25p, which is a blatant steal.
Its a bit complicated but to have a go at the theory. (What actually happens is even more complicated).
Stock exchanges act something like continuous auctions. To get a price, someone needs to be buying and someone needs to be selling so the share changes hands. I.E. you both agree to buy and sell at 8p, then the share price is 8p. (In practice, since market makers facilitate the transaction and need to make money, its more like someone has to agree to sell at say 7.5p and someone buys at 8p, with the market maker making the cut in the middle).
You can think of buys and sells as stacks. Because lets say you want to buy a share. You'd be happy at 8p. But also at 7p, 6p, 5p etc. And if you wanted to sell, you'd be happy with 8p - but also 9p, 10p, 12p etc. Since shares are discrete, you have to push to the front of the queue. If you really want to buy, there's no point saying "I'll buy at 7p" say, if sellers are offering 8p, and someone else is buying all those shares at 8p. You have to push up and offer 8p to get some. (And vice versa for sellers). To get to the front of the queue you need to offer the highest price to buy - or the lowest price to sell.
So in this case, I suspect a lot of small investors have gone "I'm sick of this, I'm out" - and have decided to sell their shares. Well there weren't enough (indeed, there possibly weren't any) people willing to buy them at 13p. And since people wanted to be at the front of the queue - they dropped the price down lower. 10p, 9p, 8p, etc. They have to lower the price to a level people are willing to buy them to do that. So even though it looks like there's a lot of buyers, the price won't rise until all the people willing to sell at 8p have sold - and that stack has effectively been used up.
What will push it up is this process in reverse. Someone wants to buy. Initially they buy up all those willing to sell at 8p. Then 9p. Then 10p etc. If the market collectively went "this is stupid, I'll buy 1 million more shares at 8p then" you'd potentially find they wouldn't be able to. If the market then said "okay, I'll have 1 million at 9p" the market would move up to 9p etc. (As said, in practice its a bit complex because the market makers are trying to keep this all balanced behidn the scenes, hence the regular accusations of manipulation etc - but in theory that's what would happen).
I think it's because there's essentially no institutional investors providing ballast. People often say "there's not that many shares" - which is true - but it seems like the vast majority of them are owned by little holders. Hence the pattern of little sells every day, occasionally some big buy ins on news (and equally people taking the opportunity to cash out) - and then its back to drifting on little sells.
We are all waiting for the day someone shows up to buy 20~ million shares and then put them on ice for 5 years.
I think the Bank of England has been a disaster.
But unfortunately the evidence of a big recession is energy prices. Some adaption is possible - but you can't go from spending around 2.5-3%~ of the nation's GDP on energy to around 8%~ without consequence. Some other expenditure will have to be cut. In practice businesses will try to raise prices, those that can't will go under. And this goes for all of Europe. Equally States are finding it harder to just borrow their way out of it like Covid, because with inflation running so high prospective borrowers want more interest.
In normal circumstances this should fuel a massive boom in gas & coal development - but because of climate change politics that probably won't happen. So like the BoE we will just look on helplessly and send even more money to Norway & Qatar etc.
I can't say what the price will do in the short run - but it strikes me that if you think a fair value for Omi is 10-12p, why not sell up and seek greener pastures elsewhere?
I mean my logic may be nonsense - but I think Azna should be worth $1 billion based on the sale of Burtica. Omi will end up with 25% of that, so $250m. Lets say £200-220m. So about £1-£1.20 a share. Which is a 10 bag from where we are.
Would I expect it to be worth that today? Probably not, as there's a lot of work to do and loads could go wrong. But markets can get ahead of themselves and I don't think its completely impossible to imagine Newmont or Agnico (or both) decide to pitch in to take the lot at around the 50p-80p mark if the evidence starts building that Anza could be worth quite a bit more than £1 billion.
That's the basis of why I've been here for years anyway.
Unless you think the other ventures represent massive liabilities, I'm not really clear why they would weigh on anyone who wanted to buy Omi to get Anza. Just scrap them if they bother you that much. Or more likely spin them off to another explorer.
In practice the share either needs to get an institution or two onboard - or it needs a new generation of bigger fish, who will buy up 20~ million shares between them with the intention of holding for the medium term. The best way to do that is probably to keep appearing in the news with drilling results etc.
I can understand why you wouldn't see full value today, but everything is shaping up for Omi to be free carried to a 25% stake in a mine worth $1 billion, $2 billion, $5 billion, who knows. The current market cap is therefore ludicrous.
But then clearly a lot of people are selling, so presumably they think otherwise.
Talking about gaming MMs is usually the road to crackpot territory - but I think its not unusual for them to try drifting through the prices to see what they shake loose if there has been something of a gap up like we saw on Friday afternoon.
Maybe I've missed something obvious, but why do you think the majors signing up for phase 2 will take 3~ months after September?
I guess the presentation might reveal new things - but it seems doubtful.
Really the problem is that while this Argentina adventure might be good business, it feels like a sideshow. We want Newmont/Agnico to sign on the dotted line in the next 10~ weeks. I guess there's a risk they don't. Or a risk they do and the market goes "yeah... Omi shares at 5p" - but you'd have to hope not. Whether there will be an immediate leap up to 25-40p is perhaps less clear. But I hope so.
MMs seem to have decided that's it for volume today. Will give a quote to buy 10k shares but no more.
I can't see 40p being a gift - but its not impossible to see things moving in that direction in September.
I mean you can argue its priced in I guess - but I'd hope the market would think the majors aren't bothering to acquire 51% of something worth £35m~.
Maybe other people can - but its not currently letting me buy more than 10000 shares.
Progress has been delayed by Covid. This is frustrating, but surely not really surprising.
Hopefully things are getting better on that front.
Fundamentals will tell in the end etc - but really what the share needs is some institutional investors who drain the float. So the price stops collapsing whenever a bunch of traders offload £50k worth of shares.
Hopefully that happens once the 51/49 split takes place.
Glad I got another 100kish shares at 10.50~ a couple of weeks back.
Wouldn't let me buy more than about 2-3k shares this afternoon. See some other people got through though.
Would obviously enjoy a nice climb back towards a 25-40 range.
Yeah. Not adding much but I chipped in yesterday and it appeared as a sell here.
I'm not sure it really matters in the grand scheme of things, but in case anyone is looking at the sea of red numbers and thinking its right.
Kind of negative situation really.
Continue to think OMI has a great asset and that will eventually realise a much higher share price than today.
But equally could see the share price drifting in the short term, with nothing really to keep it up. If people will sell today for 12.50, I can't see why, barring unexpected news, they wouldn't sell for 10 in a week or three's time. Without news on the horizon I can't see why buys would be rushing in.
At the same time if you are out completely, I don't fancy your chances of calling exactly when an RNS is going to drop that puts a rocket under the share price.
It would obviously be great if Newmont and Agnico announced say a $10m drill program because they just want to get on with things. But I'm not sure how realistic that is.
I wouldn't expect a takeover offer tomorrow but its not impossible to see one in say 18 months.
It depends on how quickly things evolve. They can run things to completion - but if they were to find 5m+ oz that leaves Omi fully carried with 20% of an asset potentially worth billions. Lets say in that situation Omi would be worth 300-500m, so something like £1.5-2.5/share. It would therefore seem to make sense to buy them out before you got to that stage. (If the share price were ever to start moving up Omi may also find it easier to issue new shares, raise capital, and get involved in other projects, but lets ignore that for now.)
People got upset when I said it last time - but realistically, if Newmont said "60p to clear off today" I suspect most would take it - even if the 20% through to completion could be worth say £2. (I'm a shareholder, obviously I'd like a lot more - but as an example.) The issue is the window - because if they start proving up reserves with good expectation to find more the price would start to rise. So it may not happen because events run too quickly.
I doubt there are any shorters in a share like this. The volume is too small, the risk too high. Why would any institution bother?