George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
I can’t say for sure what Giles was referring to, but I suspect it was the same, or very similar, to my reference to rolling over a T20.
T20 is a trade where you buy a number of shares, but are not obliged to ‘settle’, or pay for those shares until twenty trading days later - ie four weeks later in most circumstances. Not every broker will allow you to buy on these terms. For those that do, the most common formula is that they will allow you to buy more shares on, say, a T20 up to the value of settled shares (not necessarily of the same stock) that you already hold with them. So, if you already hold 10,000 settled shares in ALGW you would be able to ‘buy’ another 10,000, effectively on credit, and not have to pay until four weeks later. So, if the shares are £1 each, and you have only £10,000 in cash, you have, effectively, invested £20,000 into that company - ie you’ve leveraged your investment cash by a factor of two.
Let’s say the SP doubles during the four weeks. At the end of the four weeks you sell/settle all 20,000 shares (but of course you don’t have to sell the 10,000 you already owned if you don’t want to) for £40,000. You owe the broker £10,000 for the 10,000 shares you bought on a T20, so you’ve made a profit of £20,000 on the £10,000 you actually had invested in the first place - instead of the £10,000 you’d have made if you hadn’t leveraged.
When the 20 days are up, if the SP hasn’t moved upwards as much as you thought it would, you might choose to still stay in the game. In that case you ‘roll’ your T20 - ie you sell (settle) the 10,000 shares and immediately buy them back again on the same terms. If the SP has fallen You now owe the broker the difference between what you paid for them an the settlement price you just achieved. If they’ve increased, you have the diffference in cash in your account.
And the next question is ….?
Sorry, but I don’t think that was a 1,000,000 trade … always assuming you’re talking about the trades at 11.00am that were late reported. They were 21 secs apart and second trade was .05p dearer than the first. Same again at 1623 - two 500,000 trades 14 secs and .1p difference. Same at 1618 with a pair of 700,000 trades. All three of those are either B&B or someone rolling over a T20. No great mystery!
My charts don’t go back further than three years and get a bit difficult to read on that reduced scale.
But without doubt we’ve now broken the three year high, which stood at (about!) 4.6 in Nov/Dec 2018.
As someone else has said ... show me the resistance!
Forgive my ignorance but ...
I appreciate of course that setting up and drilling is not possible when the thaw comes in. But does the thaw also impact the ability to flow test? I have previously assumed that the drilling rig can skidaddle once TD is reached and everything is safely cased, BOP installed etc. So how much heavyweight kit is needed for flow testing that would have to be got safely off-site for ‘summer’?
Well I hope this makes sense ... oh and that I’m not teaching Grandma to suck eggs!
Firstly a T20 is a trade that you don’t have to settle, or pay for, for twenty trading days. So what it boils down to is that your broker is giving you about a month’s free credit. Of course they won’t (usually) do that,nowadays, from scratch. How much stock/credit they will allow you is going to be a multiple of the value of the settled stock in your account with them.
So what this means is that if, say, you’re convinced that Pantheon is going to rise in value over the coming month, you may ‘buy’ £1k worth on a T20 - essentially with the broker’s money. Hence exposing yourself to the possibility of making a larger gain in absolute terms than you would otherwise be able to do with your own liquid funds. That’s why I regard it as leveraging. You will be able to ‘close’ the trade at any time before the twenty days are up if you want to crystallise any gains - or if, say, the SP is up 50%, close half of the stock after, maybe fifteen days, and you’ve nothing left to pay when twenty days are up and you’re left with a tranche of free shares.
Now for the bad news .... if you’ve not closed the deal before the twenty days are up you do of course have to settle. You can still ‘close’ the deal on day 19, using a T1 to ‘sell’ - but if the SP has fallen you’ll have to cough up the difference between what you bought for and what you closed at. Or you can just let the trade ‘settle’ after twenty days, which means you finish up paying the price of the original trade and finish up owning the shares.
Sorry if that’s all elementary grade - but you did ask! Of course never, ever, trade this way unless you’re able to pay up when the time comes .... or you’re absolutely 1000% certain the SP is gonna rise - and then you’re probably, certainly, wrong!
Thanks everyone.
Tried to get in after reading these but my broker took too long to answer the phone.
I hope you won’t think I’m being antisocial in saying I could do without an RNS at 0700 tomorrow morning therefore, :-)
Good afternoon all
I’ve been in and out of 88E a few times, since TPET days even, and have recently, for obvious reasons and thank you Reddit, top-sliced a chunk.
So - I’m now looking to spread my Alaskan risk a tad by investing into Pantheon.
Having read the 8 March RNS, am I right in concluding that the current (mostly) optimistic mood on here results from the fact that a redirected sidetrack has now been started at Talitha (after previous technical issues) aimed at a potentially rich reservoir at the bottom of the well. This is going to take about 2-3 weeks (from 8 March?) and there are high hopes for a positive outcome. Is that it - or is there something else I’ve missed? Sorry if I’m being lazy by not reading back beyond the most recent ops update.
Planning to take the plunge later today so ...
Thanks in advance
Oil beast - What they actually said (and it’s a few hours now sine I read it) was that they knew of no reason OTHER THAN the fact that they’ve started a new drill and that the next door neighbours are doing very nicely thank you!
In other words there’s every reason! That’s why they simply had to answer the ASX questions and didn’t need a more formal ANN.
Cow - next time, before you rush to your keyboard to belittle someone posting a simple question ... just take the time to read the question?
He wasn’t asking ‘Can I buy via a nominee account’ - he was asking: ‘Can II buy using a nominee account?’
There is a difference ... ask any Institutional Investor!