By Tom Winnifrith, The Sheriff of AIM | Monday 11 April 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
At the end of December AIM listed 88 Energy (88E) had cA$1.2 million net debt and cash of cA$9.6 million. However in the prior quarter it spunked cA$16 million, with just under a million of that on PLC costs. Hmmmmm - What do you think is left?
I accept that exploration spend on Icewine in Alaska will have been lower in Q1 2016 than it was in Q1 2015 but I put it to you that the money has nearly all gone, the debt however has not. And as such the only question is when is the placing? Not is there a placing?
Actually I lie. At 2.5p the market cap is £80 million so the placing will largely be a bucket shop affair - i.e. conducted at a steep discount. All the signs are there that 88 Energy is gearing up to issue confetti. So question two is "what price is the placing?"
An RNS today boasts of a "new investor presentation." That is designed to suck in the Bulletin Board morons yet the shares are slipping. The morons buy, the clever money sells knowing that it can buy back more cheaply within weeks.
At a fundamental level it is hard to say what 88 Energy is actually worth but £80 million seems to price in an awful lot of good news. It is the smart money not the morons whose lead you should be following.
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