By Tom Winnifrith | Monday 1 May 2017
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.
Amur Minerals (AMC) was one of the great mining junior ramps of the past 12 months. With the Sith Lord Zak Mir and Justin the Clown leading the charge using bogus charting tomfoolery and soft interviews with the CEO Robin Young, the shares surged to 15p in December at the height of the rampfest. They are now 6.25p to sell and heading sharply lower. What say you rampers? How about "Tom Winnifrith's repeated bearcast warnings were spot on and Zak & Justin The Clown were talking 100% cock as usual?"
The first point to notte is a very strange announcement last week which saw shares issued to death spiral provider Crede at a 7.65p. What's not to like? Crede, as a result, owned 2.6% of the equity. Hmm. The statement notes:
Pursuant to the terms of the subscription agreement as set out above, the Company has today issued 15,869,131 new Ordinary Shares to the Investor at the Black-Scholes Subscription Price, which means Crede CG III Ltd is now interested in approximately 2.60 per cent. of the issued share capital of the Company as enlarged by the issue of the new Ordinary Shares. Pursuant to the terms of the subscription agreement, an administration charge is due to the Investor in the event that the Warrants are converted. Such administration charge is equal to the number of new Ordinary Shares being issued multiplied by the Black-Scholes Subscription Price.
So unless I have got this very wrong the net proceeds to Amur are nil and the net cost to Crede is nil. One can safely assume that Crede, which is the lowest of the low among death spiral providers, will not hang around and will dump the stock as fast as it can if it has not dumped already. When you pay nothing for shares it is all profit.
The question is just how desperate was Amur to enter such a financing deal in the first place?
Next up is the nickel price. Okay the Jun Marie project will not come into production for many years, if ever, but the price of nickel has tanked in recent weeks to just over $9000/t. Even small falls from here and you'd have to question the viability of the project.
Finally there is cash. The company has been spending heavily out in Russia and has full corporate overheads including fees to The Clown's employer Vox Markets and other vital IR spend. How much cash is left? And when's the next placing?
Never miss a story.
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments are turned off for this article.
Search ShareProphets |
Stock market news |
Recent Comments |