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By Tom Winnifrith | Thursday 18 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.
The great bear Waseem Shakoor rates Frontera Resources (FRR) as one of the top 3 dogs for shooting on the AIM casino. He has just posted seven points for bulls to ignore as they ramp this worthless crap. Over to Waseem.
1. There are a lot of "estimates" and "intentions" in today's RNS regarding the price at which money might be raised. The reality is that the only non-related party finance ACTUALLY raised has been $700,000 short term in exchange for 323m shares.
That puts a hard price of 0.167p per share at a GBP/USD exchange rate of 1.30 - quite a discount to the current share price of 0.32p.
2. A new death spiral financing facility has been put in place in favour of YA. I am unclear where the $6.2 million debt to YA has come from as they are normally issued shares as soon as they hand over cash.
3. Vendor debt of $8 million has also appeared from nowhere, also to be paid in shares, and the shares will be surely sold on issue to recover costs.
4. The related party debt/equity swap is at a nominal 1p/share but it never had any hope of being paid off - the debt has ballooned in recent years to an incredible 15% compound interest rate - that amount of money was never put into the company by the related parties. Yes, it is a debt owed, but the all of that cash was never received.
5. Previous RNSs stated that the drilling campaign was stopped to allow a JV to proceed. There is no JV or Farmout and it is now clear that the company had no funds to explore further.
6. The share count is about to be doubled once more to approx 17 billion shares. Fromntera isn't going to have a great balance sheet at the end of this rinse - the shares are being mostly issued to settle debts.
7. Once the new shares are in issue, the current market cap. will be £50 million. For what, exactly? It'll be interesting to see where all this new debt has come from, as it suggest hug cash burn that has not previously been disclosed.
I have kept things relatively simple, but I believe these points are worth consideration.
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