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By Gary Newman | Thursday 12 July 2018
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.
Anyone who follows the world of AIM on bulletin boards and Twitter will have noticed a lot of sudden excitement in Bellzone Mining (BZM) yesterday, with the share price rocketing and closing at around 0.9p, but unfortunately some were posting false news. Was that deliberate market abuse?
That was a far cry from the 0.55p level which the shares closed on Friday, and given that £5.5 million was added to the market cap of this tiny company, you would think that there must have been some major news.
The company did actually release news on Friday morning that an addendum to its Kalia Mining Convention, which guarantees Bellzone the right to extract, process, treat, transport, export and sell any iron ore and nickel mined from there, had now been granted by the Republic of Guinea.
That news was positive as it related to changes in the mining code which it has been in discussions over since 2015, and largely covered the timeframe in which progress at the project had to be made, as well as improved economic terms. As part of that the company will have to complete a feasibility study by the end of 2018, and already has over 90% of the sampling completed and ready for shipment to South Africa, where it will be analysed.
There seemed to be a bit of a delayed reaction to the news before the share price rocketed on the Monday and reached levels of over 1p, before a steady sell off with volume of 105 million. On Tuesday it closed at 0.68p and volume had dropped to 23 million odd.
The rise on the Monday looked like an organised pump, almost as though the people involved had taken a while to decide how they were going to try to play the news, and then all of a sudden there was a concerted campaign to push the shares.
But not content in getting one rise out of it, the same crew wanted a second bite of the cherry and anyone watching Twitter will have noticed a number of accounts suddenly all pushing a rumour of a Glencore investment into the project.
The accounts pushing this the hardest were @ValueAimTrader @TopTradersADVFN @xinvestors and the worst of all, @OilMining_world – this account even published a tweet which it made to look like a proper news release, stating: “Glencore agrees to stake in ferronickel Kalia project in Republic of Guinea following government ratification last week”, along with an accompanying photo. You can see some of these tweets below.
Now the publication of anything like that as a statement of fact, when it is completely untrue, is of course market abuse, especially when it is designed to manipulate the share price, and hopefully the FCA will be looking into this account and others linked to it - @xinvestors in particular – and I have to wonder if some of these accounts are all controlled by the same person(s), as the coincidences seem staggering if not? Of course, it could be pure coincidence that they all just so happen to all pump the same shares at the same time, and like and retweet each others posts, and there is no collusion! At best, it is irresponsible of some posters with larger followings to retweet this sort of information without confirming its authenticity – a few seconds of looking into the Glencore claim would have confirmed that it was fake!
Often after the event these Tweets are quickly deleted when the share price inevitably comes crashing back down on their pump and dumps.
As if that wasn’t bad enough on its own though – knowingly posting or sharing false information to cause the share price to rise – I have to wonder if at least some of these accounts spreading the false rumours also had knowledge of the subsequent news which arrived this morning. I am sure they did not but one does wonder.
Before the market opened today an RNS came announcing the completion of a placing to raise £950,000 net via the issue of shares at a price of 0.6p, a massive discount of 33%! That makes the fundraise look very weak, but in reality I think that just shows that it was already in progress prior to the big spike – either that or the investors putting money into it have very little confidence in the company to ask for such a big discount, which doesn’t bode well.
It would of course be completely illegal for anyone that was made an insider whilst the placing was being carried out to comment on the company during that period, until it was released via RNS. Or to pass that information on to anyone else – anyone who received such information and knew it to be true, would also be governed by the same insider trading rules.
This is not the first time that a similar situation has arisen, PCG Entertainment (PCGE) was another recent example, with claims of a massive contract coming that had been confirmed by sources at the company – of course it hadn’t and was just yet another ruse to pump- the share price around the placing.
Some will argue that anyone who gets caught out by these pumps only has themselves to blame. Being overly-enthusiastic about a share to deliberately try to pump the share price so that you can dump your own holding at a profit is something that I find distasteful – I’d rather just invest in decent companies or trade the chart movements – but it isn’t illegal.
But when you post deliberately false info purported to be official news, that takes it to a whole new level and needs stamping out by the authorities.
As for Bellzone itself, it isn’t a company that I really follow closely so I’ll leave you to make your own mind up about the fundamentals – it certainly doesn’t look any worse value than a lot of similar mining companies at this stage in their life, especially now that the share price has dropped back below 0.7p to buy as I write this, but usually there is good reason why the market cap doesn’t match the potential resources in the ground.
Just remember the names involved in all of this and be very careful of any company that they are pushing in the future, as they have a track record for being involved in pump and dumps at the lower end of the market!
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