Lonmin Share Discussion Threads

[goldenfish2010] 04/8/2015 15:30

been there, suffered that (afren)....

hard to sell when you are losing a lot. but the truth is: cut your losses asap.

you wont be making your money back. you know very well that you will lose even more.

[careful] 04/8/2015 15:23

as an educated man you therefore agree that the rights price is irrelevant.
apologies, you must know such things and much more besides.
you must be referring to the subtle side effects of a low rights price, and there are many.

[goldenfish2010] 04/8/2015 15:17

i knew i shouldnt have gotten that CFA.

LOL

[careful] 04/8/2015 15:12

goldenfish.
yet again an example of an experienced investor not understanding the numbers.
within a very small range of error you have 2 options usually.
1)take up your rights and put cash into the company to strengthen its balance sheet.
you will own shares and the value of the company will increase.
in theory the value of your holding will be worth the original pre rights value of your holding plus the cash you have paid for the extra shares.

2) sell your rights into the market, they will have a value, but your share holding will be diluted.
the value of your holding will now be the pre rights value minus the money raised from your rights sale.
it makes no difference whether they raise 1000m shares at 1p, or 100m at 10p.
do the sums as i have many times.

[pro_better] 04/8/2015 15:06

IMO
30p by this friday end of trading day.

[lazyhisnibs] 04/8/2015 14:46

Rights issue price in combination with the number of new shares for each one held matters.

Without an indication of what management need to raise there will only be wild guessing.

Subject to continuation of the PGM prices trend the longer it takes management to announce the farther the share price will likely fall but the bounces are conspicuous by the absence.

[goldenfish2010] 04/8/2015 14:41

careful

you must be joking right?

Cash strapped companies like LMI are turning to rights issues to raise funds. In the upcoming rights offering LMI will grant shareholders a chance to buy new shares at a discount to the CURRENT TRADING PRICE (in november 2015). ie 3 shares for every 10 shares you already own at 45% discount.

as a result of the introduction of new shares at the deeply discounted price, the value of each of your existing shares will decline.

hope it is clear.

[careful] 04/8/2015 14:10

Rights issue price makes no difference at all.
100m shares at 10p, or 10m shares at 100p.
makes no difference at all.

why can't people work out the numbers?

[the_insider] 04/8/2015 14:08

The share price decline could get faster when the strikes, violence and unrest start soon in SA.

[goldenfish2010] 04/8/2015 14:02

as i said at current pace and with a RI settled in november/december i would say at 8p.

[grlz] 04/8/2015 13:58

Guessing Games time: 4 for 1 RI @25 announcement by the end of Aug imho

[lazyhisnibs] 04/8/2015 13:42

goldenfish,

In most of the situations where the share price plummets for more than a month after the RI notion becomes something more solid than mere rumour do the largest two or three names on the BoD tend to follow their rights assuming they have some to follow which they really should have? Also, how often are they required to participate in the underwriting or does that tend to only happen when there is a particularly wealthy funder(s) still around?

These situations scream for management just getting on with the financial re-structuring and if that is likely to include a RI then announcing one along with all the salient details quick quick rather than on a slowly does it basis. But perhaps their hands are tied by workings of corporate financing most of us aren't familiar with. If to be underwritten by IIs then the share price level at which they are comfortable will surely depend a lot on whether they are already invested or not.

[careful] 04/8/2015 13:32

but an exchange rate of 12.68 rand to the us$ must reduce costs.
the results from randgold and rio on thursday will give us clues, as did fres today. (mexican)

[hectorp] 04/8/2015 13:28

careful, it's no comfort to someone who sees their investment/s fall 100%. They are wiped out, where as a rise of 500% is success story and jumping crackers, most stocks will never return more than 100% over a long timeframe.
lazy ( above) POG is, a good parallel now. Where is it 6p.
Any fundraising here will be done at a lower price but I'd not second guess this.

[goldenfish2010] 04/8/2015 13:26

the lower the platinum prices, the faster LMI is burning cash and drawing from its debt facilities to gain breathing space. the restructuring has not even started yet! when the RI will be arranged then the share price will be already very very low. same story as many companies with not very good management.

[goldenfish2010] 04/8/2015 13:18

lazyhisnibs

20p-25p is written all over it imo. its always the same story.

[lazyhisnibs] 04/8/2015 12:44

My reading of Lonmin's reports supported by what's in the media is that sales prices also have to rise.

One of the figures I found the most surprising was in USB's missive of about three weeks ago. It spoke of a platinum price at least 60% higher than it is now. Then again the share price has fallen about 50% since then and their platinum figure was to allow for what they perceived to be needed to start investing appropriately in the mining infrastructure. That through the cycle stuff.

Unless the directors here want to buy-in to an RI which seems unlikely in a major way then one would think they had every incentive to announce funding this month rather than, loosely, by November. I'm assuming that potential underwriters aren't insisting on letting the share price settle as in a fearful and uncertain situation it probably won't as Petropavlovsk's didn't: it just fell and fell and fell.

[careful] 04/8/2015 12:26

that is the beauty of share investing.
at any given price the most we can lose is 100%.
but the upside is unlimited

[hectorp] 04/8/2015 12:25

SA is a failing state, relying on a bullish or neutral market in minerals etc, which is not what we see now. Perhaps it's the next Zim.

[careful] 04/8/2015 12:23

But sales of 231,778 oz of refined platinum for the last quarter suggests that this mine could survive provided that they can reduce overheads to match the lower platinum price.

i was looking at broker view, and some as recently as last week had a price target way ahead of todays as recently as last week.

things look grim right now, my holding has halved in value, and it looks as though i could lose the lot.
but i will not sell, it would upset me even more if they recovered.

[lazyhisnibs] 04/8/2015 12:17

Big Picture Question

Are commodities headed back to the levels from which they started to shoot up a decade or so ago?

Many if not most have already reversed part of the way and it is my guess that in most cases they are probably going to maintain that trend for the foreseeable future so for at least eighteen months.

I also guess the pace must slow down and that modern costs of production in most of the world means they probably won't retrace all the way. Further, for precious metals there might be scope for much lower costs of production in authoritarian eastern States such as Russia and China.

As usual there'll be plenty of bounces, some of which will be strong but overall it will be a lower lows and lower highs story for the time being.

Any other views?

[goldenfish2010] 04/8/2015 12:13

It looks like 30p is coming very fast.

[lazyhisnibs] 04/8/2015 11:59

Careful,

In the media yesterday it was mentioned that in Australia a gold mine was sold for a dollar and another has gone in to bankruptcy.

As to the falling rand apart from being a double-edged sword (as it drives domestic inflation but obviously with a lag effect) nothing is likely to make Lonmin profitable other than a strong pick up in sales prices. Cost cutting will help greatly if the company is not pestered in to all but axing their own survival plans.