Lonmin Share Discussion Threads

[dealy] 20/11/2015 19:41

I bought 700,000 Shares at the Close for 1.26p.

[elvisrocks] 20/11/2015 19:05

Kojak re Post 6439.

I think there is still a mix-up here, but maybe it is just the way you are expressing it. Shares and rights have decoupled themselves from a trading perspective now.

What you mean I think is if the old shares fall below 1p (not goes to zero) then that questions the logic of an RI. Perhaps with just £7m of market cap, this is why this traded 30% of its capital today as traders washed and washed again.

Regarding the rights falling from 0.19p to 0.12p (and being as low-high as 0.08p and high as 0.29p) on 0.5% volumes, I agree you can be opportunistic. I saw two auto trades today, four seconds apart with an 11% price difference.

So, Yes theory is being inter-woven with arbitrage and trading here.

[elvisrocks] 20/11/2015 18:48

Lazy and Kojak

Lazy first:

Thanks, didn't see the correction, but no matter, sort of ... It's easy to get yourself bambozzled here plus by the decimalisation.

I think what you mean here if the current Old Co shares go below 1p (current 1.27p) then its soul searching time because at 46:1 we are being asked to pay 1p per share (rights current worth 0.12p). But the whole Old Co capital today is only now worth £7m and nearly 30% of the share capital got traded today. Many times by the same people no doubt!

Kojak has just clarified his Post 6435 with 6439 and I'm just digesting now.

Kojak next:

Kojak I think you got yourself confused as well as in Post 6435 you say "The rights price is disappointing but then again as long as rights are worth something underwriters are not needed" - even it is collapsed to near zero or shareholders let their rights lapse, underwriters STILL needed.....

Likewise "In theory the old shares could even go below 1p, in that case it makes no sense to use rights and in that case underwriters are needed". FROM TODAY those 1p shares only have a market cap of £7m and are now dis-attached from the rights now trading......

I think you have clarified what you mean here in Post 6439, just I was pointing out the current illogical arbitrage existing (and diffing trading volumes) between LMIN and LMI.

Lazy / Kojak, no rush to reply etc and all that.
Theory is mixing with arbitrage here!

[lazyhisnibs] 20/11/2015 18:28

6438

Thanks Elvis. Thanks for that and I've just corrected it.

I'll not trade rights for my own reasons which are to do with one of the few rules I have for myself. If the shares went sub 1p I would do some sole-searching about why and have a long hard think about platinum. I might even read the research!

Right, furball feeding time.

[kojak78] 20/11/2015 18:25

If the old co share price goes below zero it is cheaper to buy them and not follow rights. What would that say about the ri? It would imply no pis following rights.
But everything is possible and one has to be opportunistic. I have such a small position that I could easily double or triple it without it becoming dominating the portfolio.

[elvisrocks] 20/11/2015 18:18

Lazy, re Post 6437 when you look back at it.

It's easy to get caught with all the decimalisation here, so not sure what you were planning / meaning when you meant "assuming rights don't fall sub 1p".

The rights are already sub-zero at 0.12p and the arbitrage is currently LMIN 1.12p (1p+0.12p) versus LMI 1.27p

Did you mean LMIN Rights or LMI Shares when you said "assuming rights don't fall sub 1p"?

Just checking in case you are planning a trade!

[lazyhisnibs] 20/11/2015 18:04

Elvis,

Re your edit to 6429, thanks but my mind just boggles.

Re 6433, I get why they are selling if they can't afford to follow their rights. I suspect that at least a third of PIs who haven't already sold down or out can't afford to follow all of their rights and another third will wobble when the time comes. That's where II buyers of rights may come in assuming shares don't fall sub 1p. For one organisation in particular, I suppose one should surmise that they will get involved.

I'm baby sitting one of my ex's four-legged friends and they are as demanding as children so I'll say good night.

[elvisrocks] 20/11/2015 17:59

Kojak, I suppose that's a different way of thinking about it, the £40m ($60m) I calculated there goes over and above the $400m to the company, so Lonmin is "valued" at $460m today.

182m of 27bn rights sold today = 0.5%, probably PI's selling without thinking it through and other PI's or institutions picking that up.

Does that sound correct?

Would you see the arbitrage equalising and the >1p Old Co we see today drifting below 1p (there is only £7m to play with) and the rights value correcting itself?

That's how I see it / potential trade.

[kojak78] 20/11/2015 17:51

Elvis, nothing wrong with the calculation. The amount you calculated is the market cap above $400m which will still be paid to Lonmin. The rights price is disappointing but then again as long as rights are worth something underwriters are not needed. I have paid 1.12p for the new shares using my tax credits from today, if rights value goes to zero it would have been possible to buy at 1p or 10% less.

In theory the old shares could even go below 1p, in that case it makes no sense to use rights and in that case underwriters are needed.

The important thing is the company is financed, so the share price is not important for survival of the company. For investors the underlying cash flow over the next two years will decide if there is something to gain here. I will definitely hold my 2.5m shares once rights are used.

[elvisrocks] 20/11/2015 17:48

net curtains, don't know where you get £350m from, but if you think of that as $500m and $400m is the new RI capital (effective new IPO etc) then $100m for Lonmin before the split is 10p per share versus £2 at beginning of year, £33 8 years ago etc. Peanuts.

[elvisrocks] 20/11/2015 17:44

Lazy, see updated Post on 6429.

I sort of agree with you on 6432, only 0.5% volume sold today, and most, I would imagine would be PI's throwing in the towel. Why, before working it out, is beyond me.

[lazyhisnibs] 20/11/2015 17:37

Elvis,

Depending on the service levels of their respective brokers a proportion of PI's from different time points today (mostly during the afternoon) would have completed that form and sold some or all of their surpluses.

IIs, if they so desired, would have been able to get started sooner.

[netcurtains] 20/11/2015 17:34

The company has a market cap of £350.32M....
Isn't that way too high?

[elvisrocks] 20/11/2015 17:26

Kojak, are you able to comment on Posts 6425, 6428 and 6429?

[elvisrocks] 20/11/2015 17:22

Lazy.

Yes it was 586m*10p = £60m so that makes sense bar the LMIN / LMI arbitrage that I don't understand.

This calc today shows £40m ($60m), so rights have dropped by 50% (£60m to £40m) which doesn't make sense given the level of under-writing in place and as Kirk 6's point that they are very good value at this "price".

EDIT

When you look at Closing L2 for LMIN tonight which I know you can't see, you see:

Buy orders: "26.48m buy orders" but "26.45m of them" are at "0.003p or lower" and most at "0.001p" = nonsense.

Sell Orders: "8m of them all at 0.13p or higher"

Whilst 8m/27bn shares sell orders is tiny, this is how the slate looked when it got wiped clean tonight, so the idea of "massive buy orders" coming in per Kirk is not strictly true. He is however right, at this price, they are very good value.

Total volumes sold today is 182m, so roughly 25 times what was left on the board for tonight.

[lazyhisnibs] 20/11/2015 17:20

6425

"Old Co Equity has dropped to 586m shares *1.25 pence = £7.3m
New Co Rights is 27bn shares * 0.12 pence = £32.4"

Was it just shy of 59 million pounds at yesterday's close? Obviously the Old Co calc above is an anomaly for now.

[elvisrocks] 20/11/2015 17:15

Agree, Lazy just deleted Post 6422.

Is my maths correct in Post 6425, which highlights it even more?

[lazyhisnibs] 20/11/2015 17:11

Elvis,

Re 6422 I wouldn't go to bed with that thought on your mind or you'll have nightmares.

Regarding your question earlier, as far as I know I didn't get a reply on how much was shorted at the peak so thanks for your memory dump on Kojac's 13%. That's an hell of a lot. I thought Petro at it's most bashed was about 7% and it was supposed to be the highest on the FTSE at the time. But my memory's finally beginning to fade on all those details so I stand to be corrected.

hxxp://www.shorttracker.co.uk/company?sort=1&d=desc

According to the link above Lonmin's in the region of one and half percent these days. The FSA's spreadsheet is less inaccurate apparently but I've lost the link for that and am too lazy to look for it. My reason for asking those questions was thinking through what some are expecting (or say they are expecting) post consolidation. But I think other things matter more. For instance every now and again platinum prices head higher, although for a long time ... just for brief stints.

Frome now on until the consolidation this BB will probably see more quick phase posts from day traders who come and go than from debaters. So, probably more transparent ramps and de-ramps.

[elvisrocks] 20/11/2015 17:02

Agree, it's easy to get lost in the decimalisation, number of zeros, spreads and overall volatility, but either way, auto trades seconds apart can give 10% or more differences!

Old Co Equity has dropped to same 586m shares *1.25 pence = £7.3m
New Co Rights (46*586m) is 27bn shares * 0.12 pence = £32.4m

So £40m * 1.6XR = $65m against $400m Underwritten Cash Call.

Check my maths but I don't think I've got this crazy-ness wrong.

[kirk 6] 20/11/2015 16:51

Talking about he lmi not the right issue however there are considerably more buy orders in that. To be honest they are extremely good value rights at the moment

[elvisrocks] 20/11/2015 16:45

Kirk6

What buy orders are you seeing, I'm seeing LMIN still in Auction on my L2 but buy orders of 65m v sell of 22m volumes?

See also my Post 6422.

[kirk 6] 20/11/2015 16:40

Massive buy orders on level 2 at close

[elvisrocks] 20/11/2015 16:27

Thanks Lazy. Compared to an "expected TERP" of 1.19p, looks like we are gong to finish.

LMIN - 0.12p area (mostly been around there all day, down from 0.19p)
LMI - 1.25p area (been well into 1.30s / 1.40s most of day)

Crazy stuff with, on 0.5% volumes traded, you've only been able to "buy/sell" $2m of the new capital RI!

[deanroberthunt] 20/11/2015 16:21

is there a bigger bargepole stock....err, Nope