Lonmin Share Discussion Threads

[kirk 6] 26/11/2015 08:13

Back to £40 a share long road back anyway

[kirk 6] 26/11/2015 08:12

Can't buy at the bid anymore on the rsp

[kirk 6] 26/11/2015 08:12

Could be on the move upwards at very long last

[elvisrocks] 26/11/2015 08:11

Graham, you do not yet under your theory own one LMI share to pay up against.

If you bought them just before pre-rights their TERP LMI was about 1.19p, that's roughly what you have to go and pay for one now ex-rights. You can't buy them at 1p, that's the strike price under the RI offer.

If you wonder what this capital reorganisation is all about, see below from Prospectus:
-------------------------
The Directors propose that the Company undertakes the Capital Reorganisation comprising the Sub-division and the subsequent Consolidation of its Shares. The Existing Shares have traded at a discount to their US$1.00 nominal value for a significant period of time and therefore any further issue of Shares would need to be at an issue price per Share representing a discount to the current nominal value. Issuing new Shares at a price below the nominal value contravenes the provisions of the Companies Act 2006 and, therefore, Shareholders will be asked at the General Meeting to approve the Sub-division of the Company’s ordinary shares, which will have the effect of reducing the nominal value of the ordinary shares.
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The Existing Shares, the Intermediate Ordinary Shares and the New Shares to be issued pursuant to the Rights Issue will have the same rights and be subject to the same restrictions and ranking on the same basis, save that the Existing Shares have a nominal value of US$1.00 whereas the Intermediate Ordinary Shares and the New Shares will have the lower nominal value of US$0.000001.

[abryer] 26/11/2015 08:08

Was up 50% on jse

[graham2405] 26/11/2015 08:02

"Seems you made good money on that with the drop down to 70p."

Yes, but I had to take a big risk, one that I was prepared to take on Glencore.

The managements skin in the game gives me confidence that they would do the right thing.


The maths

47 * 0.025 = 1.175p + 47 * 1p = 48.175p for 47 shares fully paid.

As against 10.25p + 46p for rights = 56.25p

That's an 8p saving per 47 shares.

....or about 20%.

As an accountant, please do explain where I have gone wrong?

[elvisrocks] 26/11/2015 07:59

Magnet I disagree, look at pages 58-62 of the Prospectus, clear difference in timetable between SA and UK.

[magnet26] 26/11/2015 07:57

Elvis the subdivision occurred at the same times.

See bottom of page for price movement over last 10 days.

hxxp://www.sharenet.co.za/v3/quickshare.php?scode=LON

[elvisrocks] 26/11/2015 07:52

Hmmm the mighty Goldman Sachs put out a Neutral rating yesterday on Lonmin .... wonder what means in their language....

[elvisrocks] 26/11/2015 07:45

No they are not Graham because you assume you can "pay up the 1p" against the LMI share but you are yet to buy one LMI share ..... and they cost 1.20 last night!

Keep trying Graham, everyone loves a tryer!

PS: I do agree, for once, with your Glencore analysis. Seems you made good money on that with the drop down to 70p.

EDIT
Graham, you have modified your response and deleted your maths.

[graham2405] 26/11/2015 07:36

I am not icarraldo

I have not bought any.

....and if you remember icarraldo stated that he had sold and taken a loss.

[elvisrocks] 26/11/2015 07:33

You have Graham, and I think on balance that you and Icarrodo have not bought a truckload (but I'm not totally persuaded yet), the point is you put out a post yesterday that doing it Graham's way you could beat the market and have saved 20%.

Hopelessly wrong and that is before you even consider buy/sell spreads. Even the experienced professional traders may get burnt in this volatile period.

That's my point.

[graham2405] 26/11/2015 07:27

"Firstly this is applying the benefit of 3 days of hindsight"

I HAVE STATED FOR WEEKS NOT TO TOUCH UNTIL AFTER RI!

No hindsight here.........

All that said, I still would not touch it.

[elvisrocks] 26/11/2015 07:27

Magnet, I wonder whether this is another angle to the arbitrage we are seeing because in SA the sub divided shares went into sub division only today whilst in the UK they did so last Friday.

[elvisrocks] 26/11/2015 07:22

Graham re Post 6877 and mine of 6872.

You are a bit naughty here particularly regarding your maths and advice yesterday that if you bought the 47 rights and 'paid up the 1p' then you could have saved 20% and you should build up stake via LMIN and not LMI. Firstly this is applying the benefit of 3 days of hindsight, secondly it is ignoring the arbitrage in place, thirdly your numbers give the impression that you have "beaten the market by 20%" and fourthly your maths is hopeless.

You think you can save 20% doing it your way, what the maths actually is is 47 times 47.175p = 55.225p, against a pre rights position of 56.25. In other words, applying the benefit of hindsight and ignoring buy-sell spreads etc, a saving of 1.8%.

Thus, when I said "I doff my hat to you" I was hedging my bets and it was a be nice to Graham night last night, but you are actually misleading people quite heavily here.

[magnet26] 26/11/2015 07:22

touched 84c = 4p

[magnet26] 26/11/2015 07:21

Hiting over 2p equivalent in SA this morning?

[chrisbr777] 26/11/2015 07:19

Excellent Graham. Let me look further into your points. Appreciated.

[graham2405] 26/11/2015 06:57

"Graham, as an aside from this discussion. I have been looking at Glencore over the last few days, and you mentioned below that you are invested in Glencore. Please share you thinking about why you see this share turning around. Most of the analysts rate this a 'buy'. Share has been hammered recently, and they are doing a rights placement it seems (with Directors and Management having to personally take up 22% of a large issuance). Also looks like they are doing this well in advance of getting into trouble. Your thoughts are welcome."

2 things.....

First I am trading Glencore, it is very volatile and I have been trading it since the Placing @125p. (I have already made significant profits from the drop to 70p and the lightning fast recovery to 130p)

I continue to trade it daily (sometimes 3-4 trades per day), given the massive swings, some days greater than 5%. With low dealing charges I can make a good profit with 2% swings.

All that said I am also happy to be invested and have over the past few weeks, since the placing had anything from 20k to 100k 'invested'.

My current average holding is circa 104p, but I have not included all my profits from trading. In actuality the profit made from the drop to 70p and the rise to 130p has pretty much paid for my current investment in Glencore.

"and they are doing a rights placement"

Long done, fully funded @ 125p, massively oversubscribed, and underwater. ;-)

Also Directors not involved in the placing have bought significant stakes.

So, why do 'I' like Glencore.

1. the precipitous fall......I love falling knives. (not Lonmin though) ;-)

2. the trading business is sound. IMHO

3. the agricultural business is sound IMHO, and they are in the process of selling a non-controlling stake.

4. the mining business has sale-able assets. Which it plans to sell some.

5. the management have a LOT of skin in the game!!! (circa 25% of the company)

6. I believe that the Placing Price (125p) is a very reasonable target price for me, and I am happy buying/trading it a below these levels.

7. brokers target prices are well above current levels, and even the most critical Investec, has only just reduced to 75p.

8. they dumped Lonmin........and shut the one remaining Platinum Mine they own.

9. they appear to be well managed, they are doing the right things and doing them quickly.

A few negatives.....

1. they are 'the smartest guys in the room', and you know how that ended last time. So there are risks, risks that 'I' am prepared to take.

2. James Chanos, announced recently (about a month ago) that 'he was a potential purchaser of Glencore' i.e. that he was short. He was also one of those that was short on Enron......



hxxp://www.shorttracker.co.uk/manager/Kynikos+Associates+LP/all

hxxp://www.shorttracker.co.uk/company/JE00B4T3BW64/all

3 Copper prices are a concern for Glencore, they are 'almost' as reliant on copper as Lonmin is on Platinum.

4. so, Lonmin 'could' lose you money slowly over the next 2-3 years, and Glencore 'could' explode in a puff of smoke.

....and yes I still prefer it to Lonmin.

All IMHO......

[graham2405] 26/11/2015 06:32

"So what your are saying is ignore LMI shares and build up its equivalence through LMIN rights at such low prices, I think this is what you are saying by 'pay them up with 1p each'?"

Yes, better off 'as I said' and waiting till after the RI and buying rights and paying the 1p.

Regardless, I still would not buy it, as I expect that they may soon trade below 1p or much more likely below 100p after consolidation.

[chrisbr777] 26/11/2015 05:49

Talking of manipulating the market, the Lonmin share (LON) on the JSE spiked 66% in the last few minutes of trade yesterday. This was not followed by London which closed at 1.2p. Players are getting desperate to shift the momentum.

[chrisbr777] 26/11/2015 05:39

Graham, as an aside from this discussion. I have been looking at Glencore over the last few days, and you mentioned below that you are invested in Glencore. Please share you thinking about why you see this share turning around. Most of the analysts rate this a 'buy'. Share has been hammered recently, and they are doing a rights placement it seems (with Directors and Management having to personally take up 22% of a large issuance). Also looks like they are doing this well in advance of getting into trouble. Your thoughts are welcome.

[elvisrocks] 25/11/2015 22:09

One last one, a re-post of earlier and what Typo56 said on Friday:
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6334: If you think it's the bottom, pile into LMIN @ 0.1p. (I'm not)

6344: Yes elvisrocks, I think 1.1p would value the company post rights at about £300m. I'm not sure why there is such a large arbitrage between LMIN and LMI. On the face of it it looks a no brainer. Perhaps it is but perhaps it factors in the risk of LMI shorts being called in, causing a short squeeze. It's something I'm playing, but not big for that reason.
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Question: So if the LMIN rights are only 0.025p now, why not pile in now? We've got nothing to lose, max downside 0.025p? Arbitrage has remained at just under 0.20p.

[elvisrocks] 25/11/2015 22:03

Just watched a large part of the Marikana Strike video, helps understand things a bit better plus bring back my days in SA. Will maybe post a little on that tomorrow. Night all.

[elvisrocks] 25/11/2015 22:01

Graham, for you to pick up in the morning, I doff my hat re Post 6863 as below:
47 * 0.025 = 1.175p + 47 * 1p = 48.175p for 47 shares fully paid.
As against 10.25p + 46p for rights = 56.25p
8p saving per 47 shares (20%)
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Since when could you buy 47 LMI shares for 1p in the market this week? Last time I checked LMI were 1.20p, so that would add another 9.4p to your numbers, exceeds your 8p saving!
IDIOT
Buy 47 rights and pay them up with 1p each.
------------------------------
The RI is 46 shares for every 1 you own, 46:1. So what your are saying is ignore LMI shares and build up its equivalence through LMIN rights at such low prices, I think this is what you are saying by 'pay them up with 1p each'?