Lonmin Share Discussion Threads

[elvisrocks] 26/11/2015 16:34

Kirk agree entirely on Post 7020.
If ur trading rights only, they are very cheap.

[elvisrocks] 26/11/2015 16:33

Hmm the "gap" has widened at 16.30 hrs exactly, LMIN 0.035p v LMI 0.26

0.225 v 0.19 expected, although price shown on L2 screen is the very last trade of the day upto 16.30.00 regardless of size. Let's see what after hours trades bring.

[kirk 6] 26/11/2015 16:30

The rights are exceedingly cheap at the moment and today has seen a reversal

[kojak78] 26/11/2015 16:11

Graham and Typo, I do not think underwriters get rights for free. They just do not need rights. The question is how are lapsed rights allocated to shorts? I do not know the details here but if shares are on loan someone must have loaned them out. If that is from nominee accounts or from institutions I do not know. Loans from institutions will likely be used, that means shorts will have to deliver shares against 1p. Shares on loan from nominee accounts: there will be a huge percentage of rights not used. But I think even then the nominees will have to sell the rights in order to act in the best interest of clients. That means in any case shorts will have to deliver either shares or rights. Except if rights cannot be sold because there are no buyers.

Assuming a 70% II vs 30% PI quote and take up of 95% from IIs and 60% of PIs would mean a 84.5% takeup on all rights inclusive of the virtual ones that exist because of loaned shares. 15% on loan would mean a takeup on the 100% share basis of 97.2%.

If there are only 10% of rights unused the price could collapse to 0 as they are just not needed. If there are only 5% or so of rights missing the price could skyrocket. So a small shift in takeup will have a huge influence on rights price. I do not think the rights price can be predicted. You certainly cannot "invest" in them, it is only a gamble. And it does not matter if the rights price is 0 or 0.1p, it is only a 10% difference.

Rights holders can even instruct their broker to buy more rights without buying it themselves in the market, the broker will probably follow those orders at the very last moment they are listed. Brokers may force shorts to buy back rights too.

[kirk 6] 26/11/2015 16:04

Buy the rights now

[careful] 26/11/2015 15:40

The big picture is important.
I believe the commodity super cycle will return.
The reason being that World demand, with its 7bn population (rising) will be huge.

Demand for oil will almost certainly reach 100m barrels/day over the next 2-3 years,today it is 93m.
and the need for iron, copper, food and everythig else will be huge.

the problem will be shortages of all things.
We shall look back and laugh at todays situation.

[elvisrocks] 26/11/2015 15:37

Graham ... an economist? PMSL!

You need even basic primary school maths to do economics and Graham ain't got that qualification!

Lazy, you may me laugh last night you said Graham was the "sharpest tool in the box" (or something like that) more like "a sandwich or whole hamper short of a picnic basket" ....

[elvisrocks] 26/11/2015 15:27

Graham, has your hair got put back together again after that malfunction?

If you want to do it your way, for every 0.04p right u buy (assume it stays at that price) you are buying approx 20% of a 1p paid up share trading at 1.19p.

Now do you get it?
PMSL!

If it goes to 0.08p and LMIN goes to 1.16p say, you are buying 50% of a 1p paid up share.

Think about it as the "motion of the ocean" (not Billy Ocean the singer)

[elvisrocks] 26/11/2015 15:22

The facts will change on 11th Dec Graham, just trying to give you an early heads up and help you with your maths.

When careful mentioned Einstein there, funny, I envisage when you had that major malfunction this morning your hair going straight up like nutty Einstein just having a jolt of electricity put up his ....

PMSL.
Everyone loves a tryer Graham! Keep up the good work!

[elvisrocks] 26/11/2015 15:18

Bless Graham, it seems the doctor didn't give you any pills for your major malfunction this morning on your maths and you'll no doubt struggle to answer that economics question as well. This is too much fun, like conversing with a complete idiot.

So the closer LMIN and LMI go to 0.00 and 1.00, the closer to 100% is the old equity wipe out. It's pretty close now at 90 odd %. So what will happen after the RI closes? The market will pick a value between 0-$2bn for what they think Lonmin is worth.

It had a go this morning when Magnet said it hit 4p equivalent on the JSE. That's about 1.30 (check earlier post) in today money or about 85% of balance sheet equity. About 50% higher than Deutsche. Don't argue with me Graham, argue with the JSE and take those pills the doctor gave you.

Everyone loves a tryer Graham! Keep up the good work, you're keeping me entertained at least!

[careful] 26/11/2015 15:17

graham 2405
wow, you say...'I learn as much from answering as asking..'
Even Einstein would struggle to understand that

[typo56] 26/11/2015 15:15

When the facts change....

perhaps they'll be something worth discussing.

[elvisrocks] 26/11/2015 15:10

Good understanding of economics Graham ...

How about the difference between Keynesian economics and monetary economics in this situation? Or how about John Meynard Keynes "when the facts change, I change my mind. What do you do Sir?"

[graham2405] 26/11/2015 14:48

Do you think that the underwriters pay for the rights?

No, they get them free (trust me they will not want them), they then pay the 1p, and attempt to sell them minimising their losses.

Underwriters are 'insurance', and like most insurers they do not want you to have an accident. ;-)

[typo56] 26/11/2015 14:42

kojak78, I see what you mean now. Presumably all rights will be paid up, even if it's by the underwriters?

I can't recall if I've ever been short nil-paid rights when they've been paid up. I suspect I may have been, through a combination of lethargy and ignorance! If I find the time I'll check and look at what happened.

[graham2405] 26/11/2015 14:36

"If you're not yet irritated with my questions I hope you don't mind a couple more."

I like answering questions..........I learn as much from answering as asking.

"It seemed to be common news that the PIC had reduced from about 10% to 7% before the RI was confirmed so is it likely that they bought since and have now dropped their holding to 7% again or put another way they are actively trading or at least have been?"

No, they have dropped it below 7%

The last RNS stated - From 50,733,635 to 44,870,970

The recent RNS stated - From 44,870,970 to 40,605,886

So, no evidence of trading between those RNS's

"What do you think is potting with platinum short term, another of its brief rallies or has something more fundamental changed? I may have got hold of the wrong end of the stick but if Russia's transferring to stock some of what they previously sold then that doesn't sound helpful to the price beyond a matter of months but it would help Lonmin at this juncture."

I avoid predicting Platinum prices, but I will state, invest based on where they are now. They may of course go lower or higher. Regardless, I do not see an obvious driver to take it above $1000 in the short term, unless one of the larger PGM producers closes.

Stockpiling (taking it off the market) could lift the price, but, the knowledge that it is sitting there will keep a lid on any rise (they could of course dump it later). Also, a number of companies have reduced production (not enough), but if the price improves they will produce again, this will also keep a lid on any raise in price.

This is my 'considered view' I am not a commodity expert. BUT, I have a pretty good understanding of economics.

[kojak78] 26/11/2015 14:31

Typo56, 15% of shares should be on loan right now. And short positions won't lapse, each right short will be 1 new share short, but shorters will get 1p per right short too. Of course if 1/3 of shareholders let their rights lapse that amount will not be transferred into shares. But it is only a fraction, there is no question most of the rights will be taken up.

[careful] 26/11/2015 14:20

agreed mikemaxm, it is impossible to predict commodity prices when there is so much speculation.
Many short positions CFD/ETF's on metals that are making money for the punters.
But when/if the fed does move they could cash in their profits and we shall see a bounce.
Similarly long $ may have also run its course.

This Company is priced for the worst possible outcome right now.

[lazyhisnibs] 26/11/2015 14:20

Graham,

If you're not yet irritated with my questions I hope you don't mind a couple more.

It seemed to be common news that the PIC had reduced from about 10% to 7% before the RI was confirmed so is it likely that they bought since and have now dropped their holding to 7% again or put another way they are actively trading or at least have been?

What do you think is potting with platinum short term, another of its brief rallies or has something more fundamental changed? I may have got hold of the wrong end of the stick but if Russia's transferring to stock some of what they previously sold then that doesn't sound helpful to the price beyond a matter of months but it would help Lonmin at this juncture.

[mikemaxm] 26/11/2015 14:09

Careful
The experts have been wrong about platinum price that I stopped beliving their medium and long term forecasts.

[typo56] 26/11/2015 13:59

kojak78, if you let your short position in LMIN laspe you don't end up holding a position in LMI any more than you would if you let a long position in LMIN lapse. Potentially short positions could be liable for whatever long positions receive for lapsed LMIN in the rights issue rump, but given they're expecting zero...

I guess I've missed something but why if all investors were to take rights would the demand be ca. 115% of rights available? That doesn't sound right. Ah, so 15% from short positions?