Morning Fellas,
ORN = 3.4c
ORNJ = 56 ZAR x 0.085 = 4.76c
Arb = 28.6%
I am interested why people say that the South African exchange is irrelevant to the ORN pricing / valuation discussion.
Here is the volume for ORN on the ASX
And here is the volume for ORNJ on the South African Exchange
The volumes are similar each day ... so why would people discount the South African share price as having no informational value ?? There are many reasons why people can't access international exchanges to arb the difference between the two prices.
My assumption is that investors within South Africa would know a lot more about the two assets (Prieska and OCC) and the operating environment within South Africa vs Australian investors.
You can see from the chart below that the huge disconnect really accelerated once the OCC option was secured.
The chart shows the volume for ORNJ which, in absolute terms really ramped up after OCC was added. In relative terms it also increased materially vs. the Australian volume.
This makes me think that South Africans who are familiar with the history of OCC and the potential for further exploration success (or even the disclosure of the current, consolidated R&R) value this opportunity far greater than Australian investors do.
Throughout the chart history (above) there has always been an arb gap which may be explained as (a) jurisdictional discount outside of home country, and (b) lack of alternatives for South African investors limited to the South African exchange, and possibly (c) a better understanding of the assets that ORN have by South African's vs. foreigners.
Yes ... I understand that there are more shares on the ASX and the CR was done on the ASX showing that this is the main market. Conversely, ORN was able to raise $25m very easily in recent days showing that HNW and Institutional money sees value in (a) base metals and Cu particularly (b) ORN's projects and (c) aren't too concerned with jurisdictional risk.
I am keen to have an alternative view presented as I am really scratching my head here in regards to the arb.
Cheers
John
