Ann: Algae.Tec Announces Biofuels Refinery Deal , page-17

re: Ann: Algae.Tec Announces Biofuels Refiner... Tretch: Yes, director buying has become worth looking at and potentially taking seriously. He still has bias and it would be naive to think that you can be sure he bought in simply with the same strategy as a non director might, but it's no longer completely obviously transparent publicity stunt buying. Keep in mind that even if the company is inevitably going to go broke and a director knows it, buying hundreds of thousands of dollars worth at a time like this can be in a director's financial best interests. I'm not suggesting anything like that is the case here, but it's worth considering carefully if you're going to be putting your own money on the line - your job doesn't rest on it, you don't have the same amount of skin in the game already, and no one cares whether or not you buy, while people start popping Champagne bottles and waving pom poms when a director does.

Gorsen: So I'm a human litmus test! I'm not sure if that's a compliment or an insult, haha!

I do think the current situation looks brighter than it did a few weeks ago, but let's not get ahead of ourselves. The technology is still just an unproven concept, it's still a long way away from being applied on a commercial scale or being proven to be economically viable on a commercial scale. Put that in context of the massive market cap to book value comparison!

How much cash does AEB have on hand? How much cash is going to be required to build this plant? How long will it take to start pulling money from sale of oil (assuming it is possible?).

Let's for a moment assume that this is all perfectly economically viable (which is a pretty massive assumption). Let's go further and assume it was a conventional piece of technology which was going to be applied in a reliable, proven, tested way according to the economics AEB has suggested. I don't think this would be a particularly attractive company to buy into, given the timeframe and cost requirements between now and when things start happening - look at the level of success which is already priced in by the market.

What we see at the moment is a very long term decline in share price for perfectly understandable reasons which has been broken by a piece of news which has caused excitement even though the fundamentals haven't changed (it was always obvious they'd be able to get a place like this to stick their plant). At 17c everyone was sitting on a loss, the typical demographic of holder was someone interested in sexy new green technology and thus would be inclined to be 'true believers', so any good news was going to be a catalyst for some buying. So where to from here?

In the short term we might see the share price tread water for a while, or we might see a return to a declining share price. It's difficult to imagine anything causing a rally from here. In the medium term it's very difficult to see anything but a gradual decline in share price as the current excitement fades. The serious brake on the share price is that so much upside is already priced in.

Assuming the technology is viable we'll probably get a good time to buy in, but even if it is viable (and I'm far from convinced of that), I think we'll get the chance to buy in below 15c. Having said that, natually, the market is irrational and lots of people love a story like this, so anything is possible. I wouldn't get too excited about the current jump unless I had bought in at under 24c and had already sold out in the current opportunity. In hindsight it was a good trading opportunity, but was basically impossible to predict.

Good luck to all!