back to reality, page-5

Burbs not a shame at all imo, but an opportunity, or should I say more corrcetly - opportunities.

Opportunity #1:

I made this comment on another stock I have a large holding on the other day but after 2 years of buying opportunities and very few selling opportunities, we were given another selling opportunity this week.

Thursday night's trading on the Amex with the spike up to 95c but close at 87c was a strong signal that the spike had found strong selling resistance. So the gap up on the ASX yesterday to 5c presented a short term selling opportunity in its own right as a signal that the buying spike had run out of steam. The announcement relating to the Roosevelt land sale created an uncertainty that made that selling opportunity obvious gift - imo.

Opportunity #2:

Imo the Roosevelt sale announcement paints some very interesting scenarios, most of which were covered in the discussion on this forum yesterday.

Yes the worst case scenario is that the land sale falls through and the company will be short of cash for its drilling campaign. The funding situation would then put downward pressure on the SP again.

I think the US market either took this possibility seriously or as an excuse/opportunity to take profits on the last week's gains (as the market so often does).

However, there are a number of reasons why I think that funding problem eventuality wont occur:

Firstly, there is the question of whether the Roosevelt land sale will go through or not. While it is a binding agreement I dont think we want to be in a position where the company is taking the counterparty to court to effect the contract - that would take ages and money - not a good outcome.

Also, the counterparty has asked for an extension, not cancellation.

The company's announcement, issuing a potential termination notice, doesnt sound as if the company is desperate for the sale to go through (otherwise it would simply have granted the extension).

More like either (a) it wanted to make a serious statement to the counterparty to get its skates on and close the deal otherwise the company is in a position to cancel the sale (which may be a bluff), or (b)the company is comfortable that it can find an alternative buyer or that it wont have a short term funding problem until it does.

There's also then other funding alternatives. Primarily, there is still the almost 600M RI shortfall shares to issue and tide it over cash-wise - who would not take those now at 2.5c?

Personally, I think the Roosevelt land sale will go through. While the price gains over the last week I think were primarily driven by the Fed Bluff JV with OOGC, given that drill is months away I think it was inevitable that there would be consolidation after the strong gain. Yesterday's ann has accelerated that consolidation and maybe will bring it down to a lower price than it otherwise would if it had gone through - which is an opportunty to buy back for anyone who sold yesterday, simply buy more knowing the JV deal with OOGC is in the bag.

Remember, the SP closed at 3.4c on Jul 31st before the OOGC deal was announced, and opened at 4c after it was announced and advanced up to 5c. Imo that puts market valuation with the OOGC in the 4's, and anything below that now is good buying.

Cheers, Sharks.