Ann: Change in substantial holding , page-24

Hello all.

Agree that it is a bit strange that PALA is selling so steadily over the last few months, having accumulated strongly to near 20% over the last few years.

However, as Vintage points out, there may be many possible reasons for this such as needing the cash, better opportunity elsewhere, diversify uranium investments, etc.

One additional reason might be tax-loss selling to offset profits elsewhere across their investments, perhaps with the intention to repurchase later. PALA's acquisitions were done well above the prevailing share price, so the recent sales would incur a considerable loss. PALA give an address in Switzerland, but appear to have a multinational involvement. Tax could be a complicated affair.

Tax-loss sales and repurchase has to be done in accordance with rules, but it is worth noting that PEN have indicated that a rights issue to the tune of $20-30M is expected as part of their financing package to get into production. If share price hovers around 2.5 cents, a one-for-three rights issue (say) implies around a billion new shares are needed. As most rights issues are at a discount to the prevailing share price, PALA may be able to renew their interest in PEN via the rights issue at a discount whilst booking their sale losses against their tax liability elsewhere.

I have no special knowledge in this matter… just a thought as to what may be PALA's strategy.

For your consideration…


:-)

Declaration: I hold PEN shares and PENOC options.