Sometimes my husband reminds me that it is the little things we should be looking out for when reading ASX announcements .
I am using this reference in this post not to compliment him but as one such announcment that was snuck in after market today is in my view an example of this , something that sounds to be nothing but actually could be very significant
LRS has been completely unloved at 7c and is trading at all time lows .
Optons expired previosuly worthless
Tonights news was that someone has subscribed for $60,000 of short dated options that were offered to old option holders by paying 1c per option , but with an exercise price at 20c short dated .
This seems nothing on the surface but in my view it is a significant example of where there is smoke there is fire .
How could someone be so thick to buy options to this magnitude if nothing was happening , LRS has been in down trend for over 2 years , and very little news has been forthcoming on their Guado project , you can buy hares at 7c , why pay 1c to buy shares at 20c .
Looking at the FA story again , which is why I really like LRS , is that I sense this news indicates something might be happening on the Guado JV they had previously flagged they hoped to start production at in 18-24 moonths when the stock was 40c
LRS do have a JORC resource on this project that is 6% heavy metals , of which around 25% is Magnetite and 25% Andusalite and it is massive in size in a zone where labour is cheap .
Andusalite has quite a high value per tonne and this looks as though it is the biggest resource in the world
In 2012 LRS did a scoping study to starting production at 15 m tonnes per annum going to 30 million per year after 3-5 years
My forecast with simple maths at the 15m tonnes per annum equates to a mine life of 300 years and around $130m income per annum from the andusalite alone , on that number you could expect at least 30m profit per annum .
The stock is 7c because they have had the resource for a while now but no money to fund the infrastrcutre , and people lost interest and sold it down thinking the JV would never eventuate
BHP and RIO are neighbours to the LRS project and I admit this post might be based on hope as a long term holder of LRS , but if the news today is someone wanting to get set in the stock before something happens in respect to a JV this stock will bounce back from 7c very quickly
Happy to take a punt on a 25% + punt in te short term on the back of the news tonight
I disclose my bias I own LRS from as high as 30c , but I also want to increase my strike rate in this forum to over 40% as well should LRS go from 6.8 to 10c as I expect over the next few weeks if my guess is right on what this announcment means
