actuary, I support your observations. If there is good news and momentum in share price growth and market interest, the consol is a benefit.
Some thoughts..... If the sentiment and share price and buyer strength over sellers is positive, the consol' will be of benefit. The benefits include extra cash receipts for further exploration and proving of resources on the numerous and diverse tenements. When the news is good and the market is supporting and seeing growing value, the market cap increases. Market sentiment is effected by many things as the last two weeks have highlighted with hundreds of stocks in Australia, including many quality blue chips. They are sold down just because that's what the media is writing about, the elctronic news is talking about, and the taxi driver and the bloke at the pub is talking about. If the company ( in this case GDA), doesn't respond to any market uncertainty or nervousness, the price will come under pressure. Apart form whatever percentage of people are influenced by positive or negative posts on stock chat sites like Hot Copper, some will be influenced to sell or buy according to; a. there level of research, b. their financial ability to remain in the stock long term , c. and their individual risk profile.
They will sometimes sell or buy without logic or reason other than having a gut feeling to get in our out of a stock. Whenever a stock has a strong rally it is normal for a retraction as waves of buying are inevitably followed by large scale selling. Real loss only is incurred when a paper loss is converted to a real loss by selling at a lower price than the investor entered the market at. In the case of Gondwana, this was compounded by the rally occurring at a time when the market was about to have a major downturn across the world at the same time as many investors in the rights issue were selling a percentage of their new shares they received (in the rights) to take a profit and free carry their remaining investment and also to convert the free options they received in the rights issue. An analysis of the trading data particulaly the volumes, shows that the selling has diminished significantly and the buying has increased at the current lower prices.
Following the decline in world markets on the middle of last month, gda was waiting for news and still is on the gold assays. The quarterly report didn't reveal as much as it could have and the timing of good news may be more targetted at the timing of the general meeting of shareholders regarding the vote on the consol'. If there is no good news or positive vision and exploration upside articulated by the directors, the consol' could be a bad thing for short term shareholders. However, where the consol' is linked with positive news and company direction towards moving from an explorer status to a producer, consol's are good for all the reasons the directors always march out as the benefits. When warren gets back from China, I have some high expectations for some detailed exploration updates, results and news on timely jv's and plans on proving up resources. Similarly, Flinders is a classic stock that had a wave of buying, a large increase in the share price and a 1000% increase in market cap and many people would have bought into FDL at the 14c to 15c price levels and then sold around the 10c level and turned a paper loss into a real one of around 50% of their capital investment. They would be feeling simliar to the traders who bought into GDA around the 5c level and sold at the 2.5c to 3c level. In both cases, the decision to sell is a personal one and is influenced by many different factors including, being influenced by negative posts on stock chat sites, nervousness about the consol, nervousness about the world and aus' stock market declines, increasing interest rates, the time between news announcements, the large sell volumes dominating the buy volumes etc etc.
Where a longer term position is taken like that of myself, the daily decreases or increases tempt thoughts of do I hold, do I buy or do I sell. It is a daily challenge to the individual sentiment any shareholder has in this stock or any stock for that matter. In the case of a micro cap explorer like Gondwana, the risk and reward is higher and those that buy on impulse with out a long term strategy and without regard to their investment plan and profile, are at risk of selling and recording a real loss rather than just a loss on paper. Those that hold with the associated risk, also hold a position for a higher reward. I have been a long term holder in FDL and GDA and vary my exposure according to the upside in the news and upside in the value, not market sentiment. I buy when people are selling and I sell when people are buying. It takes discipline and courage and a lot of research. If I can illustrate how it works on a long term hold......I am currently researching CUO, who are the beneficiary of a merger with Mineral Securities,MXX is a very much unknown and undervalued and unloved stock ( which I also have a small investment in). CopperCo did a one for 10 consolidation which was very successful. They were trading around 2c. So did Felix, they were trading around 6c. Plus I have mentiioned another on the gda threads. In the case of cuo (copperco) the shareholders approved on the 12/05/06 a 1 billion share placement pre consol' and an issue of 247m shares @ 1.7c. Multiply that with the 1 for 10 consolidation equals 17c per share post consol'. At a trading price of 3c pre consol' they went on to raise $47.6m by issuing 136m shares post consol' @ 35c each. This was used to continue moving towards becoming a producer of copper north of Mt Isa. The company is now a producer, the price has fluctuated between 55c and over a dollar recently.Before the consolidation they didn't have hundreds of ,illions of shares in the market, they had billions and they traded below gda's prices last month.
For those who are trying to portray gondwana as being a 1.5 c share, it may be that but so was CUO and many other micro spec stocks. The consol' did wonders for cuo, they raised capital, lot's of it. as gda will have to do and as every other company that is an explorer with not much, that begins to get closer to having something. All the while, all companies have to fund their exploration and discovery towards proving a resource. Wether it be FDL, GDA, CUO or any other company for that matter, there will always be people sticking the boot in, there will be people singing a ramp up song and a few who do their home work, take a position cheaply ( anything under 4 to 5c is so cheap at the moment) and hang on for the bumpy ride up and down along the way to what they see as a company in it's kindergarten years.
Like an investment in our children, mining minnows , they can be expensive until they get through university and start earning a dollar in the real world of the work force. Copper Co is a marvelous story and from the research and the cheap buy into Gondwana and Flinders , I think they will be also. To move from 1.7c like CUO, to where they are now, GDA will have to do exactly what CUO did and every other company has to do, they will continually have to go to the market one way or another to secure funding to do the exploring and to prove a resource exists. They will look at farm ins, placements, rights issues,financing facilites, debt and loans, options issues jv's and other forms of capital raisings. That's what explorers do. cheers Fatstocks
GDA Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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