I've been keen on getting my thoughts out for potential scenarios in play (good and bad).
(Tin Foil Cap Disclaimer) - excuse grammar.
Scenario One - Organised Share Brokerage Purchases
Thisscenario was my first thought as to why this is occurring.The purchases are not an individual buying, otherwise you would see it comefrom predominatelyone exchange. However, all three LSE, JSE and ASX are trending with volume inthe timeframe which leads to the assumption this is an organised purchasingeffort. In saying that, a Share Broker is more than capable of achieving this.The timing also coincidently is occurring after both the Mr Hawthorne purchase gotthrough its vote and the CEO's recent talk at 'The Junior Indaba' where heessentially sold KP2 as 'Potash - Put your money where our mouth is'. Followingthese events, it would not surprise me the word spread of KP2 and the boardgave the green light to the Share Broker to open the flood gates. Share brokersdon't just buy up in a day either, with the amount of money they are to invest,they need to organise it in such a way where they don't cause too much spreadof buy-in price whilst also adhering to the traffic light protocolsof the exchanges (ASX having the weakest haha).
What doesn't add up for me here is usually a broker will provide an averageprice they will aim to meet. What's happening here is first in best dressedwhich is more FOMO themed - leading to less of a broker move. Either way, worthconsidering.
Scenario Two - News leak for EPC Signing
Probably the most popular hypothesis getting around atthe moment and I can't blame people for thinking that. The company literallyjust met in China with PowerChina reps to discuss the EPC and most likely, itssigning. Sure, someone from the board may have leaked news (veryunprofessional) but not uncommon. What we are seeing is just those in the knowgetting ahead of the news, which I would think would become a dumpingopportunity. However, as we saw recently in the ASX volume inquiry,no 'legal' signing has taken place yet - take from that what you want. Butentertaining this scenario and the EPC is essentially signed - I see this pricemovement still as too much for such an event. I wouldn't expect the EPCsigning would warrant such volume, there's still 6 weeks after forfinancing to be approved which is also no guarantee on the first try. Thebuying here looks more like a much bigger event than speculativepurchases. Hell, if this was a pump and dump situation, moreshares have been bought in the last 2 weeks than currently exist in the orderbook to dump on, doesn't add up.
Scenario Three - Company Buyout
Ididn't actually consider this until Quest09 linked the recent articleregarding SQM buying out Azure Minerals (ASX:AZS). I did some digging into thisand it appears despite the current global economic conditions, SQM still haveplenty of cash to spend on worthy investments. AZS had been trading is a verysimilar pattern to what KP2 is, then within a short period - boom. See chartbelow with the KP2 comparison (excuse MS paint skills):
Verygeneric comparison here, but the green circles are just noise with the occasionalshare offering or news purchases. The blue however, is the quiet rise beforethe Company buyout was released for AZS. There is a chance this is where we areright now for KP2, however, technical analysis is of no use here, it’sall about product valuation. What are the chances SQM is in a spending moodright now, and is in the market for mining investments? Every finger points toKP2 as a lucrative one, hence their partaking in share offerings.This however, would require a 50% vote, which is David is onboard with, theyhave roughly 21% (please correct me if I'm wrong) - it would then mean thepublic and other top holders would need to account for 29% vote to get it overthe board which is very doable in my opinion. This is a big reason why I thinkDavid has invested his own money, to garner more voting power. A man of his agedoesn't want to be on the board of a mining company forever, I think it wouldlove nothing more than to hand over the reins with a very nice retirementpackage.Thisscenario is actually one I lean towards to the most. The news leak wouldn'thave come from anyone in KP2 - in fact I doubt KP2 are even aware of the buyoutoffer coming their way. The news leak would have come from thosewho are going to be offering it. Now let’s look at potential valuation, which I am by nomeans qualified to do so this is very speculative numbers.AZS traded as low as 0.05c with a mkt cap of around 5 mil approx at its lowest prices. It was sold for 1.8 billion - share price of $3.70.
KP2 mkt cap is sitting at around 125 mil AUD give or take. (Less than a month ago that would have been <40mil).
Now, I can't remember exactly but we need financing of the project close $1.6 billion? Either way, let’s say SQM offers to buy it out for $1 billion in attempt to secure a LARGE discount - this would put the final buyout share price at approx 25c (I am rounding total shares to 4 billion here). I rounded and calculated pretty conservative here so that would be lower end of the price scale in my opinion. If I was a gambling man, I would place this company at a buyout price of 50c.
Now... if you knew a company was to be offered a buyout of 25c or even 50c, would you hesitate at buying in at anything below that? No. This is why we're seeing such rampant buying imo. And if it stops suddenly, perhaps that’s the buyout price before its announced? Very naughty but worth playing that scenario out haha
Scenario Four - Fake news leak, pump and dump, company copes a fine.Okay, the boring one but it's important we account for everything. This is all just a rumour that’s turned mad. Price is pumping as such, and eventually, no news will be released or perhaps even negative news where the signing doesn’t happen - and the price dumps!
Rest assured; I don't think the Share Brokers would let the price go below its original support level of 0.009 as this is the price Mr Hathorne just purchased his large sum of shares at. Additionally, as I said earlier, there is next to now liquidity below for anyone to dump a large quantity. If you happen to see the order book will up with a huge sum of buy orders below us, that would be your warning sign to sell. But for now, we just see quiet movement up and up, followed by a humble support zone. Buyers here don't care what price they get in at, just that they get in.
Please take all this with a grain of salt, I would love to hear what other scenarios you might think are on the cards.
If you read of that, thanks!
Not Financial Advice. 
