I am taking my lessons from this scam.I lost $500 in total on this, but anything not paying a good dividend is risky. The strategies these thieves used to raise capital raised many red flags. Their modus Operandi was one of, if we do this they ( the shareholders) won't be able to do anything about it, and they were right. ASIC, C&SC & ASX did nothing about it. There was no cop on the beat.
Basically, if you buy a spec stock you lift your risk profile by 90 percent. This is the leverage/risk reward. The thieves know this, they also know the regulator will do nothing about shonky behavior. If there is a severe market correction, 80 percent of the speculative stocks are in trouble. Chalice CGN ( once a market darling ) went from $10 to 79 cents - look at a chart. The spec stocks are a risk on steroids , We have had spec major stocks like Pasminco in the past, and even major stocks get into trouble . I didn't average down on this because it wasn't going my way . i paid 8 tenths of a cent & that was the maximum price they were. Soon after that, they started issuing the under-market stock & they were, issuing stock on and off- the market at different prices. Then they started issuing convertible notes to their mates, and most probably explaining to them why they were a winner . The stock was never a hold & i believe the directors got rid of the stock as soon as they could.
This lot was innovative, the way they brought in multiple of unheard-of strategies all at the one time . If you look at how much they were paying their MD & the rest of the board, it was ridiculous for a company with no income.
Also, look at the amount of drilling they did, it was ridiculously low, and they did as little as they possibly could, whilst paying themselves most of the money raised . There should be a ratio of director's fees paid to that spent on exploration & drilling. This was another red flag . The trouble is many of these things are only noticeable in hindsight. i believe a person on the board with derivatives experience realized the holes in the mining company law & took full advantage of it .
How ridiculous is it to allow a company to issue 46 billion shares, and then to allow consolidations to the value of a multiple of 7,500, to destroy the shareholders' value by 99.983 percent with the 150/1 & 50 /1 consolidation? i owned 60,000 shares & now own 8 after the consolidations . Whilst it was despicable behavior, I believe the anomaly, lies with the company law- the company just exploited it. Another red flag with all of this was why did Comsec not charge customers to sell minuscule amounts of shares, so people could realize a tax loss . Why didn't they also contact ASIC / ASX / C&SC, and alert them to what was happening to their customers? It's your money & your decision, and your right to decide where your money is allocated. I played Ora Banda OMB, but things didn't improve for them until they brought in a new General Manager called Craig, who turned around their fortunes slowly, unfortunately, I sold out before this improvement. loyal shareholders who wore the hard times were handsomely rewarded. Sleep with dogs & catch flees. The thieves have snuck off with your money, possibly to resurface elsewhere - be aware of the red flags
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