Brokers, Fund Manager and Re-rate

I thought I’d get together a broker trading summary for TNG, PLS and KDR since 1 July 2016.



The problem with TNG SP is really clear when looking at the data – other than ‘self managed investors’ using Comsec, there is no other secondary or primary platforms that support TNG.

The measly 1m share at 0.12 is an excellent example. A poster recently asked why would someone sell at this price?  I’d flip that question and ask why are people not buying at this level?

I’ve raised with the company about attracting new investors to TNG, both retail through brokers and institutional through fundies – the company have suggested the primary reason for the disconnect between SP and NPV is due to the discount applied for financing and that the SP will only re-rate come financing.

I think the company needs a full-time resource like an executive director that spends all of their time promoting the company and project to Australian brokers and Australian fund managers.  Not to be confused with someone like Paul Vollant promoting the products around the globe.

Retail self managers (ie – comsec accounts) aren’t going to drive any sustained price movement (even at a financing re-rate) that we’ve seen at advanced mining peers that have been through the evolution the last 12-18 mths, largely due to the fact:

1. Those invested in TNG are likely already overweight;
2. Those wanting to be invested in TNG are already here; and
3. The retail pool of prospective investors in TNG is small.

We really need new brokers introducing their clients into TNG and we need the thousands upon thousands of small cap fund managers (believe it or not most small caps fundies invest in co’s up to $1B market cap) to drive the next wave of SP appreciation.  Even with a finance re-rate – if fundies and brokers have no idea who we are because we haven't built those relationships in the preceding years, they don’t invest and there isn’t a sustained re-rate.  For anyone concerned about a TO, this should be your primary risk to address.

Have a look at PLS and KDR  and you see the names UBS, Deutsche, Morgans Stanley, Merril Lynch, Citi.  These are generally the custodian/broking accounts for all the fundies/instos.  These are the guys we need to have on our broker activity to see any meaningful or sustained re-rate.

Those that will suggest existing holders will drive this re-rate – it simply won’t happen.  You get a spike and drop like our friends over at KCR.  I know I’d probably buy another $15-25k on a finance re-rate but certainly not on a binding term sheet that has yet to even land on a commission for the sale/marketing of the titanium.  In my experience, the commerce of an agreement is generally the deal breaker/maker.  The lack of trading suggests most probably see this agreement that way.