Global Geoscience and Variscan

A single buyer yesterday, at 03:17:51, snapping up $500 worth of shares at 0.4 of a cent.

Followed by a single seller, at 03:18:58, dumping less than $400 worth of shares at 0.3.

I find it difficult to interpret this as anything other than a rather blatant attempt by a prospective buyer to try an encourage holders to dump stock for tax reasons.

On a more positive note, it also might suggest that some of the buyers with orders sitting at 0.003 are starting to worry that they may end up missing out.

I get a sense of deja vu with Variscan at the moment. I am reminded of another stock I used to hold, Global Geoscience, which back in 2015 was also bouncing between 0.003 and 0.004 for a few months. These days, by contrast, GSC is a much-hyped 'hot stock', with a share price sitting well above the 0.400 mark.

Yet if you go back and read the posts on the GSC thread back in 2015, most of the posters (myself included) were moaning about the company.

And there was good reason for this: the management of Global Geoscience had a tin ear to shareholder concerns. They were skilled geologists, but basically ignored all their shareholders and inevitably, the shareholders lost confidence in the company, with the share price eventually winding up at less than half a cent. In time, of course, there was a massive rebound in the share price, but by that time I had sold off most of my shares, like most other long-term holders.

Anyway, the point is that no stock falls to sub-cent levels unless there is some significant problem with the company .

And this would seem to be the case with Variscan at the moment: shareholders have lost faith in the management, given the lack of progress in the company over many years. And there have been some suggestions that this is a 'lifestyle' mining company. While I am a bit sceptical about that claim, it is fairly clear that at the very least, the management have adopted a poor long term strategy for the comapany.

But is the company really worth just a few million dollars, as is implied by a share price in the 0.003 - 0.004 range?. Personally I am a bit sceptical.

Other might disagree, or course. Following on from the capital raising, the number of shares outstanding will exceed one billion, which increases the chance of a share consolidation, and these seldom work out well for shareholders.

However, I remember thinking the same thing about Global Geoscience back in 2015. They were forced to do raise capital at almost the lowest level possible (0.002) and true to form, the GSC management ignored their long-term holders, instead embarking upon a placement limited to sophisticated and professional investors. After the placement, the number of shares outstanding in the stock blew out from a few hundred million to nearly one billion. In this context, it is not hard to see why holders were selling off as low as 0.004 and 0.003.

One thing I will give the Variscan management credit for is that at least they are providing all holders with a chance to take part in the entitlement issue, which is in stark contrast to the way the GSC management handled a similar situation back in 2015.

Any stock which falls to half a cent or less is going to have some problems, they wouldn't be down at that level if they didn't. But my feeling is, that all things considered, Variscan looks to be a better bet than most stocks with a price tag at 0.5 cents or less.