Prior to trading halt, stock opened at 16.5 and as high as 17.5 and back down to 16cents. 6 million shares went through the market place.
After the announcement, the stock got dumped and then rallied to form a pretty solid buying support at 15c.
However, that still doesn't escape the fact that 5m shares were sold around 15/15.5c plus another 6m shares that were sold at 16c to 17.5.
Where's the stock coming from? The first guess would be it is a classing pump and dump, and someone did very well. However, on closer scrutiny, we can deduce one of two things -
1) The buying interest isn't just retail and mums and dads. The stock's steadily been creeping up and volume has been increasing in the past two weeks, leading up to the "leak" in the Asian Wall Street Journal.
2) 31m new shares were issued to the vendors of the subsidiary AZG purchased earlier this year, after meeting their KPIs. These shares are to be issued at 14.6c.
If the above holds true, then we can assume that either
a) This was a concerted effort to help the vendors of the subsidiary to exit their 31m share position.
b) The people buying the shares past 2/3 weeks have liquidated and now a new buying force (retail and believers) have emerged.
Either way, we can safely assume that there is possibly a 31m share overhang (although they haven't been issued, it is technically possible to sell first, if they have enough borrow) OR there is a new wave of buyers that have emerged after all this news broke.
The big question for the short term, is will the fresh buyers be enough to take on the 31m share overhang and push higher? Probably not.
In the longer term, this company will be snapped up somewhere along the line, and will need a bigger brother to come in and grow them. In the short term, I would suggest the rally is done and we're back to the 12-13 cent range with small volumes.
Of course, all this is moot if Friday someone (Civmec or otherwise) turns up with an official bid document.
In other words, I dont know what I'm talking about.
AZG Price at posting:
15.5¢ Sentiment: LT Buy Disclosure: Held
