I have often suspected that hedging is found in those evil shorters but didn't realised that there are bond holders exposed to the PLS debts
The bondholders aren't exposed to PLS's debts they are providing the debts via senior secured bonds (the secured means secured against the assets at project level). I don't know the specific conditions of the bonds PLS has issued but if they are tradable in secondary markets or over the counter markets, bondholders will often borrow stock and use it to short the company they have loaned money to. This offsets any falls in the value of the bond in the secondary market and preserves the yield (interest rate) on the bond. It's a
delta-neutral hedging strategy (look it up)that money lenders use to try and insure the income stream on the money they have lent. If this form of shorting occurs in conjunction with real, more malicious shorting then the effects can compound the amount of selling.
Not sure I understand this point. A very long LOM (very large resource) is the basis to extrapolate the valuation then work back to get current valuation using this methodology.
I think you are missing the point. When I refer to LOM, I'm not referring to the size of the resource, I'm refereeing to the life of mine which is governed by certain crucial assumptions, not least of which is the long run underlying commodity price. The NPV is maximised over certain pit designs and mine lives which take into account many variables. What I'm saying is the all important variable, the commodity price, is impossible to estimate over the lives of these projects so therefore the NPV's and DFS are also bogus, complete impossibilities. The estimates have been created on Fantasy Island making little Tattoo very happy. And before anyone accuses me of being a shorter or down ramping to get in cheap, please forget it. That's just a laughable HC cliché. I'd never put money into this company at any price and I've never shorted a stock in my life. I'm a long only investor. Esh
PLS Price at posting:
80.5¢ Sentiment: None Disclosure: Not Held
(20min delay)