It has all the hallmarks of a dead cat bounce before a further drop, doesn't it?
When I'm wrong I'll admit it. I was expecting a rosier picture from the DFS. The capex required is huge. I promptly sold out for a small loss (unfortunate I didn't sell earlier when I was in a profit, but I was expecting things to be better, perhaps too optimistically).
Everyone has already said it, but the cold reality is that with that much funding required, there's going to be pain for shareholders between now and when this is funded. You can't sit there with a $200M market cap and expect to raise $2B without causing dilution. I think this will be a great project, I'm sure they'll get funding, I'm pretty sure it'll be a great technical success, I'll likely buy back in at some stage, but I just don't see a reason to be holding now as opposed to after the share price has crashed from the funding pain. Even if it crashes below 10c (which it probably will), capital still needs to be raised and the price will drop below whatever the price happens to be then. Why hold before then?
The only way I can see this being the bottom is if they get a huge investor to buy in at a premium to the current price. This is very rare, but it does happen. If $2B fell out of the sky into their lap now, it would add a lot more than $2B to value of the company (IMO), so conceptually it might add more than $2B to the market cap, and so conceptually it could be the case that someone may want to pay a premium in order to throw the capital at them... but I just can't see it being realistic in this case. Even in conventional projects it is very rare, and capital is raised at a discount, not a premium. In this case we have not only the problem of the amount being massive in both raw terms and the % of the market cap, but it's also to pioneer a novel method and it will take years to get there. Even in a conventional scenario you'd be hoping for it to be a rare exception to raise at a premium rather than a discount, but I just can't see it being a realistic hope in this case.
Great project, great story, just bad to be a shareholder right now.
All IMHO of course.
QPM Price at posting:
13.0¢ Sentiment: Sell Disclosure: Not Held
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