For your information, I have already drowned! I just refuse to believe it. haha!!
Share Consolidation - Very Good Question.
I have my own view, but would like an opinion shared from others. Maybe Westy, Piste Skier or Littleblackduck (if anyone knows what happened to him. They may have equally better views than mine.
But I will give it a go!!
In the case of Sundance Resources they could have a trillion shares on issue and still be the pig with lipstick that it is today. A share consolidation now, would only weaken their SP even further (if that were possible!!). That event could only be possible if and when they achieve financial closure on the project.
There is a risk with having too many shares on issue. It is much easier for the short sellers to get a hold of the company and turn it into a high volume turnover stock. I currently hold FMG!! They did the opposite some 7 years ago when they had 300m shares on issue and made a decision to go 10/1, multiplying their shares on issue. Currently 3B+...
The idea at the time put up by Twiggy was to attract more shareholders and increase market capitalisation.
Maybe a good move in theory, when the IO market was booming....
In the current market downturn and world economy they are an easy target for short selling..and the high volume turnover. Increasing the volatility in the stock and making investors wary of coming near them.
So its counterintuitive in my view, especially due to the exposure you already have to the fluctuating IO price. To increase market cap is hard going. To lose it is easy. You can have billions wiped off your value within a few hours...One bit of negative news and you get slammed. Short sellers paradise, especially when you have some many shares on issue.
My theory is, the more shares you have on issue the greater exposure you have to those that create SP
volatility. My own view that in this current world, the less shares on issue is better.
SDL Price at posting:
0.4¢ Sentiment: None Disclosure: Not Held
