~11m shares traded in the last session....who is selling...and more importantly...who was the counter-party... suddenly arriving from nowhere.... if you connect the dots based on the last month trading patterns...it boils down to 'tree shaking' by one or two players...
...they call it 'strategic tree shaking' with the objective to accumulate: they will keep playing these games until they have accumulated targeted number of shares through various SPV's.... to ensure to stay below the 5% radar....this usually happens just before a hostile take-over... and shorters are being paid to ensure that accumulation happens at the lowest costs possible…. Strange that AustralianSuper is not accumulating at this price…which begs the question who else is party to this take-over consortium…
Salient facts are still:
- Net book value is ~8x the current share price....market cap is lower than cash in the bank…hence, no cashflow issues....zero cash debt....only convertible debt: : https://www.copyright link/companies/mining/suspended-reality-for-syrah-as-short-sellers-take-profits-20200331-p54fr1
- ....why would anyone develop a new graphite mine if you could just buy Syrah 'off-the shelf' for cheaper than you could develop yourself.... the plant is brand new & ready to meet future demand…and has Balama still has >40 years of reserves in the ground…
- This is no brainer if you have 2 year plus view: massive synergies to crystallize for vertical integration for battery makers.... batteries are the future...not just in EV’s... and natural graphite demand will double every 2 years going forward post this black swan....also synthetically produced graphite will soon be banned due to pollution... this has already started...
Bottom line:
- Try to avoid the current short term noise, myopic narrative & fake news i.e. battery demand will drop due to COVID19, sky is not falling, Mozambique & the Balama plant will not be taken over and run by insurgents J
- The shorters will keep shorting and the accumulators will keep on accumulating- these two parties are under the same roof if you remove the algo noise...and unfortunately, some of the cash-strap retail shareholders will be forced to give their shares up for the current 12c to the dollar...which is sad and they will regret this when the eventual take-over happens at >$1.50/share;
- More importantly is to realize that this company's balance sheet is as good as it gets... robust enough to still be around for at least 5 years; that is assuming that the board will be wise enough to advise the incompetent MD (S. Verner) not to burn more than say US10- $20M/year going forward while the sites are on Care & Maintenance.... only way to ensure balance sheet cannibalization/ shareholder dilution over the next 2 years;
- But I personally think they should get rid of Mr. Verner ASAP... too many red flags based on intent...and last 12 months' performance....he is the main reason why this company share is trading currently at 12 cent to the dollar....has done nothing since the last fund raising round to preserve shareholder value...and substance over form...appears to be consciously running this company into the ground for some reason....i.e. why would anyone suddenly use a convertible debt structure funding for a 12 month cash suicide mission ($15M cash burn a quarter)? Should be sacked ASAP.... or be transparent why he is allowing these accumulators to take over the company at ~12 cents to the dollar....
So, be pro-active and send that email to the chairman and ask him to comment...CC Mr Verner...and file that email...it will come handy if this 'go pear-shape' in a year or two ... especially when we go after Mr. Verner's personal assets post the class action... their email addresses have been disclosed in my previous posts... or look it up... it is in public domain....
...BUT hopefully they (management & board) will course-correct now while they still have the opportunity, by minimizing cash burn until the market has changed... and cash burn below US5M/quarter will ensure this...not $15M...
...still my two cents...
(20min delay)