technically significant...

Very interesting underlying equation here...

Hard to be sure but could be as few as just 6m or so shares actually trading in the market.

Shares on issue:

Listed shares = 39,601,000 (62%)
Listed options = 18,970,000 (44%)

Unlisted shares (escrow) = 24,544,000 (38%)
Unlisted options (escrow) = 24,400,000 (56%)

Totals:
Shares = 64,145,000
Options = 43,400,000

Top 20 = 34m (53%)

From this we can make a few assumptions…

Of the shares available in the market for trading (39.6m) we can assume 53% of these are in the hands of the top 20 who are unlikely to sell prior to drilling…leaving just 18.6m shares for the rest of the shareholders.

Of these 18.6m shares, normal trading parameters would suggest approximately two-thirds are in the hands of non-traders or those who typically will not take advantage of short-term price spikes.

This leaves just one-third in the hands of those possibly prepared to sell at current levels…or about 6m shares.

If so, I can see a significant opportunity here.

The retrace over the last two days has seen very little obvious churning…in short, it has been a very measured period of distribution rather than a free-for-all sell-down with the usual high volume volatility. There has been little sign of bid stacking on either side and a relatively consistent flow of orders each way.

The bottom line here is that the limited churn should result in a relatively straight swap between sellers and buyers, rather than a heavy turnover back and forth from just a few traders…as such, given the volumes involved, we could be approaching a significant period of trading.

With only 6m shares or so actually in the market and over 8m traded during the retrace, (allowing for a churn of some 2m)…I think it is safe to assume we have seen the end of, or a very close to the end of the retrace selling.

Of course, there will always be someone willing to sell at any level…but I would expect any volumes trading below tonight’s close to be relatively insignificant.

In light of this…perhaps the most significant statistics here are the VWAP’s for the spike day and each day of the retrace…32.74 (17m)…31.7c (5.9m) and 29.4c (2.1m) respectively.

Assuming the selling has finished, this gives the market 3 key opportunities for an entry…
29.5c for aggressive traders;
31.5c for less aggressive traders and;
32.5c and above for those wanting a confirmed rally prior to an entry.

Perhaps adding further weight to the above scenario, the options have been remarkably strong, finishing today where they started and only trading some 170K shares over the course of the day, in spite of holding a decent premium (3c) on the shares and being almost 100% up over this time last week.

All things being eqaul, as a result of the above assessment, I am expecting a rise near-term…but whether it occurs tomorrow, the next day, or even next week, is a little hard to say with any degree of certainty in the current market climate.

News of course would throw all this out of whack!

Cheers!