trying to make sense of it, page-3

Hi All,

Fingermark said that “Patience should be the key”. I for one am not a big fan of this. I try to time my ‘entry and exits’ when I buy a particular stock. My view is that to get optimum performance, buy the dips or buy the takeoffs to minimise risk. So I use a bit of charting to get my entries right.
I bought WME at 0.26c after the announcement. But had bought into WME before hand at 0.18c. So yes, I’m sitting at a loss for my second entry, but this is partially offsetting with my original entry. Although am sitting at a paper loss and am unhappy about.

I also try to determine my exit price – and given that most speculative stocks hold the trade pattern of “Buy on rumour, sell on fact” – I think what you are seeing is a classic example of how the last two weeks where traders bought up the stock, and nubies also bought WME as a speculative Uranium buy given the propensity of the run.
Once the results came out, Traders sold out their positions for a tidy 25%+ margin and people like me who saw value (and saw the potential takeoff at 0.26c) bought the stock off the traders. Nubies, held hoping for greater gains IE: 0.30c mark, but the market corrected because the traders had so much higher volume holdings than what the Fundamental buyers wanted to buy the stock at. I for one am prepared to buy 600K worth of shares at 0.25 = $150,000, but I don’t have that much money and no one will lend it to me. If you look at the volume trades the last few days, it was in the mid-500k and that aint much. That’s small time trades and more than likely, its Fundamental buyers like me and Fingermark and Sandune buying up WME.
As such, you get a sell off. You get a downward sloping trend and as such, its down around 0.215c per share. Nubies start to get worried and their small holdings IE; less than 50K shares, start to be put on market. Therefore 0.23c support was breached yesterday. I hope it halts – but hey – I’m not the market, and the market has punished WME.
Hence this is where we are at today – whereby we have a market for WME that are not so full on Fundamental investors who put value on the stock versus Nubies/traders.

HOWEVER,


This isn’t bad – I see it as a buying opportunity. Now you may ask me; why am I upbeat about WME.

My exit strategy dictates my share management strategy.
When I buy a stock, I categorise it – IE: Quick trade 10%, Short term – 25%, Long hold 100% - Bagger 10x.

WME is a 10x.
From my view based on my comments/analysis on its land holdings, its shallow grades, its geological and political situation and ABOVE all – management. Its financial structure of having $2.5mill in the bank is sound, its cash burn will see it through to end of year. It has 201m heads and x amount of oppies . (which is too big for my liking.) By which stage the JORC resource will confirm an 18million resource.

A company that I invested in; OMC had an inferred JORC of 13.7million U308 and was worth $1.10 before takeover recommendation by the board. I compared OMC vs WME, and WME has –

1. Pre-historic data: Goldfields said they had 18million U308. That assessment was made by geologists and was submitted and approved by the Nuclear Atomic council back in the 80s. This serves as a guide to management/geologists that there is resource there. How many ASX listed companies can vouch that their company actually has U308? I mean companies like TOE, SNU, SRZ are all still looking…why invest in those when you have WME who have 18million based on Goldfields’ research? It doesn’t make sense to allocate your (or mine) on companies that haven’t got the resource. Also make not, I’m saying that WME have the resource. WME management are on the ground to get the JORC up and running to get the company to start get BFS and capital funding to extract the U308. In that case, this company could be producing in two years – IE: 2009. How many companies can actually put forward a producing U308 sign in their front door by 2009 without the red tape and political legislation to go through. Just ask PDN how they are coping with it.
2. Management: Leon Reisgys is Acting CEO and has been for ages. The guy is a Geologist through and through – and you gotta love a captain that actually goes out on the field, digs trenches, analyses and gets to know their ground. How many CEO’s of Uranium companies are out there doing this? On the flipside, do you want a CEO who is a Technical director or a CEO to manage the company and its prospects. The perfect answer is you have the two separate, with WME we are saving costs by having the one guy, but we also rely heavily on the one guy. I’d love to have an ex WMC CEO to market this company.
3. Market Cap: WME is still 0.21c per share with a market cap of roughly $43million (excluding oppies). In the U308 game, market cap size is the key in that the smaller the shares on offer, the propensity for the SP to go up – quickly. Have a look at WHE. Its similar on many counts with WME in that they have pre-JORC data of 45million pounds of U308 to target, but share on issue is 86million. RESULT $2.60 SP. Point is, WHE has good tenements, exactly like WME and in a much more favourable and developed U308 friendly country. I wish I bought WME when it was $1.10, but didn’t because I was too preoccupied with GDN which I made a massive mistake on.

So there’s my take on WME – I’ll keep on analysing and will post more in depth sometime later.


Cheers
D