Hi 2ic,I'd be interested in your views on the question of share...

Hi 2ic,

I'd be interested in your views on the question of share price.

As I see it the fall in the share price was heavily influenced by a prolonged period of uncertainty about raising capital. This started as the final announcements regarding mining right, native title, etc where announced to the market, and then immediately attention turned to the question of financing.

Because the board had no clear direction on the question of which route to take it made sense that the stock went into a rolling downturn based on the simple dynamics that each time anyone contemplated a cap raising price it needed to be at least 10c below market price, this view then motivated selling down to that imagined price and then the newly contemplated cap raising price needed to be 10c lower again which then, in the void of information, meant the price had to move down to that 10c lower mark and in so doing the new position became one of the placement now having to happen at 10c lower again and so and so forth, a Perfect Storm, a self fulfilling collapse, all happening when a cap raising of that size had been taken off the table as the most optimal option at 90c.

Arguably at the same time as the final announcements being made it could have been feasible for management to put the stock in trading halt at $1.15 and announce a $200mil placement at $1.00. And if that had happened there may well have been the sentiment to get it away. Now I'm not suggesting that that's what SHOULD have happened, it's only in hindsight that that looks like a good call, it made plenty of sense to remain open to less dilutive outcomes such as a T/O or partner emerging on a rising shareprice, however given the elephant in the room which everyone was seeing, the rising share price didn't happen.

So my question is one of value. Are we assuming that TB is only worth X because of where the share price fell to, or could it be that the shareprice fell because of the Perfect storm, not value, and that NPV and capex increaeses are not such great markers of a 42-year-monster-of-a-project's worth and that a cap raising at $1 when last traded at $1.15 may well have flown?

If that is the case then let's look at value today, let's look at the share price and look at its significance and relevance to a deal in the circumstance where a company is potentially being held to ransom against the prospect of a capital raising. In other words the share price does become relevant.

If we consider the price movement from $1.20 to be more a functioning of a self fulfilling falling in on itself due to the cap raising pricing logic dedcribed above (of which the instos would have been happy to feed into, as it would be them exchanging cash for shares, so the lower the better) rather than a matter of value, then from a fundamental and technical analysis point of view a rise to 65c is significant. Not only does it represent great value investing, but on a TA basis it would be a switch in the 90 day moving average and would signal a move back to circa 78-85c. And that was the price at which the SP was seriously contemplated, halted at 75c and put away at 65c. Black Rock were willing to put $9mil in at 65 cents. Had the funding requirement for more not been hanging over head it would have rebounded post the raising To 80c, and let's not forget that it only got down to those levels in the first place because of the lack of direction and the cap raising pricing logic I spoke of.

So what I'm positing is, could we justify a SP of let's say 75-90c even in the absence of any partner being known, even with the possibility of a cap raising?

If the shareprice did move to 85c, and why not given a corporate deal which would result in a 40% or more return is a real possibility, then in the event a CR is needed couldn't the stock be put in trading halt and a capital raising then get done at 75c, let's say?

If what I write has logic behind it, then it's in existing shareholders interests to help restore the price by becoming bullish, and in recognising the existing value maybe buying. This would averaging their podition down or up while helping the shareprice restore a picture of value and possibly improving the outcome of a deal at the same time.

I love a Perfect Storm as a reason for a share price collapse it usually represents a one in 5-10year opportunity to go in hard and make a healthy return.