What was behind the selldown this week? Does someone know of a pending cap raise?

Here is the 3 months daily chart (taken from Comsec).

Recent drilling results have been extremely positive. And yet MMA’s market cap had not increased from where it was back when the IPO happened some two years ago. In the past two week’s though there has been some concerted buying (including by me) which saw the share price increase to about 26.5 cents. That was countered though on Wednesday and Thursday (10^th and 11^th January) this week when a big increase in selling volume saw the share price fall back towards 21.5 cents. On Friday 12^th January however the selling stopped and the share price closed for the week at 25.5 cents. What’s going on?

We all know that at some stage the company will need to do a cap raise. Was that a reason for the share price to fall to the extent that it did? It seems that the sellers this week were not interested in maximising the price at which they sold. It seems to me (and others I know) that the selling was all about bringing the share price down. It makes me wonder if there is someone out there who would gain some benefit if the share price was back down to around the 20 cents mark. Who could that be?

When a company needs to raise capital, placements are often offered to sophisticated investors. The company appoints a broker to handle this. The sophisticated investors are offered shares at a discounted price. A lower share price is obviously more attractive to those investors. As MMA’s share price headed back towards 30 cents earlier this week, sophisticated investors who might have hoped to increase their stake in the company at a much cheaper price would have been disappointed.

Maronan’s last capital raise was handled by Veritas Security Limited (VSL). Presumably VSL would also get the gig for the next capital raising. I am hoping therefore that the 600,000 or so shares sold earlier this week had nothing to do with VSL. I’d hate to think that the company’s broker might have an interest in suppressing the share price prior to a cap raising. If someone can show that they did, then this is something that should be brought to the attention of Maranon’s directors, and perhaps also the ASX and ASIC.