Some of you might be wondering why I am refreshing a thread that I started five months ago, when it hasn't aged well and stood the test of time. It is to look at what I got right, what I got wrong, and where we might be going from here.
My post from mid-September did age well for about a month and a half. I think that was largely because of a combination of Regal having sold out and the expectations of the investor memorandum that Bryan was telling us would be out in October.
I think that delay had a big impact on investor sentiment. What occurred in mid October was Bryan stepped down as executive chair (back to MD) and Jeremy Kirkwood stepped into the Chairman role. I suspect that rather than just get an investor memorandum out, Jeremy wanted to make sure the investor memorandum would be very robust and meet the wants of shareholders but also the needs of potential partners in the project. Therefore, whilst Jeremy Kirkwood being appointed chair was a big positive, there was no urgency to buy while Jeremy reset the project and its prospects. The rain and drilling delays have unfortunately pushed things back further than expected.
If I look at where we are now, that more detailed and robust investor memorandum is not far away and would probably have already been released but for drilling delays outside the control of management.
But we are now very close to getting some meaningful information on what the project will look like and more importantly, some indications of capital and operating costs.
So where do I think we will go from here?
I think we are much more likely to see 5 cents than 3 cents
I say this for the following reasons:
- From those posting with a "Not Held" disclosure, it seems like many were waiting for the price to fall below 3 cents to find their entry point. It is becoming increasingly clear that there is strong resistance around 3.2/3.3 cents. Therefore, those looking to bargain hunt are having to decide will they buy now rather than miss out.
- I think that those looking to get in under 3 cents need to consider why the share price started dropping in mid January. I think a significant factor was Glen Corby Bull. He used to be the largest shareholder holding 17.5 million shares on 15 January 2024. He sold 6 million in two weeks to then hold 11.4 million on 31 January 2024. The price dropped from 4.7 cents to 3.5 cents during that two weeks. That 6 million shares he sold represented a significant proportion of the traded volume during those two weeks. During the period 31 January to 15 February, Glen Corby Bull only sold 1.4 million shares and at 15 February held an even 10,000,000 shares. During that period the price hovered around 3.5 cents. The question is now will he keep selling or hold that 10,000,000 parcel? Even if he keeps selling, it does not appear that he wants to sell below 3 cents given that there are currently 10 million buy offers above 3 cents. Therefore, I suspect that the selling pressure from Glen Corby Bull will not push the price below 3 cents and he may have stopped selling.
- Whereas in October there was no rush to buy given the delays, there is now limited time before the investor memorandum will come out. The sell side seems to be thinning with less than 1 million sell offers below 5 cents at the time I am writing this. Therefore, limited opportunity to buy below 5 cents.
- The upside from a positive investor memorandum could be significant and likely to push the price comfortably above 5 cents.
- The grey cloud is that HIO are likely to need to raise some cash whilst they continue their partner selection process. However, management will not raise that cash until they release the investor memorandum. Also, I can't see that grey cloud keeping the price below five cents once the drilling is complete (no more delays outside management control), the investor memorandum released and an update on the partner selection process.
If I am right about the above, then I think that there is a high probability that any capital raise will be done above five cents and the coming days / weeks could be the last chance to buy below five cents.
(20min delay)