02-Jun-2020: Legend Mining Presentation June 2020
LEG are raising capital on the back of recent positive drilling results, hence the company presentation (link above). Their latest drilling results were released last Tuesday (26-May-2020) - see here: 30m of Massive Sulphides in RKDD017 & RKDD013 Assays, Mawson. I sold out of LEG at 16.5 cps on May 21st, after selling the majority of my position back on May 1st at 19.5 cps, having bought them on April 1st at 11.5 cps. They're now back at 15 cps. Highly speculative, as they are explorers, not producers, and have no income except from capital raisings. I tend to trade these explorer stocks, buying relatively early as the hype is building, and then taking profits and hopefully selling out before the inevitable capital raising (CR), as I have done here (probably more due to luck than skill).
If a company is investment grade (which LEG clearly is not) then you might want to participate in a capital raising, if that CR is indeed extended to ordinary retail investors (which they often are not, particularly with smaller companies who often go for the cheaper option of placements). However, with these speccy metals/minerals explorers, I would prefer not to be caught in the stock when they decide to do a CR because I usually don't want to participate (particularly as it's often very hard to put an accurate "valuation" around such companies to work out if the CR price is fair or reasonable), and because they almost always result in dillution and/or a share price slump. The exception is if they come out with excellent news during or just after the CR period, such as further exciting drilling results. But my view is that the company's management are probably in the best position to work out whether they are likely to have really good news coming soon, and if so, why would they not wait and raise money AFTER the news is out there and the share price is even higher?
So, to summarise, I find that these CR's are generally opportunistic, particularly with companies who have no income and have to raise capital regularly to keep going. With such companies, plenty of practise usually means that they get pretty good at judging when to raise capital and it's not always at an opportune time for ordinary shareholders. So I generally steer clear of them. In the cases where I have got involved, the share price was usually lower a month later and I could have bought them cheaper on-market, so participating in (or holding through) the CR turned out to be a mistake in almost every case.
So, I'm happy to be out of LEG during this CR, and happy to have already banked my profits.
If Legend (LEG) hit some really SERIOUS mineralisation later, such as something similar to what the aptly named Sirius Resources discovered a few years ago (they found the Nova-Bollinger system and were then acquired by IGO at a MASSIVE premium), then I'd likely get on board and stay the course (until the inevitable takeover), but LEG are not there yet.