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AIM and ASX listed Norseman Gold (LSE:NGL) is rubbing salt in the wounds of the private investors it so likes to screw and who had bought the shares before Wednesday’s placing announcement likely feel by increasing the proposed placing by 25% (to Australian$25 million) “due to strong demand” from “institutional investors”. For once I do not condemn Norseman’s management. This time it is greedy City brokers who should be strung up from lamp-posts with piano wire. This sort of thing is a stockmarket scandal.
This placing was done via a book build. That is to say the brokers (who trouser 5% of funds raised) call up fund managers and say how much stock to do want at what price. So we thought it was A$12 million (plus $8 million loan conversion) at 2.7p. But it appears there was more demand so they issue more stock at the knockdown price. They could have simply upped the price and raised the original amount (rather than an extra A$5 million) at a higher price. But no.
Greedy brokers will have told the company:
1. Better be safe than sorry. The gold price might slip/ you might get a kangaroo caught in the grinding mill and have cost over-runs, blah, blah, blah. I know you do not need the cash but let’s play it safe.
2. Hugo Ponsonby-Fuckwit at ( name a big fund manager) says he wants more stock as do a couple of other leading fund managers. We can’t scale them back as they will be big supporters in the aftermarket so let’s give them some more shares. Yeah right. These guys are as likely to buy in the aftermarket as they are to move into a council house in Scunthorpe. At 2.7p no wonder they want more stock, it is a giveaway. They will not be long term holders but will happily turn over stock if they can make a quick buck.
And I bet you that among the “names” introduced by Northland Partners and Ocean Equities in London are bucket shops like Hoodless Brenna who will be flipping this stock straight onto their retail punters having made a turn. If this placing was all done to blue chip long term holding funds, I shall donate £50 to a charity selected by the staff at Northland/Ocean. I am not making a provision. If any clients of Hoodless, City Equities, SVS etc are being offered stock and would like to confirm my suspicions feel free to get in touch.
3. You are great miners but we know how to play the market, that is our game. Trust us.
It is all filthy. The brokerage firms will have made an extra 5% of A$5 million ( call it £170,000) from this ruse and the actual broking staff will get 15% of that ( i.e. £25,000) plus have a bigger bonus pool at the year end. Shareholders will be shafted. So tonight it is cocaine and champagne all round at the broking firms involved. And its diet coke and sour grapes for you and me.
I still think that the shares are dirt cheap. My target price remains well into double figures and I hope for closer to 20p than 10p within a year if production targets are met as I explained HERE and HERE.
But the staff and management at Ocean and Northland should hang their heads in shame. They have made themselves richer by screwing private investors. I invite either firm to deny publically that there were no “retail brokerages” ( i.e. bucket shops who flip stock straight onto clients) involved in this placing which made it “oversubscribed”. In the absence of an explicit denial then all involved can only be described with the sort of language associated with Mr John Terry.
Well said Tom, I read the latest company news and thought to myself I’ve just been shafted once again. If I could have a meeting with the broker I’d be making sure they left the meeting room with at least a bloody nose.
It is high time that the FSA took some action in these situations rather than sit on the sidelines. They probably have better things to do such as stop Evil and yourself from having a chat on webcast on T1PS!
Steve
Shareholders should contact the Nomad and ask how it justifies what went on Thurs/Fri – extra dilution for cash not needed & to see minutes of board meeting held between 4 PM GMT Thurs and 7 AM Friday GMT where the independent directors vote & justify the decision.
wvandyk@northlandcp.co.uk
Is your man
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Tom Winnifrith