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Bear Trap - (FAM)
22/2/2017 (119264)

Bear Trap

Watch out - there's a bear about. He is easy to spot, since he is blundering around FinnAust Mining (FAM) making as much noise as he can manage, and he lumbered into view once before, back last autumn. He might scare a few folk for a while, and could even attract support from the odd confused clown. But he might have got a bit muddled, and in the end, the numbers will tell the real tale.

A chap called Richard Jennings appears to be behind it all. He is involved with something called Align Research. This is the link a poster using the name Richieboy666 used on the London and South East bulletin board to post the Align piece - http://www.alignresearch.co.uk/finnaust-mining/finnaust-mining-curious-case-large-shareholder-stock-sales/ Go to the ADVFN bulletin board thread on FinnAust and maybe he is there as Richie666 posting links to the same piece. He also posts various, generally negative, comments on FinnAust and wrangles with another poster, perhaps a former partner, who likes FinnAust.

His autumn effort, knocking FinnAust when the price was around 7p, might have played a part in holding the price in the 6p to 7p range for a while. This was in my report 'Rising Tide' of November 11 - '... it could be that the shares are beginning to recover from a report which suggested FinnAust was overvalued at 7p, but offered little reasoning in support. The company had earlier rejected an approach from someone offering to write reports on the company for a fee. There were also rumours a few weeks ago that someone had taken a chunky short position at between 6p and 7p.'

FinnAust fell from just below 9p today to close at 8.15p to 8.3p in fairly heavy volume. They dipped briefly below 8p. The company announced that a holder (perhaps broker S.P. Angel) had exercised warrants to buy one million shares at 2p, thus paying 20,000 to the company. These will not be admitted to trading until February 28, but the price might have eased a shade in anticipation that they would be sold.

The price fall would more likely have resulted from the Jennings note which used the disclosures in the Blue Jay minority purchase document released on February 20 and covered in my report 'Blue Jay Hopping' . These listed share deals over the past year by members of the concert party who are selling into FinnAust the near 40% of Blue Jay which it does not already own. Under the heading 'FinnAust Mining and the Curious Case of Large Shareholder Stock Sales' the Jennings note talks about sales (and the odd purchase) of FinnAust stock. The largest 'share sale disclosures' as Jennings puts it are by Jeremy Whybrow, who is not on the FinnAust board. These are listed as 'off market disposal' of 3,125,000 shares at 2p, of 1,345,549 shares at 2p, and of two lots of 250,000 at 2p, all on March 8, 2016.

In fact, FinnAust had a 200,000 fund-raising early in March, 2016, and Whybrow took 4,470,549 shares in that placing at 2p each. Add the two largest figures in the Align list, and they amount to exactly 4,470,549 shares (at 2p). The Whybrow 'off market disposal' moves were not sales. He was shifting shares between different pockets at nil consideration.

And the numbers are small when set against Whybrow's continuing direct holding of 56.6m shares, which will rise to 94m shares on the Blue Jay deal. Hardly evidence of any loss of faith in the company's prospects.

FinnAust directors Rod McIllree and Greg Kuenzel did not sell any shares in the period, and have very large holdings. The other sellers disposed of small numbers - raising trivial amounts of cash in the circumstances - and remain very substantial holders. Shaun Bunn has 17m, rising to 28.5m on the Blue Jay deal, and Garth Palmer has 9.2m, rising to 16m.

The Align report also attacks share sales by Western Areas, who will have 138m (18.96%) after the Blue Jay deal goes through, and by broker S.P.Angel. The broker does not hold any FinnAust shares, but has five lots of warrants at prices between 2p and 7p. It also remarks on the delay in releasing a maiden JORC resource.

That resource statement, now due in March, is late, as often happens with small resource companies. It is now expected mid/late March. The Align report suggests true value of FinnAust is around 15m to 20m, a market capitalisation which would equate to around 2.5p a share.

We shall see. My reports (find them by putting FAM in the box at bottom left of the front page) suggest that potential value could be a multiple of the current 8.25p price. Those cursing that they might have missed it when FAM hit 9p earlier in the week have the chance to pick the shares up at 8.3p or so now, thanks to Mr Jennings.

I have a holding in FinnAust Mining.

PS. A post on the ADVFN board today by Richie666 claims the directors take 'a decent six figure salary'. Anyone reading the Blue Jay deal document to the end would see that since December 2015 McIllree has been on 6,667.67 a month (80,000 a year) and Kuenzel takes 1,000 a month.


  More on (FAM)
Previous Stories
Mike on (FAM)
6/3/2017 Another view of FinnAust.
2/3/2017 Setting it straight on FAM.
22/2/2017 Shorts down and stumbling.
20/2/2017 Getting ready to run at FinnAust.
10/2/2017 Buyer in for FAM.
30/1/2017 Getting the resource together.
9/12/2016 FinnAust in funds.
22/11/2016 Good news at FinnAust.
18/11/2016 Bullish ilmenite report should help FinnAust.
11/11/2016 A gamble on the way up.
24/10/2016 Gamble in Greenland.
14/10/2016 A global great?
5/10/2016 A cool cold gamble.


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