SPP Damages Thundelarra Market Potential

John Robertson

PortfolioDirect

Share purchase plans come at a cost, as WA mineral explorer Thundelarra illustrates. The $17 million company is in the midst of a plan to raise a potential $5.1 million at 5 cents. After announcing the plan, the company’s share price fell 18% immediately to the 5 cents offer. Existing shareholders could sell knowing they could buy back costlessly at a lower price. Having tracked higher as the 14 June closing date drew nearer, the price fell again after the company announced on 8 June that it would extend the offer by a fortnight because not all shareholders had received their offer documents. While an undisclosed but probably small number of shareholders would benefit, the extension will have imposed a larger cost on the majority. Some could have suffered additionally by having to postpone share sales after taking directors at face value about the timing of the offer. The infusion of new shares will then open the possibility of some shareholders wanting to disgorge a portion of their new purchases leaving more downward pressure in the weeks ahead.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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