Reasons for the Drop Actually Quite Simple/LogicalMy opinion, of course, for the reasons for the drop:
Management of JRs usually issues secondaries at the highest possible levels to maximize effects of good news and project developments. This minimizes dillution and thus maximizes raised capital for activities. Management also has the best 'insider' perspective on what's going on. Therefore, their timing on issuing a secondary sends an 'inferred' message to the market:
- Could issuing new shares now mean a buyout isn't imminent?
- They weren't very low on cash, so does issuing now mean the best of the drill results are out?
- If things are going to get so much better in the months ahead then why do a secondary at a lower price than the previous one?
Keep in mind this post is from a current shareholder that sold the majority of my position on the news. I still have some left and will likely reenter in the future. I would love to see the weekly chart "break down" to flush out all the technical traders and then reevaluate. I have little doubt that this is the finest uranium discovery on earth in the past decade or more. It will very likely be bought out. My two big issues are the future of uranium itself and the short to intermediate term message management 'sent' with this secondary. I've read both sides of the long-term outlook for uranium and I'm just not sure which side is right. The motivation for a buyout at 9+ per lb (or any buyout) would have the construction of a mine and production. This would be based on how certain an acquirer's long-term price outlook was for uranium. I would note that, to my knowledge, Rio Tinto hasn't even begun construction of a Roughrider mine and it's been years since the aqcuisition. This means that the cash deployed was poorly spent in my opinion. They could have spent possible a little more and bought a much better deposit in the basin.