Reconnaissance Energy (Africa) Ltd V.RECO

Why would they do that at ?

[Matteo1234]

This thing they got going with Haywood is... They use Haywood to promote the company. By writing positive articles. Giving positive price projections. They have paid Haywood off with shares in the company. Now they do a capital raise initiated with you guessed it. Haywood. Haywood puts out a price projection report giving Reco a $12.50 price target while sameday halting the stock and buying a big chunk below market. Is this normal practise in the Junior space ? I' m not a expert on this. Looks a little dirty to me. Any Ideas here ?

[SprengoM]

Hi Matteo, One of the most important factors for juniors, especially mining/exploration companies, is funding. These companies BURN cash without knowing when and if they will generate revenue. The Haywood's of this world are the vehicle for junior's to get visibility with investors and these companies make big profit when they succeed in raising capital for small companies. So they have

[Matteo1234]

Thanks for the feedback. I tend to feel the same way.

[GorgeousGeorge1]

They actually raised a very small amount of money compared to their market cap. It is not uncommon to raise as much as 10-15% of market cap amongst juniors with no revenue. So another way of looking at it - if they were/are not confident that whatever they found in 6 - 2 will lead to commercial success, it would make a lot more sense to raise as much as possible now, to avoid excessive dilution

[SprengoM]

That's true, but I do would like more transparancy on what they will use the money for. I quote: "The net proceeds from the Offering will be used for seismic and drilling operations, as well as for working capital and general corporate purposes." They already had $30M from the warrant exercise, which should be enough for 5-6 wells and 2D. General corporate purposes can mean anything

[Kyodai]

It's clearly better to get some money when you can, instead of when you have to...

[Buyhigheatchips]

This makes the most sense to me. We're set now in case we have to widen our net after hole 2. And let's remember, Haywood is not in this to lose money. This bought deal shows that they're putting their money where they're mouth is (which btw has been appropriately hedged with statements of risk imo).   

[GorgeousGeorge1]

It is normal yes. I'll just point out, although there is an obligation to be positive in their research reports and optimistic in price targets, it doesn't mean the content is false or intended to mislead. The same research goes to Haywood's own client base. In any company, large or small, take the most bullish research report/PT and look at the relationship between the issuing broker

[hydrocarbss]

You can go buy all the shares from Haywood. Then you'll be in the driver's seat. Go for it.