RE:Huge Volume TodayOCB1234 wrote: Huge volume today no doubt due to the bought financing. If we can close the day above $8 that would be a big win. If not, I expect the sp to go below $7.50 temporarily and stay in the $7.50 - $8 range until the deal closes.
When a financing is announced at a price below the current market, there is a perceived incentive for the participants to sell their existing shares (or short the stock) and replace them with newly acquired PP shares. This could pressure the stock price down as low as the PP price of $7.65.
The biggest buyer of shares in the market today so far is BMO Nesbitt, the lead underwriter of the financing, with net buys of 142,000 shares. In second place is Raymond James with net buys of 4,600. So that doesn't appear to be a factor this time so far.
If the full $20 million were required to bring Eagle to full commercial production with no increase in cash reserves, and if VGCX was already fully valued and if there was no increase in the POG today, then one could reasonably expect an approximate 35-cent drop in the share price (20M divided by 58M shares) because of the financing.
Currently gold is up by about C$19 which increases annual cash flow by about $4 million or about 7 cents/share. With just a 5 multiple this offsets the 35-cent hit from the PP.
So in theory at least, there should be no drop in share price today. But if there is because of the perception that there should be a drop or selling to get cheaper pp shares, it should be short-lived.