#EUA cooling off period was due, although it's not nice seeing negative commentary, some driven by shorting, some by enmity. For the former - there are ways of shorting without being aggressive - @Smudgedann @Blowster85 proved this. For the latter - celebrate, it's great for AIM!
Onto #EUA: both interviews have been terrific. The interviewees could not have been more clear that Monch at the very least will be acquired in the near term.
- Pd has in the past 24 hours hit another ATH. Demand from auto industry is rocketing and supply pipeline is negligible.
- #EUA is the only viable UK listed Co left that offers direct exposure to Pd. A lot of cross ramping flying about on Twitter and BBs about other PGM players. I don't want direct exposure to primarily Pt plays - the market dynamics aren't appealing. Pd, however...
- The contract with Sino has been put on hold. #EUA could commence work there at any time, as the contract is binding - and thus be in receipt of the $50m subcontract. They have paused it as potential buyers might want to use other EPC providers. That's a huge show of confidence.
- Precedent transactions in the Pd space are significant. Given the dearth of independent Pd projects, premiums are being paid. Hence two investment banks signing up with #EUA - on a no win, no fee basis - to sell the assets. They're evidently confident in a successful outcome.
- Site visits have been going on for weeks. Lesego Platinum is one named suitor, but #EUA mgmt. stated in interview: "we are in discussions with.. some others", and in the RNS that it's in "ongoing negotiations".
Mgmt. can't sell on this 'spike' - they'll be aiming for higher.
It's understandable why some are calling it a P&D, the obvious question being, why would someone pay 10x for what #EUA was valued at only last week? The answer is, as I've written of extensively in the past, that AIM is an extremely inefficient market. Just look at #RRE #MKA #HZM
#EUA's extreme undervaluation has gone unnoticed owing to:
- region of operation - many won't touch Russia;
- Pd - a relatively obscure metal with a small market means that many missed the steady rally in the price;
- Glacial pace of development at Monch over past 15 years.
People see a 500% rise and automatically assume it's a P&D. I have named 3 stocks above where, if they rose 500% now, many would think they're fairly valued.
Many struggle to adapt their opinions on stocks. The big sell sign put out by #EUA should catalyse an opinion change.
Mgmt is fatigued. It's been developing its assets for many years. Monch is now permitted (a long-winded process in Russia, as #EUA has learnt the hard way!) and construction ready. This has coincided perfectly with the Pd price explosion.
No wonder mgmt is seeking to cash in.
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