Not a frequent poster here, but as one of the “weak hands” who...

Not a frequent poster here, but as one of the “weak hands” who sold last week, I wanted to share how I look at things.

First, I too believe Tap is worth at least 10-12c. More than Risco’s offer, but maybe not much more, because while cash is building up, there is still $24m abandonment liability to pay for. In some ways, they are still net cash negative and whatever they accumulate now is not yet for shareholders.

Now, do I see share price go to 10-12c? No, unless NGP makes a full offer for all shares. I have learned from (costly) personal experience that share price and fair value are not the same, especially for small caps. Whether we like it or not, share price is driven by supply and demand, which in turn is more driven by sentiment than fair value.

On the demand side, the case for new shareholders to invest is not obvious: yes share price may be undervalued, but Risco and NGP effectively control the company and they probably don’t care much about us and the share price. As others have said, they have no use for the franking credits, so they won’t be in a hurry to do anything with them. There is no exploration potential, so we can’t hope for stellar returns like CVN recently. So the potential reward is not so attractive for new investors (while risk is there), and there are probably more exciting stocks around.

On the supply side, over time people get tired or need liquidity. So there will always be a small number of sellers around.

Think about this: over the past 2 (?) years, Risco has accumulated a 32% position from nil by buying from the market. This has obviously supported the share price. When this “artificial” demand dries out, what will happen?

So when putting things together, I have not much hope price will go anywhere close to fair value in the near or medium term. In fact, I expect it will drop in the days or weeks after Risco’s offer expires. Maybe when price drops to around 7c, it will be a good opportunity to come back in. Until then, my hard-earned money will go somewhere else.

IMO