VWAP - Tip comp !, page-158

The markets are fascinating. They often behave totally contrary to what even intellegent people might expect but certain truths can only be defied for so long. I'm also interested in how new social media influences the markets and particulary what drives youger people to invest their money. Sentiment has always been around in the markets but in the old days it was much harder to influence on a stock specific basis as you only had newspapers, TVs and telephones (you know the ones that were fixed to a wall and only used to talk to peolpe one on one). Even so that didn't prevent the phenomenum of "group think" from occurring. Take the famous example that happened in WA of the Poseidon bubble which happened in the late 60s before modern computers, mobile phones or social media. The group think mentality is not a product of social media, it is a product of stock markets and a product of greed. The recent crypto bubbles were exactly the same thing.

https://en.m.wikipedia.org/wiki/Poseidon_bubble

It is just that nowadays group think can take hold much easier due to the connectivity of people. Take AVZ for example.

Group think says that there is a technology metals revolution and that EVs will distrupt ICE at an exponential rate and group think says that the Manono deposits are some of the largest lithium deposits in the world and probably the largest hard rock lithium deposit in the world.

Now most of the above is true (with possibly the exception of the rate at which EVs will disrupt ICE which is still an experiment in progress) so why has group think let down investors here badly? The answer is less easy to quantify and the subject of arguments at nauseum on these threads. The simple answer is probably that the value of AVZ just properly reflects all the current and prior circumstances, complexities and risks that can't easily be quantified in a nice easy to express, easily digestable group think parcel. I know that's not a satisfying answer but trying to understand the specific reasons for why the company is valued the way it is will just drive you insane. The reality is given the location of the project and circumstances of the company's existence, AVZ is just a difficult beast to value with a high degree of uncertainty. Group think just doesn't work no matter how compelling the underlying mantra actually is.

So what I think that you are left with is doing your best to analyse reality, ie the things you can understand, things like this capital raising which to some extent is the sum measure of all the uncertainty. This is something which is easily understandable and I personally have seen before. There are jus a few takeaway facts.

1) The uptake of the SPP barely exceeded the underwritten component which strongly points to a market which is not supporting the story any longer.

2)) The company has stated how much money it needs to properly continue with its feasibilty work and the current amount raised is not enough.

3) The company has the ability through an agreement with Patersons to raise an additional $5 million dollars.

The above are more or less facts. Some people might want to debate them but that would be a losing argument.

So it comes down to the third leg of the raising to see if it will be supported IMO so that the company can raise enough money and still look credible. If they can't they will be in trouble as the death by a thousand cuts scenerio will start to play out. I've seen it many times before. A company just looses total support from the institutional investment community. If you want an example of this read the BDR story and what the new BDR board had to say about their chances of raising more capital before they recommended a cheap takeover/merger to their shareholders. BDR is slightly different as it has an operating mine and carries a large debt burden so the pressure on directors to find a solution is/was greater. A better example as I've mentioned before is SDL where eventually once they lost the support of the Chinese and the Australian market for their "world class" iron ore deposit developmemt in Cameroon they resorted to convertible notes issued to a Ukrainian "war lord" banker.

I'm not allowed to give investment advice but I can give general advice which is to throw away the above group think mantra and start making decisions on what are the most obvious and explainable pieces of information. For me it's reducing down to some pretty simple inputs now, ie the company needs more money. If they source it the share price floats for longer and has a chance of rising, if they don't it's a death by a thousand cuts scenerio and the share price has a very very good chance of being lower in 12 months time or the company enters into an unfavourable and mostly unwanted corporate transaction. Esh