Explorers raising funds through placements

[Ken]

Gday,

Just a observation I came across.

Many exploration companies have raised funds through placements as such. CQT and NXS are ones I can think of off hand. There are many more

Since the raising of capital there has been significant rises in share price, CQT raised cash @ 35 cents, and NXS raised cash in the low 80's now over $1

Do people look for stocks raising funds? Obviously it means there going into some extensive exploration or drilling, and they are being backed by someone.

Thoughts?

For stocks to multiply it would seem capital raising is important.

 

[doogie_goes_off]

Yes - mineral exploration costs money. No - Capital raising dilutes the share price. Actually yes - operating capital is essential. Actually No, if they don't have a good prospect or two where will that money go?

As you can see it has up and down-sides. The best advice I can give is this - if capital raising is called for, the overall price tends to be capped at raising price. When capital raising stops it is worth looking to see how much of the prospectus is taken up ie: do current shareholders have any faith in the company? If the company can raise >1 Million as a Junior or the equivalent of 12 Months operating capital then they have enough support from people that hold stock and share prices are likely to rise medium term.

As companies spend money on exploration it is important that there is a flow of positive results. It is not always easy for the lay-person to understand without a grounding in the industry what is positive, but as a rule money spent on drilling is well spent because results will be forthcoming and keep people interested even if there is not a "big hit" yet.

Capital raising alone means nothing special, there is no real rule except that this speculative stock can last if it gets enough $ from capital raising. The fundamentals are still "what have they got?" "how accessible is it?" "what are the chances they will sell it for big $, get taken over by a bigger company or find something good?"

 

[doogie_goes_off]

Through placements - missed that bit oops Some of my dribble applies.