RHK - Red Hawk Mining

[chrissyoscar]

The market loves Flinders and so do I.
Looks like we could be in for good times.

Trading is a funny thing.
I started 2 mths ago with an investment loan of $50,000
I bought 4 banks, NAB, CBA, WBC, SGB
I also got TOL, QBE, CTX, and took a punt with AGO (AGO was a punt for me lol)

Today I have TOE, BLR, BMY, AGO, FMS, ADY.

Apart from AGO and possibly FMS the other's are all specie's

Funny how things change.

 

[mas888moe]

Hi everyone, Can anyone tell me how much do you have to pay if you buy FMSOA options to get shares? Is it 12cents?

Thanks very much

 

[chrissyoscar]

you will need to pay 10c an option to convert them to shares.
They expire in late September this year.
At the moment they are trading at a discount to the full share price so if you intend to buy and hold go for options.

 

[fallenangel22]

Announcement today re: drilling - what that does to the price wait and see. Directors change of interest just after. with me being a newbie and all Im a bit confused does that mean the drilling ann was just trying to give some stability to the market prior to the directors ann.

 

[mapna]

you will need to pay 10c an option to convert them to shares.
They expire in late September this year.
At the moment they are trading at a discount to the full share price so if you intend to buy and hold go for options.

Can you explain more about the benefit of buying option than share??? I would like to buy some and keep until sept/2008.

Thanks

 

[chrissyoscar]

Can you explain more about the benefit of buying option than share??? I would like to buy some and keep until sept/2008.

Thanks

They were trading at a discount which as of today is no longer the case.
By discount I mean the options where trading at about .12 and the shares at .24 that's a .12 difference.
If you bought options at .12 and then added .10 to excise them it would cost you .22 while the shares where trading at .24 at the time options where .12.
Sounds confusing doesn't it.
Well today the options and full share gap has closed so the discount is no longer there.
It'll probably come back next week but if you're keen don't wait to long as any good news will see the price climb.
There are risks and as you can imagine any negative news could also see this stock drop rapidly.
Most think it'll be positive but there are a few posters who are negative.

Hope I've helped a little.

 

[fallenangel22]

Thanks Cc But can you tell me why would the directors sell their shares to buy less options than they had ordinary shares?

 

[chrissyoscar]

Thanks Cc But can you tell me why would the directors sell their shares to buy less options than they had ordinary shares?

I might be wrong but I think one of them sold 5,900,000 shares and purchased
6,769,969 options.
This would have been done to aquire a bigger slice of the pie once excised and to give confidence to the market.
he wouldn't be buying options at .12 if he wasn't confident the share price would hold or increase before September.

Some of the guys on HC believe it's a sign of good things to come.
The more options that are bought and excised the more confidence the market gets.
For example I hold options which are going to cost me .10 the excise, well if Flinders find nothing or very little or if the quality is crap the share price will tumble.
Now if it tumbles chances are it'll go below .10 and if that happens nobody would excise there options are they will become worthless.
The fact that directors and the investers are buying them and they are now being excised mean there is confidence that Flinders will find something of value.
No guarantees but confidence is building.

 

[fallenangel22]

Thanks I get the picture now. By the way I have also been told that fortescue have given permission to Flinders to use their railway when and if they go into production.

 

[tulasi74]

I might be wrong but I think one of them sold 5,900,000 shares and purchased
6,769,969 options.
This would have been done to aquire a bigger slice of the pie once excised and to give confidence to the market.
he wouldn't be buying options at .12 if he wasn't confident the share price would hold or increase before September.

Some of the guys on HC believe it's a sign of good things to come.
The more options that are bought and excised the more confidence the market gets.
For example I hold options which are going to cost me .10 the excise, well if Flinders find nothing or very little or if the quality is crap the share price will tumble.
Now if it tumbles chances are it'll go below .10 and if that happens nobody would excise there options are they will become worthless.
The fact that directors and the investers are buying them and they are now being excised mean there is confidence that Flinders will find something of value.
No guarantees but confidence is building.

Am surprised the sale of shares to acquire options is a positive sign. If the entire amount received from the sale of shares was used to purchase options, then I would agree. With the figures quoted above, selling 5.9 millions shares would have surely enabled the director to buy more options than what was acquired.

Wouldn't the fact that not all the monies from the sale of shares was used to acquire options be a negative sign, i.e. the director is reducing his exposure to the company and not increasing it even though in quantity it might appear to have increased but in $$ terms it hasn't. Could this not be a sign that result are not expected to live up to expectation and there is potential for share price to fall?

I don't know much about shares vs options but it just seems logical. Please DYOR. I have heard so many good things about this company and I hate to say anything negative. Just questiing the logic behind the quote.

 

[Atma]

Thanks I get the picture now. By the way I have also been told that fortescue have given permission to Flinders to use their railway when and if they go into production.

yes but how much do you really think fmg will allow FMS to use the railway? Even if FMS finds 300mt, they may be only able to produce 5mT-10mT? The capacity of the rail will almost certainly be used up by FMG and their s/holders as well as a plethora of iron ore juniors that have proven deposits right now next to existing Cloud break line (FRS,UMC,AGO,BCI,BRM)

we don't know the iron ore price by then

FMS will not produce till atleast 2012. The rail line has not been built to there yet so what "railway" are you referring to. FMG doesn;'t have any money to build there yet. What will be the IO price by then? What if IO goes into oversupply? [Vale 400mT Rio tinto 320mT BHP 250mT FMG 120mt? african iron ore 75mT?]

paying $350m today for potential 5mT-10mT of production by 2012 is a bit too much i suspect considering the above risks (also it needs dilution)

All these questions i guess.

 

[kerosam]

personally, i think if FMS really discovers x amount of iron ore and produce y amount of iron ore... as a current minute shareholder, i would treat this coy as a potential take over target...

 

[chrissyoscar]

Am surprised the sale of shares to acquire options is a positive sign. If the entire amount received from the sale of shares was used to purchase options, then I would agree. With the figures quoted above, selling 5.9 millions shares would have surely enabled the director to buy more options than what was acquired.

Wouldn't the fact that not all the monies from the sale of shares was used to acquire options be a negative sign, i.e. the director is reducing his exposure to the company and not increasing it even though in quantity it might appear to have increased but in $$ terms it hasn't. Could this not be a sign that result are not expected to live up to expectation and there is potential for share price to fall?

I don't know much about shares vs options but it just seems logical. Please DYOR. I have heard so many good things about this company and I hate to say anything negative. Just questiing the logic behind the quote.

Why is it negative, he sold 5,900,000 shares at a rough average of .23 total value about $1,357,000. He then bought 6,769,969 options at about .12 total costs about $812,396 with $676969 still needed to excise those options.
He'll have about $550,000 in the bank after the share sales but wouldn't you think he'll need that.
It's not always as black and white as it seems.
If he used all the money from the sale of shares to buy options he might not have enough money to excise them.
If he's so confident that the price would hold and go up you might ask yourself why not buy as much as you can then sell some just prior to due date to pay the rest. As a major share holder and director (I think he's a director) he can't just simply sell options as that wont be well received by the market.
It could show lack of confidence and effect the share price.
There's could be lot's of reasons why he did what he did but I would think the major one would be having to find the money to excise options which is why it played out like it did.
He still has more than what he had and given the market some confidence.

THIS is still a specie but I like the way things are going and support it continues to attract.

 

[chrissyoscar]

personally, i think if FMS really discovers x amount of iron ore and produce y amount of iron ore... as a current minute shareholder, i would treat this coy as a potential take over target...

I think there are a lot of people jumping in thinking that's possible.
It'll be nice if around Christmas Santa gave us all a present.

 

[prawn_86]

I think the size market cap these guys have is totally ridiculous and way out of proportion.

> $250 mill for a target, when there are producers earning profits, from various other minerals, that are under $50 mill.

Or IO projects that will be in production by years end that are capped at under $50 mill also.

Once again just goes to show that sentiment is more important in markets these days than actual underlying value. The joys of anyone being able to jump on board due to the Internet i guess...

 

[Touch of Gold]

I think the size market cap these guys have is totally ridiculous and way out of proportion.

> $250 mill for a target, when there are producers earning profits, from various other minerals, that are under $50 mill.

Or IO projects that will be in production by years end that are capped at under $50 mill also.

Once again just goes to show that sentiment is more important in markets these days than actual underlying value. The joys of anyone being able to jump on board due to the Internet i guess...

Don't go on production or earnings to estimate a companys worth..
FMG is an excellent example, it had a market cap of over $25B before it produced anything. Sure it spend Billions on infrastructure but thats a fraction of it's Market Cap. I don't want to compare the two as FMG may have 2 to 3 times the ore, but considering the the pre JORC extimates, $1-2B would not be out of the question.

 

[fallenangel22]

down to 20c Why would you sell now when drilling has commenced?

Maybe a bit of market manipulation or am i just paranoid.

 

[prawn_86]

down to 20c Why would you sell now when drilling has commenced?

Perhaps people feel that the MC is not justified for what they have (or dont have).

Perhaps its just a healthy pull back.

Perhaps there is some profit taking to hedge against poor drilling results.

Really it could be anything, the market is a strange beast...

 

[Broadside]

down to 20c Why would you sell now when drilling has commenced?

Maybe a bit of market manipulation or am i just paranoid.

at the current market cap you'd want the early drill results to be good, unless you're a long termer...a lot of expectation built into that price given there has been no drilling.

 

[BIG MAC]

Hey there RAY _(Prawn 86), Given FMS has the cash for the drill it is at least a clean punt. What <50m play would you recommend going into DSO this year?

Any thoughts on GIR or IOH?

Look forward to hearing from you.

By the way I know it not sexy but for a sub 10mill play in Magnetite- Iron Road looks cheap and close to infrastructure with good management/ cornerstone investor

HEM today shows the market is still hot in Iron....Prices look solid until at least 2010

Later