Ventana Gold (VEN.to): How placements can be done to benefit all concerned

"If it looks like a duck....."

There were plenty of readers for this post yesterday entitled "The boyz are back in town" where I had a go at the greedy and self-serving way many Canadian junior mining companies raise capital, often urged on by 'The Houses' that freeload juicy finder's fees and options deals. All this is, of course, to the detriment of the people that they have a fiduciary duty to, i.e. the shareholders.

As is often the case, along with the spike in views for a particular post there came mailbag (always welcome from strangers when swearwords aren't included). And one mailer, initials GG, asked a good question, the key quote from which was:

".....all these companies need to raise capital so the alternative is what...?"

Yep, it's a good point. Everyone and anyone that buys a Canadian junior knows (or should know) that its working capital doesn't just grow on a tree and it will have to go to market from time to time to get the money it needs to add asset (and therefore shareholder) value. Until the company actually starts producing (or is sold) that's just the way it is.

My beef isn't against placements, bought deals, dilutive rounds of capital raising etc etc. My beef is the way it's done, and to illustrate the difference between the kind of insult shareholders of Colossus Minerals (CSI.to) had to suffer yesterday and the right way, here's another example from yesterday.

Ventana Gold (VEN.to) is a company I've already mentioned on the blog (in this post entitled 'Ventana Got Gold'), due to its recent and very interesting drill results published earlier this month. Yesterday it announced this placement to sell 6m units (each unit is one share at $0.56 and a warrant at $0.90) to raise $3.36m in working capital. As a bonus to the PR, the company also announced it had snagged a very experienced and well-regarded geologist as its new Veep of explorations for the Colombia property. Here's the chart of yesterday's action in VEN.to.

Click to enlarge

What we note here is that the dilution actually added share price value. It made the stock suddenly popular (check those volumes). In a little over an hour the stock moved up 20% and everybody is happy. The new guys on board, the already-in shareholders and the CFO.

Why is this so? Simply because VEN.to is being responsible. It's raising the modest amount of working capital that it needs via a placement that doesn't add massively to existing shares out (less than 10% in this case). Ventana is not adding an extra layer of fat to its coffers and screw ing the retailers the same way XRC.v or JAG or CSI.to has done (to name but three recent examples). VEN.to is thinking about all concerned, and it's notable that insiders at the company hold a significant percentage of those outstanding shares (over 30%) which means they're looking after their own pockets, too. Reader BF knows all about this part of the equation.

So kudos deserved by VEN.to, and we get a timely example of how placements can benefit all concerned, not just a bunch of lardasses sitting up there in Vancouver or Toronto. Ventana Gold just went up another notch in my personal estimation....certainly one to watch, people.

Finally, let's take a guess at the next gluttony dilution, and by the way Canaccord (Wendell Zerb David Pescod et al) has been pumping International Tower Hill (ITH.v) (along with the track record of its BoD), I'd say that one is high up on the list. DYODD, dude.

Dynasty and the games redux

I'm not going to list all the trades at the end of day the same way as in the previous post, but if you look for yourself you'll see how can'o'corn (the famous 33) beat down the DMM.to price at the bell this afternoon. When it comes to this kind of crap, there's no better price artist than the jokers at 33 (they're always crawling over this blog for ideas too..... probably cos they just can't bring themselves to hire someone who can speak Spanish).

As a regular reader (who prefer to remain anonymous I'm sure, as he's probably long half the DMM float in his private a/c) wrote to me after the bell;

"I'm getting nervous. I'm selling everything tomorrow at the open! Ha, ha, ha..."

Did you take him literally? If so, that bridge of mine is still for sale. Here's that everso everso retail friendly action in chart form.

Dynasty Metals (DMM.to) and the games people play

Here's the action in DMM.to right now. Interesting stuff that shows how "the houses" (aka the Canadian brokerages) will try to scam weak hands out of their positions.

11:19:20 T 3.05 -0.30 1,000 19 Desjardins 19 Desjardins K
11:18:56 T 3.00 -0.35 200 2 RBC 7 TD Sec K
11:18:56 T 3.00 -0.35 100 19 Desjardins 7 TD Sec K
11:09:15 T 3.01 -0.34 100 1 Anonymous 1 Anonymous K
11:08:59 T 3.01 -0.34 300 1 Anonymous 1 Anonymous K
11:08:59 T 3.01 -0.34 100 19 Desjardins 1 Anonymous K
11:07:21 T 3.10 -0.25 50 79 CIBC 19 Desjardins E
11:05:16 T 3.10 -0.25 200 79 CIBC 1 Anonymous K
11:05:16 T 3.10 -0.25 100 79 CIBC 19 Desjardins K
11:00:51 T 3.10 -0.25 100 7 TD Sec 1 Anonymous K
11:00:51 T 3.10 -0.25 100 7 TD Sec 19 Desjardins K
11:00:34 T 2.85 -0.50 1,000 19 Desjardins 85 Scotia K
10:54:25 T 2.78 -0.57 200 1 Anonymous 1 Anonymous K
10:54:25 T 2.98 -0.37 1,500 1 Anonymous 1 Anonymous K

10:54:25 T 3.00 -0.35 1,000 1 Anonymous 1 Anonymous K

10:54:25 T 3.25 -0.10 200 2 RBC 19 Desjardins K

10:54:25 T 3.25 -0.10 2,000 9 BMO Nesbitt 19 Desjardins K

10:54:25 T 3.25 -0.10 300 9 BMO Nesbitt 19 Desjardins K

10:54:22 T 3.26 -0.09 1,000 7 TD Sec 19 Desjardins K

10:51:20 T 3.30 -0.05 1,000 19 Desjardins 15 UBS K

10:51:20 T 3.30 -0.05 500 7 TD Sec 15 UBS K

10:42:06 T 3.37 +0.02 1,000 88 E-TRADE 79 CIBC K

Right now we have the bid at $3.00 and the ask at $3.09. What does all this mean? Well, first check out the three trades that plunged DMM.to down from $3.25 to $2.78 (i've highlighted them in red). A total of 2,700 shares was enough to wipe the stock down 47c. You'll also note that the previous four trades when Desjardins sold into the bid came with exactly the same time stamp as the three "anonymous" trades that dumped the stock. If you think this is pure coincidence I have a nice bridge you might be interested in purchasing. Since then the stock got bought in, but it's still 10% cheaper than yesterday's prices and there are people getting nervous and wanting to bail at $3.05 thanks to this move.

I love it when the big boys start wanting in! Sure they'll use tricks and scamettes to shake shares out from the weaker hands, the kind of investor who says "well...it's moved from $1.30 to $3, I still got myself a win" and hands over their shares in true patsy style. But I love it when this stuff starts happening because a) I can top at lower prices if I feel the need and b) it means they want the stock in their portfolios. That can only be good for the wiser and steadier hands among us.

So let da boyz play their little games. This time is Desjardins trying to fake the field, but next time it might be another house. They haven't managed to shake much fruit out (just 3,350 shares traded since the dump move) so expect them to put DMM.to on the rollercoaster a few more times....get people nervy and that. Me? I'm holding. Very very holding.