The Evil Diaries: Lonmin and Churchill Mining

An unusual opportunity has arisen at Lonmin (LMI). It is raising circa £300m at 1p per share. The issue is underwritten.

Curiously the nil paid (LMIN) stand at 0.03p offer, which, added to the 1p subscription price, gives an all in cost of 1.03p. This contrasts to the 1.25p or so at which the ordinary shares now trade. Be it noted that these are real prices since the volumes are running to many tens of millions daily.

So why should the discount be so large? I can only suppose that there are many ordinary shareholders who simply do not wish to take up their rights which are to subscribe for 46 new shares for each ordinary originally held. However, these rights do offer residual value and that is why they are being chucked out willy nilly.

Lonmin is a major South African operation. One way or another this company is going to be made to succeed. Time to climb aboard starting with the nil paid. Pay day is next week.

*****

Churchill Mining (CHL) have signalled yet further delay in this morning’s RNS. But it should be noted that the Churchill management have been cleared of corrupt practice. I paid 16.25p.