IPOze

Last post I left with a teaser on ORE, a mining stock.

I don't have any information about the stock except that - from the grapevine (mostly online forum/s) - it has the highest grade nickel in the country.

Well, common sense dictates that if you have the highest grade of something, you get better prices for your goods. And, when you get better prices, that means you get better revenues, ladies and gentlemen.

Recently, by coincidence, there was a news release in the Inquirer (website), just this October 26, entitled "First nickel shipment eyed by December". For your ease, the meat of the news is found in these paragraphs -

The mining unit of publicly-listed Oriental Peninsula Resources Group Inc. (ORE) is scheduled to deliver its first shipment of high-grade nickel ore to Japan and Australia by December 2010.

ORE chairman and president Caroline Tanchay said ORE’s subsidiary Citinickel Mines has been operating since August. “If not for the heavy rains in Palawan, Citinickel could have produced more. However, I’m glad we can finally ship out high grade nickel ore which is good news for our shareholders,” Tanchay said.

The scheduled shipment follows the signing and submission before the Regional Trial Court last August of a compromise settlement that puts an end to the long running dispute between Citinickel and erstwhile rival Platinum Group Metals Corp. (PGMC).

Good news indeed? So far, this hasn't been a "sell on news" story.

Well, let's review the price action since my last post.

Oct 20: Open 3.28, High of 3.48, Close 3.40
Oct 26: Open 3.49, High of 3.69, Close 3.61
Oct 27: Open 3.70, High of 3.74, Close 3.65
Oct 28: Open 3.65, High of 3.70, Close 3.60

Notice anything?

What's the spread of October 26 and 20? 20 centavo run from the open to the high, then an 8 centavo retracement from the high to the close.

Then there's the .11 difference in the opening prices of Oct 20, 26, and 27.

The spread though on October 27 and 28 had been thinning. The closing price today suggests a bearish trend for the stock given the lower close vs. October 27's 3.70 opening price.

Prices don't lie. Then again, perhaps I'm just over-analyzing.

Even with the possible bearish trend of ORE, it may enjoy buoyancy in the coming days as Nickel Asia is listed through an IPO. I looked at the prospectus and my it's hundred pages. I suggest you also do your research. The link I put here has another link to their website and provides some legalese that's best read by you.

I remember though that there was a summary version of this and I was particularly interested with the item on dividends policy. I skimmed through the (new) hundred page document and found this instead -

"Upon completion of the Offer, our dividend policy entitles holders of Shares to receive annual cash dividends of up to 30% of the prior year’s recurring attributable net income based
on the recommendation of our Board of Directors. Such recommendation will take into consideration factors such as dividend income from subsidiaries, debt service requirements,
the implementation of business plans, operating expenses, budgets, funding for new investments and acquisitions, appropriate reserves and working capital, among others. See
“Dividends and Dividend Policy”."

Portion of the "Dividends and Dividend Policy"

"We paid cash dividends to our shareholders in 2007 and 2009 in the amounts of 81,611 million and 8142.2 million, respectively, and paid a 150,000,000 share common stock dividend in September 2010.

We did not pay dividends in 2008 because we were conserving our cash in anticipation of making an equity contribution in respect of the Taganito HPAL facility project. On August 13, 2010, our Board of Directors declared a cash dividend equal to the peso equivalent of US$70 million, which is scheduled to be paid no later than three days following the listing of the Offer Shares on the PSE to shareholders of record on August 31, 2010."

I cannot say with confidence and certainty that the CEBU PACIFIC IPO Prospectus contained no such information as I didn't bother to read it. I just happened to view the Nickel Asia prospectus recently so I wanted to learn more about their upcoming offering.

The IPO of Nickel Asia will spur interest in stocks that are in to the nickel business. This means ORE will attract attention, in my opinion. So, there may be trading opportunities for ORE even with the possible bearish move.

Anyway, that's it for now. To be continued in the next post. Until then, appreciate the risk, then appreciate the capital!