Trading Update 20th-24th Nov 2017


27 November 2017

Monday 20th Nov 2017

The long awaited Q3 Vametco production results were published at 7am – these revealed increased sales (+7% YoY) and and revenue (+29%) but production down (-16%) due to unexpected downtime for a kiln repair. The discussion on the LSE board immediately after this RNS was essentially along the lines of “disappointing as it is not the knockout results we were hoping for”. Evidently loose lips sink ships.

For the first 45 minutes of trading it appeared that nothing had happened – in reality there was actually a series of 100K sells, at increasingly lower prices.  The Bid and Ask dropped at this point and Buyers moved in to buy repeatedly in the range 8.8-9.0p. This would have offset the earlier Sells were it not for an 8.5p sell of 235,295 at 9:02am. By itself this did not result in the Bid being dropped and neither did the arrival of 2x 100K Sells at 8.60p that arrived simultaneously at 10:50:05 (one of which was reported at the time and the other an hour later.) Things remained relatively stable until 12 noon.

The Bid and Ask having risen back to their opening levels seemed to indicate that the market had taken in the news –  however at this point a series of sells started, culminating in a 100K sell at 12:55 at 8.66p, and then, once the Bid had fallen, another 100K Sell 3 minutes later at 12:58. Neither of these sells were reported at the time, and the LSE board was understandably confused. Buyers naturally returned but their buying was not sufficient to offset 100K Sells at 13:33 and 13:34.

A minute after two the Ask suddenly fell from 9p to 8.5p – MMs could see that there was lots of selling going on but needed to encourage more buyers by offering even lower prices to Buy. The precise reason did not become clear until the end of the day, when a 350K Sell at 8.25p was reported as having taken place at 14:01. This caused the nett trade position to spike down to below -1.5M for the first time in the last 3 months – it did not go below this level during the 18th August Flash short.

The 2pm Ask drop did not seem to encourage buyers – in fact the converse seemed to be true – as realistically sized Sells of 184,214 and 86,307 appeared – perhaps some shareholders had been spooked into selling, or had left Stop-Loss instructions with their brokers. Another 100K Sell appeared at 14:24 and the nett trade position spiked downwards again to below -1.8M. Again the MMs had to narrow the spread to permit these crazy giveway prices to actually be fed back to the buyers – if they were to keep the spread at their usual 0.75p the MMs would be at risk of ending up the day with 2M shares on their hands and maybe nobody willing to pay them to take them away.

Following the dropping of the Ask to 8.25p Buying rapidly returned – almost a million shares bought up in the next 40 minutes. The Ask rose back to 8.5p and then again back up to 8.75p. The first rise coincides with a large Buy of 233,613 but the second rise does not correlate with any significant Buys. There may of course still be significant Buys yet to be reported – I think this is likely as soon after this rise in Ask there is another very large and suspicious Sell – 300K at 8.125p.

The SP closed at 8.25p (down 0.75p on the previous days close), volume was 6.2M (2.65M Buys vs 3.54M Sells.)

Tuesday 21st Nov 2017

After the 7am announcement that Bushveld Energy and UET were going to be deploying a 125kW/450KWh Vanadium Flow Battery to Eskom’s Rosherville energy storage test site the Ask opened up 0.5p on the previous days close.

Initial buying was strong with prices of 8.9p being paid by those first through the doors but the volumes were not large and MMs were forced to take only 8.6p by half past eight. At this point a large buyer turned up and 3 trades of 100K, at increasing prices of 8.64p, 8.75p and then 8.8p helped pushed the Bid all the way back up to 8.75p.

With a small advertised spread and an even smaller actual one there was a brief period when the Bid and Ask were constant before 9:13am when was a relatively minor sell of 50K that caused the bid to drop to 8.50p . This was followed quickly with another sell of 30K  and then 45K which caused the Ask to drop, and then another Sell of 50K which caused the Bid to drop again back down to 8.25p. With PIs already having bought more than 700,000 more shares than they sold that morning the Market Makers were even less ready than usual to allow potential shorters to come in to take advantage of a small spread – thus it was shorter avoidance 101 – keep the Ask constant and drop the Bid.

Evidently the tactic put off any opportunistic sellers and only buying occurred until noon, when the Bid was returned back up to 8.50p. The nett trade position remained above 400K until 3:23pm, when the first (250K) of two strange Sells occurred. This was followed just under four minutes later by a similar Sell of 130K, which between them knocked the nett trade position for the day back to very close to neutrality. The trades are strange in that they were reported on the LSE trade log both at the time that they occurred and again after hours – with both prices being the full share price paid. On the London Stock exchange site which we might have greater confidence in, again both reports are shown but one has a share price shown that is 1/100th of the true share price – see the screenshot below:

At this point I cannot say what causes the curious reporting of these trades but have classed them as ‘Y-trades’ (Y as in ‘why on earth are they reported like that ?’) – but it is evident that only a single trade is really happening in each case and that these trades should not be double counted, which you might do if only viewing the LSE trade logs. On inspection a similar Y-trade occurred at 8:20am – and this has been taken account of in the graphs and analysis shown above.

An extremely low after hours uncrossing trade at 8.50p led again to the closing price being misreported on LSE as 8.50p. This was followed soon after by a trade of 350K at 8.75p which is surely too precisely on the actual Bid-Ask mid-point to be a genuine sell to or buy from a PI, and has been classed as an Inter-MM trade, thus not affecting the day-end nett trade position.

Owing to the uncrossing trade after hours the SP was reported as closing at 8.50p (up 0.25p on the previous days close) but in reality it should have closed at 8.75p. Volume was 3.2M (1.61M Buys vs 1.58M Sells.)

Wednesday 22nd Nov 2017

Compared to the previous days Wednesday’s trading looks very calm in comparison – however this masks some significant large trades – sells of 100K, 250K, 350K and 300K, all delayed reported, during the day. The pattern of reducing buying prices just after 1pm is not simply explained by the sell at 1:18pm – as this is only 33K in size.  The previous drop in Bid at 8:44am did however coincide with one of the significant sells – 250K, but that was rapidly taken up by a 275K Buy 2 minutes later.

The subsequent sell at 9:19am of 350K caused the prices paid for shares sold to MMs to drop for most of the rest of the day. After this Sell the nett trade trade position fell to minus 353K and with Buys and Sells subsequently in balance this is where it finished the day.

Owing to the uncrossing trade after hours the SP reported a close at 8.72p (up 0.22p on the previous day) with Volume again lower at 2.15M (925K Buys vs 1.22M Sells).

Thursday 23rd Nov 2017

Thursday started with an RNS update about the Lemur Imaloto Coal project – Lemur had signed off on a binding Power Purchase Agreement (PPA) with JIRAMA – the madagascar state owned electrical utility. This is another major hurdle completed to help bring the Imaloto coal project to fruition.

There was an initial flurry of buying, but again the volumes were only high enough to keep up with a couple of early 100K Sells, which are marked as suspicious. At 9:246am the Bid dropped though there is really no large trade to justify this, ditto at 10:00am when the Ask dropped to 8.75p. There is some justification for the subsequent drop of the Ask to 8.50p – as this followed soon after a strange series of three Sells, each of size 60,362 and each at 8.32p, but spaced a few minutes apart – so genuinely separate trades and unlike the reporting issues experienced earlier in the week with the ‘Y-trades’.

Having walked the price down MMs found a few more buyers, but it still took another hour or so for these to mop up the pretty small 250K excess of Sells. The narrow spread persisted until Buys exceeded Sells by approximately 200K, at which point the Ask was lifted all the way back up to 9p. Apart from a few small (20-30K) sized Buys this did nothing for trading until just after 2pm, when a series of larger Sells (50K, 119K, 70K) caused the Ask to drop once again back to 8.50p. Then for a short period of time it was possible to Sell at 8.45p and Buy, just marginally higher at 8.49p.

The SP closed at 8.40p (up 0.125p on the previous day) with Volume again lower at 2.15M (925K Buys vs 1.22M Sells).

Friday 24th Nov 2017

Not much happened – either everyone was out shopping for christmas tat or BMN watchers had done all the trading they were going to do earlier in the week. The nett trading position ended the day non-negligibly negative for the fourth out of the last five days.

The SP closed at 8.375p (down 0.0125p on the previous day) with Volume again lower at 1.28M (522K Buys vs 763K Sells).


The monday SP behaviour could have been interpreted as the simple market reaction to a Q3 production report that was less than the outstanding that was expected. Or alternatively in light of the rather clear aggressive structured selling (albeit not as uber aggressive as the ‘flash’ shorts of the 18th August and 10th November) it may be interpreted as opportunistic shorting timed to run off the back of the Q3 news.

Given that there is circumstantial evidence that the 10th Nov short was closed by the exercising of the warrants originally granted to Beaufort Securities it is more than possible that the shorters, having avoided the risk of being hit by a great Q3 RNS, had simply returned when they sensed an opportunity to have another go. The subsequent reaction to the week’s subsequent RNS’s – the news of the battery deployment at Eskom and the PPA agreement with Jirama for the Imaloto coal project – both excellent pieces of the jigsaw fitting into place also suggests that the SP behaviour observed is not reflective of a genuine assessment of the company’s progress, but rather a temporary aberration caused by further shorting following on the heels of the 10th Nov Flash short and the subsequent action on the 20th Nov.

Unlike the 18th August short the size of the short set this Monday the 20th November – seemingly in excess of 1.5M, appears to have overwhelmed the purchasing power of existing shareholders and the SP has not recovered as it did in the first week after the 18th August Short.

After the 18th August short Private investors were able to purchase essentially all the shorted shares – the Market Makers subsequently allowed the SP to rise in weeks 2-3 after the short – just at the point that they determined the shorters would need to buy shares to close their shorts. They did this by selling more shares than they took in in weeks 2 & 3 – effectively the MMs went short themselves so as to be able to take advantage of the squeeze on the original shorters.

The MMs had to do this after the 18th August short as they did not have any stock to sell to those caught in the short squeeze. What is interesting right now is that the Market Makers have been clearly Buying more shares than they are selling  – they are simply preparing for the short squeeze to come, at which point they will walk the price back up and take advantage of the shorter’s exposed position.

The obvious conclusion is that these prices are being kept artificially low at the moment, – initially as a result of the shorting action, but now by the Market Makers, who appear to be currently building themselves a Long position as cheaply as possible.

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