Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Tower Resources: is a placing in the wings?

By Ben Turney

4 April 2014 12:28

I have no inside knowledge of Tower Resources (TRP). I don’t know the brokers, I’ve never talked to the company and I’m not even sure I know anyone who owns this stock. All I have to guide me in this piece is a basic grasp of simple arithmetic, a small appreciation of commercial behaviour and a rudimentary understanding of how share prices move. So naturally I am convinced that a placement is currently in the offing!

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Comments

Philip

4 April 2014, 20:32

Okay, you’re commenting on a stock I own ben but being a pragamatic investor, I see the validity of your argument.

Indeed, many of us have independently come to that conclusion anyway.

I’ve derisked on 40% of my initial holding anyway so a good amount of profits already taken. Again, required pragmatism, especially on O&G stocks.

However Tower address the funding issue, at least clarity would have been provided, even at the expense of significant dilution.

We know the way hysteria builds up to drill results so any pain should be relatively short lived (I’m assuming of course) and with the potential upside mentioned.

Good to be aware of likely scenaeious though as indeed, the price should be a lot more buoyant with the spud due.
Aheadoftheherd

4 April 2014, 21:20

No mention here about the credit facility open to the company which could for the sake of this drill cover cost shortfalls without a farm out deal or placing.
Ben Turney

8 April 2014, 08:10

@Philip

Thank you for the measured response. Congratulations on your profit. This stock has performed spectacularly since late last year, notwithstanding the recent drop.

I do think you’ve taken the sensible step derisking and a profitable free ride on the drill result makes for an exciting trade at the very least.

@aheadoftheherd simply covering the shortfall in this drill is the most unlikely scenario, unless Tower is forced to. As I said I can’t believe the board will gamble the entire company on one drill, unless they really have to