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September 24, 2007

The Real Reason China Natural Resources is Going Up

posted by MR WAVETHEORY at 9/24/2007 12:55:00 PM
Aside from the boom in commodities, there's another reason why China Natural Resources is going up today, up 42% that is. I did a search for "China Natural Resources" on Google and found that last month, August 8, 2007, CHNR had completed a $35 million financing round.

The investors agreed to purchase a total of 2,187,500 units, each unit consisting of two common shares and one warrant to purchase one common share, for a purchase price of $16.00 per unit. The warrants are exercisable at $10.00 per share for three years commencing one year following the date of the closings. Closings of the several purchases are expected to take place on or before August 26, 2007.

Let's translate that into simpler terms, each unit at $16 bought 2 shares of CHNR plus a warrant at $10. So, at the very most, the stock cost the investors $8 per share. The stock is trading at $14 today which means that investors have almost doubled their money on the stock. That's not including the warrants which are now in the money. All in, a very sweet deal for investors in the private placement.

The stock was trading at around $8.50 when the investment was made so the market cap of the company was $97 million. That means the investors bought around 26% of the company for less than $8 per share. Sweet deal! Now wonder the stock is on fire.

Update: Also, in a more recent press release, CHNR announced that Andy Xie is an investor. Andy is widely published as the former Morgan Stanley China analyst. He was widely quoted in the Wall Street Journal. That may also have to do with the recent rise. This is the quote from the press release.

Among the investors is Rosetta Stone Capital Limited, a company owned and managed by Mr. Andy Xie Guozhong. Mr. Xie is an independent economist and financial advisor. He was the former chief economist of Morgan Stanley Dean Witter Asia. Mr. Xie was ranked as the number one economist in Asia between the years 2000 to 2005 by the Institutional Investors Magazine. He was also selected by CCTV, China's largest national television network and the World Economic Forum in 2003 as one of the ten future economic leaders in China.

So, there is alot of excitement around this one.

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