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Bye Bye Herencia – It’s A Cruel World
Herencia Resources (HER) today announces the adjournment of tomorrows General Meeting until the 24th March to enable it to try and arrange a short term facility which will enable it to continue in business. As at the 3rd February it had enough money to keep it going for a month. Without a new loan urgently, it will have to cease trading.
This morning the shares collapsed 40% on the news and it became a penny share compared to a 24p share a year ago. However hope lives eternal in the heart of the gambling investor and it has already soared back to 2p.
6 years or so ago Herencia was one of a band of brothers, tiny mining companies whose names were on the lips of every Aim investor and regarded as shares which could not fail to make them rich. Herencia in particular with its rich ore deposits in Chile was one of the favourites.
Now one by one they are being picked off. If giants of the mining world are in deep trouble, there can be little hope for the minnows, all victims of the huge world wide mining collapse
The minnows however are easy pickings for the financiers and the stock market jackals. The law of the jungle rules and the predatory wolf is king. Why should any one lend money to a tiny mining company which has virtually run out of cash. Once the loan has been spent, the company will only need another.
But that is not the point. The wolf knows that if he refuses a life saving loan to a company like Herencia, it will go bust and that is just what the wolf wants. The wolf, the shark and the jackals of the financial world know that they will then be able to pick up the company’s assets for a song. Even in only four or five years time those once valuable mining rights could again be worth a fortune compared to next months fire sales prices.
Its a cruel cruel world, a world without conscience but it’s the only one we’ve got
Beware London Property & South American Mining
Foxtons (FOXT), London’s leading estate agency, says it had an encouraging second half and that 2015 as a whole was solid, which is presumably why the share price has collapsed over the past 8 months. The truth about the London property market and it is good news, (except perhaps for Foxtons) is that Land Registry figures to 31st October show a fall of 11% in Greater London sales for the first 10 months of the year.
Despite London’s troubles Foxtons is facing the future with courage. Group turnover rose 4% in 2015 and the shareholders are being rewarded with a special dividend of 6.23p bringing the total dividends for the year to 11p, a rise of 13.4% for the year.
The share price has nose dived from 285p last June to yesterdays 165p but has now risen 4p on today’s update. However if London’s huge property bubble has only just started to deflate, there could be more trouble in store for the share price.
Another cautionary tale this morning comes from Herencia Resources (HER) which illustrates the dangers of AIM and of mini mining companies with bases in South America. Five years ago Herencia, with its two major projects in Chile, was one of the most talked about shares on AIM. It was going to make shareholders extremely wealthy and indeed it did and that was supposed to be only the beginning, compared to what would happen when it got into production. In the last few months of 2010 and the beginning of 2011 the shares surged from 73p to £4. Indeed if you got in early in 2009 you could have bought for 40p, your money would have nearly doubled when the big rise started and by the time the peak was reached at the start of 2011 you would have seen it grow tenfold.
But it didn’t last. It never does, although the excitement and the enthusiasm continued for a couple of years or so, unless you got out very quickly, your huge profits quickly evaporated.
Herencia shares have in recent months been trading at 5p or less and it looks like the death knell has been sounded this morning with the news that contracts have been signed which mean that 100% of its two major projects in Chile could be disposed of for just over $5m. Still loyal shareholders are up in arms and screaming of betrayal and another scandal on AIM.
The lesson is of course, that if you must by shares on AIM and in particular shares in tiny mining companies in South America, or wherever and you are lucky enough to make a fortune, take it whilst the going is good.
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