In trading on Thursday last week, the Firefinch (FFX) share price reached the $0.83 stop loss level, and the position was closed. Unfortunately, we are only publishing the closed trade recommendation today due to a failure in technology which did not notify us that the trade exit level was reached.
Any investors holding positions should look to exit at the start of trading today.
Exiting is disappointing as we are closed to the demerger date when Firefinch shareholders will receive 1.4 shares in Leo Lithium for every share they hold in Firefinch.
We still have the opportunity to participate in the pro-rata raising as part of the demerger. Under the pro-rata offer, existing Firefinch shareholders who held shares on the record date being the 5th of May can apply for 1 new share for every 10.33 shares held at $0.70. The offer also allows existing shareholders who take up their full allocation to apply for additional shares over and above the guaranteed number of shares.
I hear you asking what does that all mean?
Well, on the record date, the high conviction report held 7,500 Firefinch shares, so we can apply for 726 new shares in Leo Lithium at $0.70. So the calculation is 7,500 FFX shares divided by 10.33 = 726 shares in Leo Lithium. At the Leo Lithium issue price, this is only $508.20 in new shares (a small amount).
The closing date for the pro-rata offer is not until the 25TH of May, so we have time before we need to decide to take up the offer. However, considering that we are being asked to apply for shares at $0.70 when Leo Lithium does not start trading until the 16th of June, there is a risk involved.
The HC report will not take up the pro-rata offer, but individual investors should speak with their MF & Co Asset Management advisor closer to the offer’s closing date to see if they wish to take up the offer. It may be worth taking up the pro-rata offer for investors with a more significant number of shares and a higher risk tolerance.
CLOSED POSITION
The closed position resulted in an overall profit of $6,585.34 or a 47.38% return based on the maximum amount of funds invested. This is the best dollar profit and percentage return for the HC report.
We are still bullish on the Lithium and maintain exposure through current open positions in Mineral Resources (MIN) and Pilbara Minerals (PLS). Any new subscriber to the HC Report should consider opening a position in PLS as we believe this is the Lithium company with the most upside in the short term.
