First tranche of placement shares issued

Our fertiliser and green ammonia/hydrogen Investment Minbos Resources (ASX:MNB) just settled the first tranche of its recent $25M placement.

Today, we noticed that the company issued the first tranche of the placement with 131,414,473 shares issued to the investors who participated in the $25M placement at 11c per share.

The amount of shares issued today represents 25% of all of the company’s shares on issue (pre placement).

In the short term we expect this to increase the supply of shares on market as some of the investors who participated in the placement look to sell for a small profit, or simply decide to pull their cash out of the market.

With general market conditions being tough, investors may look to take some cash out of the markets due to changes to their personal circumstances, add to this the MNB share price trading above the level where these investors purchased at and the temptation to sell becomes stronger.

As with most share placements, we expect the share price to settle around or slightly below where the new shares where issued as some investors look to sell out of their positions.

We are also mindful of the second tranche of the placement (95,858,255 shares) which will be issued at some stage in August after shareholder approvals.

That second tranche is being issued to a syndicate of investors led by Hong Kong based Mr. Liang Feng who is the founder of Shanghai listed “Shanghai Putailai New Energy Technology” which has a market cap of US$18 billion and is the world’s largest anode materials maker for lithium batteries

We suspect that this investment is a lot more strategic and expect there to be far less churn on that second batch of shares.

Nevertheless over the short term we expect to see more selling pressure after today’s share issue.