morongobill's  Instablog

Some might think that perhaps this blogger has been snorting too many lanthanide lines, after the wildest ride I can recall this morning with trading in the stock halted at 0721 and as many shares traded as Molycorp, and with the stock all the way down to $1.07, despite all that, I still love this company and its' technology.

Such unrequited love might not be shared by others this morning however. The chatrooms are a cacophony of anger and recriminations, as well as sadness and longing for the old days, when the stock rode high, yes, before the need for honest and complete and timely news releases and md and a's.

Why there is even talk of sending RB, the CEO, packing.

All I will say is that such lamentations and accusations are common and necessary at a time like this, a time of great loss personally and financially, in order to move on and assess the damage and to formulate a plan for the future. I am referring here not only to investors such as myself but to Orbite Aluminae's management team as well.

I am a newcomer to Orbite, the rare earth blogging business and to rare earth and penny stock investing. I am not familiar with some terms that were bandied about today on the forums such as naked shorting but I am a quick study and Google is my friend. I may not know all the ins and outs of how stocks trade or how they might be manipulated behind the scenes, but after a lifetime of reading about and working in big business, there are a few lessons learned in the past that may apply today.

This is a quick post and hopefully I will remember the main points from my skimming of the news and the news boards, as well as my readings of various Orbite and industry publications and papers.

First, there is no doubt that this was a short attack. Whether it was a concerted effort, I don't have a clue. I will say this, the novice that I am, even I could see that serious money could be made in the last few days shorting this stock. Short selling is a legal and historic part of the stock trading game and we might as well learn to live with it. If I had the financial backing and wherewithal, I might have shorted this stock and Molycorp the last few days. After all, making money with all the tools available to you is allowed in this business. It is up to the authorities to regulate and police these markets, and to the rest of us to obey the rules or face the consequences when we break them.

Second, as Antoninus has noted several times over at the Stockhouse forum, and I am paraphrasing here, the company needs to provide complete and timely information and not leave us investors left dangling out in the breeze. He even wrote a suggested news release that should have been the model for the one released by the company before Good Friday, instead of the one that they did release, which in my opinion has helped lead to the slaughter we have observed today. That blood and gore all over the trading floor can be directly placed at the feet of current Orbite management in this writer's opinion; and yes, perhaps it is time to think the unthinkable, that perhaps there should be no sacred cows at Orbite Aluminae; some in management better offer their mea culpa's today or face shareholder and the Board of Director's wrath later.

Third, we need to start thinking about the future in the immediate short term instead of dwelling on the past. All the pipedreams about a JV partner riding up on a white horse right now to ignite a short squeeze to drive this stock back up, wipe out the evil shorts, and save the current management's bacon, are just that, pipe dreams.

It ain't gonna happen, folks.

There is absolutely no doubt in my mind that after today's carnage and possibly tomorrow's as well, the Rusal's and Nalco's of the world are now licking their chops in anticipation of getting control of this revolutionary technology which will save their own behinds at fire sale prices. The aluminum business is in the doldrums financially right now, and if they can swoop in and pick up this technology and intellectual property- the whole enchilada- for a song, they will. Or a hostile takeover run from a private hedge fund might suddenly appear, anything is possible.

My best guesstimate is that whatever happens, it will not be to my or your benefit. We are just the pigs that are about to be slaughtered, with strict adherence to the laws of course. Of course! The same laws made and lobbied for to benefit the big boys, of course.

On a personal note, having ridden this down from $1.73 to $1.07 in about 2 weeks time, I might as well stay in it for the long haul. Who knows, if the company is taken private by a hedge fund, maybe I will make a couple of bucks. But I will also take away a little more lessons as well.

I bought into this and have even caught myself telling friends about our revolutionary technology and processes. Does that sound familiar? We need to learn that it is not our company, it belongs to the sharks, we are just the minnows to be swallowed and spit out
at the will of the sharks, whenever they feel like it. And we had better learn to live with it. It has always and will always be so.

By all means, we should not give up believing in investing, especially in small companies, but we do need to grow up and learn what we can and can not do. We have to think with our heads, not with our hearts or our checkbooks. We have to quit acting like doormats and when we think management of companies that we invest in aren't being forthcoming, we need to call them out. Unlike the Buffet's of the world, we cannot make them do anything with our raw power, but we can goad them into action by playing on their consciences and desires to do good and to be accepted. As one, we are little pissants to be stomped on, but united as shareholders we might get a little respect at least.

Respect for shareholders,something that I have seen very little of from the current management at Orbite and some other businesses that I have observed recently, especially in the junior mining world.

It might behoove these young upstart companies to consider the fact that hundreds will go extinct this very business quarter, and that a little humility might go a long way in helping them through these depression like times financially. The old days are gone and probably for a Hell of a long time.

There are others much more talented and well schooled in business than I so the deep market theory and analysis, I will leave to them. But the core problems, I believe I have covered. You may differ, if so, would you care to comment?

In my life, I have done everything from limbing downed trees with an ax at a small pulpwood operation in south Georgia, to sitting on the foreign currency desk at a major bank headquarters in downtown L.A., to working as an independent rep for a major chemical company calling upon supermarkets for 16 years, to my current position as I await retirement, shuttling folks to Disneyland- I say all this to give you a little insight into who I am, this smalltime blogger that many of you are now visiting daily. I am no expert, but at least I do have some skin in this game. I may be a little older than many of you, but I am still young enough to enjoy writing this and especially in interacting with the readership.

Even though some of you might feel p----d o-with my take on EORBF and ORT's current
management situation, I hope that you will come back here and contribute to the discussion and our understanding of the rare earth and investing business.

I look forward to our next visit, where I hope to discuss the destruction by authorities of a junior miner in Quebec.

Come back anytime.

This blogger is no mining or financial expert and makes no claim to be. Neither is he registered as a professional and licensed securities broker or financial planner, and has no plans to become either. Anything expressed here is this blogger's opinion and should be taken with a grain of lanthanide dust. This blogger is long EORBF and that material fact may cloud his judgment.

Morongobill

Disclosure: I am long EORBF.PK.

I can feel it in my checkbook.

The company just released the year end financials as well as the management discussion and analysis Thursday, and while I felt that things are moving along to plan, some in the stock chat forums seem to think that a signal was sent regarding the SGA(smelter grade aluminum) plant; that it might be delayed, with one or two even saying that it isn't even needed. I disagree.

The whole premise behind this company is that it started with technology developed to process aluminum from clay deposits, which has been almost impossible with the prevailing 100 year old Bayer process. There are many such clay deposits in the world and Orbite happens to have the rights to a large deposit in Quebec. They have proved that their process works and entered into MOU's with Rusal and Nalco to try to get a joint venture partner to assist in building the SGA plant, which is a hugely complex and expensive undertaking. The Rusal MOU in particular has worried some investors in that it was signed a year ago and there still is no further news- it just has dropped from the radar. This has led some to speculate that perhaps they are trying to cut Orbite out or have lost interest. which might be part of the reason why institutional holdings of this stock are still under the 4% level. Said institutional holdings being the bedrock upon which the stock price normally rests upon.

It does make you wonder why one of those investors, AGF Investments Inc, dumped half of their holdings or 3.5 million shares during the last 6 months of 2012, was it during the run up or during the long decline which is still ongoing, from around October 2012 until now, which has seen the share price drop from around $3.60 to the $1.55 level today.

It is not like Orbite is without accomplishments. The deal with Veolia Environmental Services to be the exclusive agent using Orbite's patented redmud cleanup process is one example. This will be an absolutely huge money source once the first plant has been built and other companies or governments can see for themselves that it does work. Veolia has one year to get the building underway, that's my understanding of the situation, and this is a perfect example of picking off the low hanging fruit by Orbite, in the sense that someone else will be putting up the money and then paying off Orbite with a never ending stream of royalties once plants start going on line.

Another accomplishment is the news that Orbite is now in the business of selling HPA aluminum now to end using manufacturers. The news that already 25 businesses have
purchased 1-100 kilogram samples for testing purity etc is huge. Orbite is now officially a supplier and this is a Rubicon moment for the young company.

There are other things happening but this blogger feels that there is enough news listed here to come to a firm conclusion about whether or not this speculative penny stock should belong in one's investment portfolio. YES.

But you need to understand that this is primarily a retail stock with over 90% of the shares currently being held by individual investors, who may be prone to panic with the fact that the stock has long a favorite short target for day traders and others, which has led to this long price decline.

There is still a huge amount of short interest outstanding and a consensus seems to be building that something big may happen tomorrow, after the holiday and the release of the financials before the long weekend. All I will predict is that it will probably be a wild ride tomorrow and that it would be in the institutional portfolio managers, who might now be interested in the company since it now has a real product to sell and potential revenue streams materializing soon, interest to see the shares driven down further.

So we will just have to see what happens- my wildest dream is that, as one post on a stock forum stated, that we end up in a major short squeeze and the stock price will rocket up big time as the long winning shorts suddenly have to scramble to find shares to cover their positions.

Please be advised that this blogger is no mining, or financial expert and has no plans to become one. This blogger is not a registered financial planner or stockbroker. This blogger is long EORBF which may affect his judgment. This blogger advises one to consider his opinions as just that, opinions, and should be taken with a grain of lanthanide dust as with any other talking head's advice. Penny stocks are inherently risky, highly speculative, and you can lose every penny you buy in with.

Morongobill

Disclosure: I am long EORBF.PK.

Note this post is my take on current events in the junior mining exploration funding world and is not for the purpose of encouraging one to commit any type of criminal stock funding scheme which might result in prosecution by the responsible regulatory authorities in Canada or the United States of America, or in any other global jurisdiction. Financial crimes are serious and usually result in average people like ourselves losing their entire life savings. This post is strictly an intellectual exercise by this blogger as well as a commentary on the state of the junior mining world today. Having said that, I cannot stop any cash poor junior from contacting a penny stock promoter, for a little pumping and dumping, in order to allow the insiders to bail out with some of their money back; mini golden parachutes in other words.

Per various news reports from trade associations and others that I have come across on the net, in the year 2013 hundreds of Canadian and American junior mining exploration companies will run out of cash and be forced to close their doors. Expenses for these juniors run from office rent to listing fees for the various stock exchanges that they belong to. In their business right now, the primary means to raise money in this tough time for mining concerns, is via the sale of stock equities, usually in the penny stock market, which most large brokerage firms do not get involved with due to more paperwork and hassle.

There are serious projects out there that I have looked at in the last few months, with billion dollar capex needs to get their mines going and share prices languishing in the sub 50 cent range. These projects have inferred and indicated mineral resource estimates, often valued in the billions of $US, and are worth about the price of a cup of coffee and a stale donut if the leaseholder cannot obtain financing for their mine scheme. As I have said here before, resources is a term used legally in the mining financing business to impart the fact that the ore in the ground has no viable economic value- in other words, you are betting that the geologists are spot on with their drilling studies. Reserves, on the other hand, such as what Molycorp has in abundance at its' Mountain Pass facility are a known stored value, like money in the bank.

I recently looked over Quest(QRM stock ticker) up in caribou country in Canada which on the surface sounded really good, until I dug a little deeper and discovered that while the rare earth resource estimate is huge and one of the largest in the world, it is in an area of virtually no infrastructure, requiring a 125 kilometer plus road to be built to the mine site, a port facility to be built, and if my memory is correct, will run entirely on diesel fuel as there is no energy supply there. I had to pass, with banks as tight as bark on a damned tree and a capex of close to a billion dollars, the only way to fund it would be either as a joint venture with a big miner or trying to raise the funds via share sales, further diluting the existing shareholders. Since I have heard of no plans firmed up for the provincial government to bring in the infrastructure nor of any mining major being willing to get involved, I predict the company will just have to go into hibernation and try to ride out the downturn.

So what can these junior miners do? Their executive staffs have money and their time and reputations invested in their particular project, are they just going to shut all that down and get out on the unemployment line with the rest of the working stiffs? Some will, but some may pursue another option, which might be a little more lucrative.

There are folks out there who love to play the penny stock market and are always looking for that small upstart firm that somehow slipped through the cracks and somehow came up on the radar and by getting in early they can ride the shares up as more folks like themselves pile on, and then they dump the shares, hopefully after a five or ten fold share price rise, 5 or 10 bagger in the slang usage, getting out and moving on to the next one.

There are unscrupulous companies out there that cater to these little guy's needs and they will approach the small companies and offer their "pump and dump" service for a fee, often as much as a million and a half dollars US AND shares in the company, and these company's often are successful in what they do. Let me explain that.

Success is defined in the stock promoter being paid upfront and in the insiders at their client company being cashed out, hopefully not taking too large a bath. These promoters often skirt right up to the edge of the law, think 50 shades of gray, and occasionally you
read about one getting their hand slapped by the authorities. When you make millions though and only pay thousands when you finally get caught, does that matter much in the grand scheme of things? The campaigns often last a week or just a day or so, but with so many mullets looking to invest and on their mailing lists, that is all it takes.

There are also very smart day traders of great skill that have found a way to profit handsomely from this market by short selling the securities involved in these pump and dump schemes. In fact, I wish that I had such skills and the financial backing, I would quit my day job, bus driving, in a heartbeat!

But since I lack both of those attributes, I guess I will just settle for having this little blog.

Here is my guess. There are some desperate junior miners out there lacking financing but with significant amounts of time and their personal capital tied up in their deals. They are honest but stuck between a rock and a hard place. Maybe they could even become a statistic themselves, homeless and pushing a shopping cart, loaded down with their pickax and other belongings. These folks will be very susceptible to the promoter's pitch when it comes. Or they may call the company themselves for help.

Either way, the call will not be made with the end result being that funding will be found for their project, that will not happen. The end result will be that the promoter will make a killing, hopefully the junior insiders will cash out a little, and the final holders of the shares will be stuck with illiquid, over priced and overly diluted, worthless stocks. The only exceptions that I can say will be those skilled traders who will make money long by jumping in and out, as well as the shorts who will ride the stock all the way down to the bottom, both making out like bandits!

So you see it is possible to make money in these tough times for rare earth mining investors. It really is.

Pump and dump schemes have been around since the beginning of the stock markets and they exist worldwide. They will always be impossible to root out, due to the human tendency to want to get in on a sure thing.

You can't stop it but you can profit on it, if you are either a skilled trader or if you are willing to overlook a few laws and regulations.

Or if you don't have a conscience.

The writer is not advocating that you get involved in any way with these often illegal stock schemes, nor is he a legal, mining or stock analyst. This article was presented strictly for information or entertainment purposes, and as a warning for investors as to what they might encounter in the rare earth or penny stock investing world. The author does hold a LONG position in EORBF, a penny stock which does not use a promotion company and in the writer's view, is as honest as they come.

Morongobill

Disclosure: I am long EORBF.PK.