Colossal Resources - CLPZF - Colbalt in Zambia Message Board

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Gold/Mining/Energy : Colossal Resources - CLPZF - Colbalt in Zambia

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To: Glen McGlaughlin who wrote (167)	4/19/1997 4:05:00 PM
From: Tom McIlwain	of 501

Glen: << There has to be other factors putting pressure on prices, what are they? >> The major factor I believe comes form the nature of the Reg S debenture financings carried out by the company late last fall. I got a taste of what these type of financings can do to a stock price with another stock I held called Thermo-Tech Technologies. The price was driven from about $3.00 to 0.50 by the continuous selling resulting from this type of nightmarish financing situation. If you dig up the appropriate news release you will see that the conditions of conversion for the debentures are that they may be converted into shares at any time for a share price equal to 80% of the average share price over the previous 5 trading days. What this means is that the debenture holders, if the price remains steady, can gain an immediate 25% gain by converting their debentures and then selling the shares into the market. It would appear to me that this is what they have been doing. The behaviour of the Colossal share price follows the same pattern which I saw with Thermo-Tech. That is, a drop in share price over a short period of time, followed by a period of stability where the price seems to have reached a bottom, followed by another drop in share price, followed by another period of stability..... Why do they periodically push the price down further? I believe this is to create another round of buying for them to sell into as people who believe the bottom has been reached acumulate. Remember, they need a steady price over 5 days or more to really profit from this and a strong enough market for them to sell into for a while. I cannot prove this is what is happening, but previous personal experience with this type of financing suggests this. People should contact the company and try to determine what percentage of the debentures have been converted to shares to date. They may not know offhand, but should be able to get such information. Do not blame the company. They are just trying the best they can to survive in this sea of sharks like the rest of us. Tom McIlwain

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