What happens when a company issues new shares?

First Time Investing 🐣
1

Hello :freetrade: community

A newb question on share issues if anyone can help please.

I chose Alien Metals £UFO for the Bull and Bear Double Bagger Challenge and while checking out a recent rise in it’s price, saw that they were planning a share issue to raise funds to purchase 100% of one of the mining areas they share with other companies.

The price has gone up around 30% today (Come Ooon!) :rocket: :rocket: :rocket: but imagine it may decline during the share issue?

I understand that current shareholders will be offered discounted shares during this process and wondered if this was true for us mere mortals here on :freetrade: ?

Can anyone tell me more about share issues and what we might expect please?

Thanks
Orbitalinvestor

2

Share issues, of the type you seem to be suggesting, are normally associated with stock dilution. So you should expect a depression of share price not an increase.

If the share price has increased almost certainly it is because this firm has announced ‘good’ news and as this is a mining stock it suggests to me that someone might think that they have hit gold or something. It could also be speculation about a discovery. These kinds of stocks are also notorious for attempts at stock price manipulation.

3

Thanks @bitflip I thought it was strange.

I spotted another announcement on here that they found almost 2% silver in some core samples… maybe an anomalous sample? :cowboy_hat_face:

I have read that small new mining companies are often avoided by investment funds and have taken that into consideration - and unless I spot something really special, won’t invest in any more.