The past six months have seen shares of Northern Dynasty Minerals Ltd. (NYSEMKT: NAK) roughly quintuple in value, continually rising day to day from about $0.44 per share in July to today's closing price $2.28.
Most days, Northern Dynasty shares have risen without much news to justify a rise. Friday, however, was different. Friday, Northern Dynasty shares surged 9.1% higher on what many would consider negative news.
Specifically, Northern Dynasty Minerals
But here's the thing: Northern Dynasty is selling all these shares at $1.85 per share.
On the one hand, selling these shares promises to raise roughly $37.4 million (before fees) in new cash for Northern Dynasty, helping to bolster the company's liquidity. That fact might explain the offering's popularity.
On the other hand, another reason the offering might be so popular is because buyers are getting the chance to buy Northern Dynasty stock at a 19% discount to its market price. In theory, at least, this raises the possibility that they will soon be able to turn around and sell the stock for a quick 23% profit.
That's a nice deal if you can get it. As for people who already own the stock, however, not only will they not get a chance to make that profit -- they also will see their ownership stake in the company diluted by nearly 8%.
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