TNR.v - TNR Gold Corp Sues XStrata / MIM. Level II and its uses

Having been swamped at work I didn't get to follow one of the more promising companies on my radar for a day or two. XStrata is known to be one of the biggest mining groups in the world. I'm sure I've talked about them several times in the past - they encompass several mectals and commodities incs - Xstrata Copper, Gold, etc all throughout the globe. They trade on the London Stock Exchange and has a market cap of nearly $70 Bililion last I checked. Remember my post a few days about Minera Andes expanding the mineralization zone?? http://mining101.blogspot.com/2008/07/minera-andes-maito-expands.html

Xstrata PLC - Has various divisions for base metals, precious metals, and other lines of business.
Share prices is at $3649 GBP/share (multiply by 2x for $USD conversion roughly $7298/share) and market cap of $71,082 Million.

TNR Gold Corp. - has various properties in Argentina (South America) and involvement in Alaska with Novagold. Promising projects and plenty of recognitions from majors like Barrick in the industry.
Share price is at $0.29 now and market cap is a paltry $22 Million.

Now I can see why Xstrata, the giant, is looking to take candies from the baby (TNR). Will it be this easy? It's certainly an uphill battle but let's take a look at Level II on the TNR chart today. What is Level II activity reporting you ask?

Nasdaq Level II is used when stock trading to provide a list of all buyers and sellers for each stock traded on the Nasdaq exchange. Bids (i.e. offers from active buyers) are arranged in descending price order (highest to lowest) and Asks (the sellers) are arranged from the lowest to the highest price. NASDAQ Level II will enable a stock trader to determine the depth of the market for his chosen stock and can help him to decide whether to stock trade or not (depth is the 'size' of the market for a particular stock - how liquid is it?). In order to use a level II system to any effect, a stock trading player must get to grips with the relative importance of each participant and market maker on his screens. A direct access stock trading system using NASDAQ Level II may make stock trading more fun, as it may make you feel more 'Wall Street'

Here's what a typical Level II quote would look like.

Click the picture and full size it for clarity.

L2 Summary above shows:

Bid Level - this is the price the bid / ask is at for that block of orders. This should be self explanatory.

#MM - this refers to the Market Maker's #. In Canada this could be refered to as Brokerage House #. For example you would have your Wood Gundy (CIBC Brokerage), Nesbitt Burns (BMO), Canaccord Capital, and E*trade listed here.

Sizes - The price could be misleading if the size of the orders or trades are small. Investing $10,000 and finding out the daily volume of the stock is less than $1,000 could mean you'll be sitting on the ask (sell) for awhile before you get your money back!

Going further with the TNR example let's take a look at Level II so far:

			Bid								Ask
Price	0.275	0.28	0.285	0.29		0.295	0.3		0.31		0.33		0.35		0.38
# Shares	102,500	25,000	253,500	335,500		135,000	30,000		41,000		30,000		25,000		25,000
# Orders	2	1	3	2		1	2		3		2		1		1

Excuse my terrible Word 2007 formating skills. Next time I will do a picture JPG instead. Above was taken from Stockwatch, which as you can see quite reflects the picture above.

In this case, the bid strongly outpaces the ask... in which case there's a tendency for the stock price to move up!

The total amount people wants to buy (bid) totals to more than 800,000 shares up to as high as $0.295, whereas the amount of stock for sale start at $0.30 at less than 150,000 shares available.

Putting things simply and referring to supply and demand (remember that?)

Going by the graph, if 800,000 people wants something and there's only 150,000 available, what would happen?

A move of the demand line to the right would mean an upwards move on the Y axis (price)

What do you think?