The Itochu deal is an interesting twist IMO. It looks, smells and feels like a negotiation chip. But I think coys like Itochu have better things to do than present themselves as negotiation chips... IMO Itochu want exclusive distribution rights, nothing more, nothing less.
I note in the Itochu announcement the comment "...funds raised ... would be sufficient to fully fund construction of a standalone ISR and uranium processing plant...". Given the comments in previous presentations, that I think is about $96m ... let's round to $100m.
The quiz then is what share price (and therefore market cap) is sufficient to deliver $100m cash given 14.1% equity AGS and 25.1% equity in ACE.
If my humble maths is anywhere near correct, and embedded dilution logic is real it would seem to me that the directors are targeting a share price circa 66 ~ 70 cents post final determination of litigation. That would be a market cap around $332M. I'd be happy at about that. I think that market cap would also assume that the final determination was basically nil change ie ags have 25% only
IMO a ~ $100m cash injection is also possible if the prevailing market price were somehwere around $1.80 and a final market cap @ $711M. This would mean Itochu would exercise the 14.1% entitlement but not need to exercise the 25.1% entitlement. Certainly conceivable as the latter is an option only. IMO this infers that they did indeed secure the 75% return ... a little way too extreme I think.
Overall, I'd be content at 60 ~ 70 cents...
I certainly don't see the Itochu deal as a vehicle for 'slipping one into the mum 'n dad investors' ... again, Itochu probably have better things to do.
Have a great day.
AGS Price at posting:
22.5¢ Sentiment: LT Buy Disclosure: Held
