"...additional aeromagnetic work and seismic that will involve capital spending of approximately $13million to $15million over the next 18 months."
MPO hold 30% of the Gloucester Basin acreage (PEL 285)...therefore, they are telling us they will need to find up to $4.5m over the next 18 months.
Clearly there is no indication here of an immediate need for funds, but one would expect that given this obvious need for cash, combined with the need for funding of their other projects and of course, general running costs, that some time in the next 3-6 months, some form of capital raising will be required to supplement existing cash reserves.
The $12m from the options would seem a logical target for management...if they want to get the money from here that is?
I guess it comes down to whether they feel the need to get their "mates" in, which could well be supporters, or indeed a new cornerstone investor, a deal I am sure the new guys would have the capacity to pull off.
Further, such a deal could involve the options being exercised or not...but once again, it all comes down to long-term strategies according management.
Remember, we are not looking at a typical, get-rich-quick approach here...lol...if this is your goal, CBM is definitely the wrong sector for this.
Seems obvious to me these guys will look to the big picture and will act not like "milk-the-market cowboys", but rather the well respected professional "achievers" they are.
So many things they could do to secure future funding, none of which involves "pumping" the stock with market starter announcements...as evidenced from today's rather succinct "update", they are simply getting on with what appears to be a fairly comprehensive development program.
This is in vast contrast to previous behavior.
So...what about the options, which it appears many have "concerns" about?
I have previously raised the fact there are competing agendas here, but such activity can only really dominate while the markets perception of the value equation is in limbo...silence will do this.
I think today's announcement pretty much signals to the market that silence we will not get.
In light of this, one must wonder what form the China update will take...and exactly when this might be released...one would assume before 30 June?
Add other "events" and it would seem a pretty tall ask for "someone" to suppress the stock at current levels for almost 4 months!
lol...I have seen it done however, but not usually without tacit approval from management.
In light of this, I suspect management believe the price with be significantly higher in this time and that the options will be well in the money come expiry.
So...do they wait for the options money, or perhaps arrange a "top-up" in the meantime?
My guess is they will need something prior...but no worry, they have plenty of options here.
Placements are always achievable...and with near-term options expiry "issues", the earlier the better.
Or...they could even encourage alternative funding via early exercise of options with the help of a "carrot" such as a free bonus option with an exercise price of 20c for all those who exercise their options by "x" date.
Personally, I suspect any such incentive will not be necessary and that a capital raising will eventually be conducted at 20c, either to a cornerstone investor, or perhaps even to existing shareholders in the form of a 1:4 fully underwritten rights issue.
I prefer the latter from a corporate perspective, which in conjunction with the exercising of the options, would eventually see a fully diluted capital base of about 930m shares and some $50m cash in the bank!
This would be a good result in my view and should pretty much see the company through to some decent income, from which further development can be self funded, thereby effectively putting an end to future dilution.
Amazingly, such a share structure would see MPO's share price near 86c to bring it on par with AOE's current market cap...lol...and in my view, this price would still not be a true reflection of the inherent value of MPO, which in my view is a potentially better play than AOE
Cheers!
MPO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
