Below is an email I sent yesterday to friends and family who follow my investment strategies. There is nothing sinister in this and I am posting it for the benefit of less experienced investors who may not have considered the matter at all. Today I have paid a total of $89100 by BPAY to convert my 2.97m options held in two accounts to fully paid up shares. This will be published by the company in the next 10 days or so
Hi All (everyone is on BCC to protect the innocents!)
Over the Christmas break I was reflecting with a few family members on the South Coast of NSW that I was concerned about holding AVZ Options (AVZO) as the liquidity or number of shares sold each day has decreased to the point where it can be difficult to sell out should you wish to. This is a potentially a very dangerous situation if you have a lot of options ( say more than 200,000) because it means it may be impossible to sell all of your options in one or two days at the price you want as the turnover is just not there for AVZ options. If some catastrophic event occurred you could be stuck if all your shares in AVZ were options. My own bitter experience in life is that bad luck always seems to strike those ill prepared, hence the reason for this email.
Why the daily turnover of AVZO has shrunk so much is a bit of a mystery because turnover of the main AVZ shares (called Heads) is running along quite well. It could just be that the long term investors have soaked up all of the Options and are simply waiting for the expected takeover to occur in 2018. If that were the case then it is a good reason but being stuck in any share is never a good thing.
On the subject of the Take Over (TO)like many I believed a takeover was highly likely to happen by Xmas but it did not. I guess the Chinese companies were not confident to pay > 35 to 50 or around $900m for a company with only 7 drill holes todate. That is not too surprising as few companies in the world would do so but I believed that a TO was imminent.
My forecast for a takeover bid in 2018 has now been revised to May - June. That allows time for the first round of drilling to be completed by mid April (per their announcement) and a JORC calculation to be made of the total resource size at the Roche Dure pegmatite and possibly also at the Carrier de'Lest pegmatite (bear in mind there are 7 pegmatites all up). There is a further 20,000m drilling to follow this round of drilling.
Once that JORC drilling data is available it should give any desperate or keen buyer the confidence to make an offer on AVZ. Just how much that will be I don't know but my personal expectations are 40c to 50c per share. Anymore than that would surprise me but I have been wrong before. Any less than 40c would be underselling the value of the deposit especially if they prove up 300m to 400m tons of high grade Lithium.
I have begun a process to upgrade all of the AVZO that I own by contacting the share registrar in Perth and informing them of my desire to do so.
I will have to pay an extra 3c per option to have it converted into a AVZ share. One plus is that AVZ will get quite a bit of cash from me to help pay for their exploration activities.
If you are interested in doing the upgrade of your options, the share registrar is:
Security Transfer Australia Pty Ltd
Tel:
08 9315 2333
email:
[email protected]
Any questions please give me a call
cheers W2
