Hi
@WalrusBootsI might offer my two cents here (but I'm not a holder, so feel free to take with the requisite pinch of salt). Firstly I'm interested in project finance so when I see announcements like this, I tend to sit up and take note. I have previously written about the difficulty of small caps sitting on huge resources to actually get the project funded - a detailed explanation why, including examples, is here in the context of MGT:
https://hotcopper.com.au/threads/mgt-understanding-where-the-money-comes-from.6156656/?post_id=54425237Anyway, to me this looks like a rather expensive deal (remember, the company will
always advertise it as being low-cost, they will never come out and say
"crikey, it's pricey!"). So HIO have got access to $200M, yes, but at the cost of a $4M fee (half cash, half shares), as well as offering up 10% of the current register as options. The latter's strike price will deliver $50m into the kitty, all being well - so that's not all bad news - but you're also giving away 10% of the company to a financier. Someone in this thread suggested
"we only need a few more of these and we're funded" (or words to that effect). Think about that logically - if they were all set out in similar terms, you'd end up giving a big chunk of the company away just to get the thing built. That would not be a good deal by any means for shareholders. Finally, unless I'm reading the announcement incorrectly,
every time they actually want to draw down from the $200M, they will be issuing ordinary shares to LDA - so they're effectively paying a $4M fee,
and giving away options, to guarantee that LDA will swap their cash for shares in the company, at a 10% discount. It all sounds very dilutive to me, for the amount of money on offer.
Just my views at this early stage, I will continue watching just for interest's sake as I enjoy seeing the different ways juniors try to fund their projects (seeing what works and what doesn't). I don't intend to buy this company - nor do I own any other IO miners - so please try to avoid the usual rubbish about "he's shorting", "wants to push the SP down for lower entry" etc. I think this deal clearly favours LDA. However you're better off than other juniors with no funding at all, but I can't yet see how this will give the re-rate people are talking about. However, very happy to engage with holders who have a different view to the upside, after all, we're all here to learn. To be clear, not bearish on HIO - just looking specifically at this deal.
Cheers,
mondy
(20min delay)