TU Jester for not being afraid to ask. The old saying is, the only dumb question is the one that isn't asked.
Your options are exactly that. An option to buy AYN shares at 1 cent any time between now and 1 July 2015. To exercise your option, you give AYN one cent and they give you a share. Obviously you would be mad to exercise your options if you could by them on the ASX for less. However, if these options are 'listed' options (don't recall if AYN said they would be or not) then you can trade them on the ASX. That is, you can sell your 'right' or 'options' to buy AYN at 1c before 1/7/15 to someone else at whatever price the market dictates. The black art of option valuation (done by AYN) says these options are worth 0.29c. If the SP rises above 1c, then the options are 'in the money' and it makes sense to exercise, although you could choose to continue holding if you expect the price to rise further, and your exercise price is at an even bigger discount to market.
However, totally disregard the last trading price. Currently there are 1.6 BILLION shares on issue. Check out page 17 on the notice of meeting, and have a look at how many shares the SH just approved being issued. I haven't looked in detail about the conditions (if any) of this issue, but basically we will be up to some 9 billion shares if they are all issued. This is major, major dilution. If the market thinks the shares you bought are worth 0.5c, that will give a market capitalisation (MC) of $45M for a company that's struggling to produce at a profit. I think we will be well below that for a time.
As for me, I'm taking up the offer for two reasons - 1st because I believe the silver price will go higher. 2nd, because I am only a small player, and the price has fallen, I have less than $500 worth of shares, which I will not be able to sell. If I buy the extras, I might have enough to exit when the time is right.
The short answer to the second part of your question is you can choose to hold them, or sell them if they get listed. But unless the SP gets above 1c before they expire, there will be no point exercising them.
AYN Price at posting:
0.7¢ Sentiment: LT Buy Disclosure: Held
