I have reposted the below in a more appropriate thread as it start off by discussing the SPP specifically, but I ended up on a tangential monologue into a bunch of fundamental stuff which is possibly materially interesting info to read. (Self moderated my other post as the images didn't work).
Better to be oversubscribed as opposed to oversubscribed. Additionally the SPP suggested that the directors can allow it to be oversubscribed.
Regarding your conflicting mindset currently - i personally hedged my bets. So I bought 1.25m on market on open and will send away for the allotment. Between the 2 I should get a decent position at .8c.
Agree that it's not great having money tied up, the alternative is to place orders on market. My personal view is if one doesn't have the capital to comfortably have 30k tied up for a placement then perhaps one is overexposed. (Not financial advice, just my personal view opinion).
The SPP also suggests that the company reserves the right to close the SPP early. The company actually said explicitly in the announcement today.
"IonicRE encourages shareholders who wish to participate to act promptly in submitting their application. The Company reserves the right to close the SPP early, in its sole and absolute discretion, should it be considered necessary to do so, by making an announcement to ASX."
The reason why this is typically how placement occurs is that the company is usually aiming for a specific quantity of cash to complete a set of activities. If they say announced "we're going to raise 2.5m through a pure SPP 30k max or whatever figure you want it then relies on 83 shareholders taking full allotments. Short of the company calling around 83 shareholders at random how do they guarantee they raise the full amount. Secondly, people would still miss out.
SI are actually in the share registries best interest. You typically want the top 20 and 40 to hold larger positions in the company as they are less likely to flip the share for a quick buck. This tightens the registry and liquidity meaning supply on the sell side is lower. ESK is a good example where i think the top 20 holder near on 90% of the free float. Meaning there's on 10% of trade-able stock. OF course it's a double edge sword. Low liquidity means it's harder to exit without pushing the price down lots which for long term investors usually isn't an issue.
In short, approaching a few SI means they can guarantee they get the funds they need, they tighten the register and keep the big boys happy. At the end of the day the company works for the shareholders. If a few individuals hold 10-15% of the company they have larger influence on decisions that the entire retail base. If i was in that position, i'd want that influence.
The SPP gives the rest an opportunity to take some at the same price as the pro's. the 500k is probably more a sentiment raise. You know like when companies raise 2.5M to pro's and everyone says why didn't they raise to the shareholders! Conversely i've seen a pure SPP fall short of raising the funds. If you can't place money to the pro's it's a worrying sign. It suggests the cashed up, smart investors aren't interested.
The company raised exactly the minimum amount it needs to get all this drilling, licensing, earn-in and cash payments to earn 51% ownership. All the while nailing the Scoping study by Nov. The share price will be materially higher where they can raise more cash in the future with less dilution. It's a great time to enter IMV. .8c is what the pro's paid and i imagine the company could have easily raised more if they wanted.
IMV next cash grab will be via a company and for working capital and funding to build a pilot plant. i expect this to be early 2021. Remembering full capital investment is expected to be in the realms of 30M USD. This significantly increases the likelihood of obtaining funding, compared to the 300M most rare earh plays require. It's the single largest hurdle for any explorer moving towards mining. The first being economically viability.
The low capex also means that there's a plethora of funding arrangements available. Debt, equity etc. If Makuutu gets valued similar to Biolantanidos which was 90M AUD. (at half the grade, 1/8th the tonnage). Then the company could literally do a basic CR for capital, which is absolutely unheard of. I'm not suggesting 50% dilution is a good thing but it's not often one has that ability.
Most likely outcome is IXR moves towards the full 60% ownership. Capital is secure through debt equity and offtake. i.e. sell 9% stake in the company (if company is worth say 90M at 60% ownership makuutu. meaning 9/10% is worth 15M aud. Take 15M USD in debt and have the off-taker fund the remaining etc etc)
End outcome is IXR have 51% ownership in Makuutu which project value at around 150M. (Seems reasonable given Biol is half the grade and alot smaller, lower basket, greater depth etc etc). With full capex funding to produce 4000-5000TPA of rare earth concentrate. Which if my calcs are correct could yield anywhere in the ballpark of an NPV around 800M @ 50% ownership.
Worth the risk, with some tangible evidence to support both how capital financing can be achieved and figures based off company announcements and comparison to peers.
I probably have confirmation bias so as always people should DYOR.
Sentiment is updated to buy to reflect my actions today. That being that i purchased shares on open at .8c. This was as i suggested i would do. That being selling at 1c and placing the order for the same amount of shares at .8c in expectation of the share price pulling back to this price Post #:45465504
Personally don't see the share price going under .8c given the pro's placing 2.5M at it. They will want a return on investment so there may actually be a mark up to sell into. I thought this last time they raised at .8c as well unfortunately covid halted the market across the board. Now market is booming and IXR will be bombarding the market with news leading up to november.
Rare earths will be what lithium was 3-4years ago IMV. Just as poorly understood, IXR box seat to be set to come into that development pilot plant stage just in time to ride a global shortage coupled up with tension across governments to secure rare earth supply outside china. Most hardrocks aren't profitable with pricing this low. Not much interest outside china to invest in capital with conversion capacity dominated by chinese. For list of other converters go to Post #:41576431
What better sell than a project which only needs 30M USD to build a plant which can produce globally commercial quantities of high grade concentrate which has more versatility in terms of final processing to suit customers. There's a reason why china dominates the markets, and it's ionic clay rare earth projects are one of the key reasons for it.
IAC (ionic absorption clay) deposits all given AA status. (Second highest tier behind Bayan Obo. Mt Weld and mountain pass given A status unsteady production and struggling capital expenditure.
All sources are either company announcements, independent journals, scholarly research papers.
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