future of bwn, page-45

Orion123

Agree with you to a certain extent - I can see that it is in Bhushan's interest to convert their options (but not for other option holders who can buy shares now for less than 10 cents, though if they all tried to do so en masse the share price would soon be much higher)and increase their stake in BWN but my take on Bhushan and their strategy is:

They recently (19 Feb) converted 2,379,000 of their 2,500,000 listed Nov 2009 options to shares thus contributing $475,800 to BWN, who were running out of cash (only had $72,000 at the end of Dec). It is in Bhushan's interest that BWN stays solvent otherwise they might have to compete against others if BWN's assets were sold off.

Bhushan holds another 7,500,000 unlisted options with a 20cents exercise price and expiry date of 8 July 2010.

Under the share subscription agreement that was put on hold in December they would potentially have obtained a further 6,500,000 options exercisable at 20cents.

Bhushan now has a majority on the BWN Board (with the last appointed member's appointment subject to shareholder ratification)

There are 56 million options expiring Nov 2009 held by other shareholders. If those options are exercised then Bhushan's stake in BWN will be diluted.

So it is not in Bhushan's interest for these options to be exercised, so I expect exploration this year will slow right down so nothing the company does increases the share price and risks options being exercised.

When Bhushan exercised their options in Feb they increased their holding in BWN to 22.3%. Above 20% a holder cannot increase their stake unless they make an offer to buy all shares outstanding EXCEPT that they can increase their holding by 3% each 6 months without making an offer for all shares.

So I expect Bhushan will keep BWN solvent by converting options during 2009 (they can convert some more from 20 August which will mean another cash injection of about $500,000 to stay within the 3% creep limit) until after Nov 27 when the 56 million options lapse. So barring other funding arrangements BWN will only have about $1M to spend this year.

At the end of this year I expect some form of the recently frozen Bhushan share subscription deal will be resurrected since BWN is unlikely to have other alternatives for raising exploration funding. Maybe next time around existing holders will be given the right to also contribute alongside Bhushan for further shares, with Bhushan given the right to take up any shortfall. But in the current funding climate, and in the absence of any JORC estimates for any of BWN's tenements BWN's best bet for further funding is Bhushan and perhaps, if given the opportunity, Savni might also chip in.

But to me it seems Bhushan is destined to take control of a majority of BWN shares sometime next year - given they already have a Board majority and the current scarcity of funding for exploration

A better outcome would be joint ventures with some other partners on tenements not currently shared with Bhushan, but again the lack of JORC estimates is a hindrance to establishing these, at least on terms favourable to BWN shareholders.