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Originally posted by Fact Finder:
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The following is my opinion only after spending till now reading and going over with someone who has a sophisticated understanding of these things the finer details of this announcement. The salient takeaway points are as follows:1.The Company has agreed to draw down A$10 million in the first 12 months (Minimum Draw Down Amount) and may draw down up to an aggregate amount of up to A$29 million under the Agreement. theCompany has agreed to issue up to 75,000,000 unlisted options to LDA Capitalwith 37,500,000 of these having an exercise price of A$0.15 and 37,500,000having an exercise price of A$0.20, with each option having an exercise periodof 3 years. 5. This means that at the present share price of 18 cents the company can secure this facility of $29 million by issuing less than 2 million shares. The immediate dilution of this issue is conservatively negligible and preserves existing capital. Having this facility immediately available means that the company stands in a strong and secure position to negotiate on equal terms with all of the present suitors for AKD1000 and allows the recent appointment to build the team necessary to service the implementation of AKD1000 with customers as they come on board. 4. Certainly the issue of the options will have the effect of diluting shareholdings but in return BRN when the options are exercised will receive a total of $13,125,000. LDA Capital has three years to exercise these options but I suspect their business model is to make profit and when these options are sufficiently in the money they will exercise same. If as many of us suspect the price of BRN shares could be in the order of 50 cents before the end of the year the probabilities are that BRN will find itself in receipt of the $13,125,000 as LDA Capital seeks to take profits which at 50 cents is well above what is seen in their industry. If this were to occur then BRN would have $13,125,000. 3 . When BRN decides to take advantage of the capital available the amount of dilution will be determined by the price of its shares at that time which means this. BRN has stated that mass production of AKD1000 will occur in 2021. Mass production will only be required if it has orders. If it has orders and is having AKD1000 mass produced to satisfy those orders logic suggests that the then share price will be multiples of its current level. If it has risen to $1.10 by then at 90% of its value BRN will only need to issue $10 million shares to secure $10 million dollars. The issue of 10 million shares will not greatly dilute shareholder value at that point. 2 . Is self explanatory. 1. The big takeaway from this is that if orders are streaming in and the share price is at new highs and with having already received $23,125,000 in working capital plus income from customers the additional $19 million dollars will not be required and does not need to be drawn down unless of course growth in demand has gone ballistic and a massive injection of capital is required to keep up.
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They have to take a minimum of $10m for first draw or LDA could place some or all the 75 million shares if their Partner COTA wants some by exercising their options and transferring shares. The options were issued at an average of 17.5 cents which is "at the money"
(20min delay)