yeh that's correct.
it is fairly good incentive to convert early as it gives you more exposure to an RI in a company that has just completed a very successful RI from shareholders POV.
while there are always risks, it seems plausible that the shareprice won't go below 2c again unless something catastrophic occurs, so the decision to exercise options has already been reasonably validated. the RI just offers more incentive.
the prospectus is interesting.
it states that other financing options were already available but the directors have elected to do another RI instead. the financial requirements seem to already be covered by the existing bank balance, so i can't see any great urgency to do this issue, and again am left feeling that the general point is to provide one last cheap raising for shareholders before larger financing deals change the dynamics.
It also provides large holders with an opportunity to pick up an extra 14% without moving the market, and in particular, it provides the Jains with an opportunity to move over the 20% takeover threshold. it seems that they have already offered to further finance the project, and possibly have an eye on acquiring as large a stake as possible.
the prospectus actually suggests that the corporate transaction is still looming (refer to Jim's letter to shareholders - "There is also potential for a regional consolidation strategy that could involve consolidating with other known copper deposits in Oman.")
I presume this is a reference to Savannah Resources, whose shareprice, for the record, continues to track our own.
Even more curious, 6.2b (RISKS) states:
"While the Company has received indicative terms for debt financing of the Al Hadeetha and Khnaiguiyah Projects, and has major Shareholders that are willing to provide further financial support to help advance these Projects into production, there is a risk that project finance for the Al Hadeetha Project will not be finalised."
This paragraph is curious in it's omission -
it only says that finance for Al Hadeetha might not be finalised.
Does this mean that finance for Khaiguiyah is actually secured?
I very much doubt that this omission was accidental.
Even if i was completely new to this company, I would be inclined to view this RI as a smoke signal. Post announcement trading supports this view.
The issue is too small to be of any material significance imo, and seems more about juggling the numbers around and rebalancing certain shareholders before the main game begins.
auq vs sav
AUQ Price at posting:
2.3¢ Sentiment: Buy Disclosure: Held
