The loans carried in the books are an asset of the company as far as book keeping is concerned.
But the exercise of the options was a cashless transaction, the company didn’t lend the directors any cash to exercise the options at 1.1 c.
In reality, as part of the previous incentive scheme, it allowed recipients to delay funding the conversion of those options into shares , and if the recipients decide to eventually fund the exercise, it costs them 3% per annum. If DP funds his shares in June 2026, it will cost him an extra ~ $120 k, on top of the ~ $ 1 million exercise price.
If he and the other recipients don’t eventually fund the conversion, they pay no financial penalty, but the shares are extinguished and the recipients have no benefit.
I agree that it wasn’t ideal there were no hurdles associated with the issue of the options, and IMO the option issues to the NED were too generous. That is why I supported the framework of the new incentive scheme as it will have STI / LTI performance hurdles, and any issues to directors will need to be approved by shareholders, each time they are proposed .
Yes, the team in Tulsa have come up with the goods, but they are also the same team that were working alongside David in the previous company, and were retained by David to be involved in BRK, originally as Black Mesa, but now part of BRK as BM is a 100% subsidiary.
It has been very frustrating not to have any concrete share price appreciation since Jewell was spudded in 2021. But there has been a 5x increase in market cap since that time, so the market has actually rerated the company, but the dilution to fund the drilling has nullified any share price gains.
Now that the proposed FFD through to 2028, (which will increase production , cashflow and profit by 3-4 times ) is essentially fully funded, further dilution should essentially be limited to the incentive scheme. There may be some shares issued for asset purchases and potentially , if the company ever decides to properly list in the USA. It is logical to think that any company rerate based on the FFD should be more reflected in the share price,especially if any further dilution is kept to a minimum, or even reversed with buy backs going forward.
Good chat guys
Cheers
Dan
BRK Price at posting:
1.3¢ Sentiment: Buy Disclosure: Held
(20min delay)