Hi Frostie, Walkabout resources (WKT) have announced in the last...

Hi Frostie, Walkabout resources (WKT) have announced in the last week a very similar deal to assist them fund the development of their graphite mine in Tanzania. I don’t hold WKT.

Previously have seen similar arrangements though without the upfront payment (prepayment shares) and sometimes the ordinary share issue is at the discretion of the company(ie when they need the money) but the investor still gets to nominate the 5 days for VWAP and gets a discount to VWAP. MNS had a share subscription deal with NEMGA if you want to see the death spiral affect that it can cause. I think they ended up cancelling the arrangement early.

I guess it all depends on how the money is used and news flow to support price and also whether you think the investor is a looking to accumulate stock or is going to sell each time they nominate to convert to ordinary shares to recover and profit from their investment, ready for the next $5m or the next customer. Rinse and repeat at low risk due to discount and pricing mechanism.

Anyway, hope that helps.