Not sure I follow the Cygnus Board's reasoning here. The deal...

Not sure I follow the Cygnus Board's reasoning here. The deal between Cygnus and Stria was inked in late July last year.



(I've not snipped all of the terms - see the ASX announcement of 29 July 2022 for the full set)

So Cygnus was not required to make the C$2m cash payment to satisfy the stage 1 earn-in until towards the end of December this year, obviously about 7 months from now. From what others have said as it stands Cygnus likely only has enough cash to see them through the northern summer exploration season so most probably they will need to do a cap raising towards the end of this calendar year anyway, regardless of earning into Pontax. It would have simply been a matter of increasing the cap raise by C$1m to meet the Pontax deal's stage 1 earn-in. Of course they could have held off making that decision to pay the C$2m to Stria or not until after they had released the maiden MRE for Pontax and decided where to next for Pontax. By going early in meeting the Stage 1 earn in terms Cygnus has reduced their choices.

By the way the line about by paying Stria in scrip about 7 months earlier than they had to somehow frees up the A$5.4m cash they have now for the northern summer exploration campaigns seems a tad disingenuous. By holding off settling the stage 1 earn-in until near its due date (in late December) would have had the same effect on how much they had to spend on the northern exploration campaigns - the point they made is a red herring in my view.

From Stria's angle the early acceptance of the CY5 shares rather than possibly a C$2m cash payment in seven months time makes perfect sense. If Pontax turns out to be a flop that ends up going nowhere then at least Stria has an financial interest in in possible successes at Auclair and Sakami projects. If Pontax turns out to continue to have potential, and the MRE offers promise, then Stria likely got a bunch of CY5 shares on the cheap. Better this way than to risk Cygnus deciding in December not to pursue Pontax and refusing to make the C$2m payment to Stria.

Anyway, once again, I have no idea what David Southam is up to or the logic he is using. To me, he's given every indication that he puts little stead in the potential of Pontax and he's done a terrible job of "selling" the project to investors, and yet he keeps it alive. I know that he is in line for about $800k in performance shares should the maiden MRE at Pontax be even a modest amount but I don't suggest he is entirely selfish in his motivations here.

Here is another confusing thing: presumably DS is doing at least one presentation, and possibly three, at the end of the month (hat-tip to Joelstar on the GCY threads for the company list for this series). The timing of these presentations means most probably they will be run before Cygnus releases its maiden MRE for Pontax so the content of the presentations will be pure hopium. Why would DS not wait until after the MRE release and then engage on a road show.




Thanks for your encouragement malibu and downunderboy but I stress that my investing record confirms I am not very good at this caper. I enjoy sharing my musings but they should be taken with a bucket of salt.