I am disappointed in this current SPP. I was sure there would be some type of kicker to help get such a large SPP over the line. As it's turned out no kicker but the SP has remained above the SPP price.
IMHO the BOD/management took an unnecessary risk with this large SPP. The $25m is far larger than normal SPPs which tend to be $5-10m. For example the recent WAF cap raise, raised over $120m with just $10m in the SPP. Most companies use small SPPs because small shareholders are a fickle lot. If the SP (share price) goes below the SPP price there is a very low participation rate. In late 2019 I was involved in a SPP of a company where the SP went below asking price, but still stumped up the $30k. The total raised in that companies SPP was $240k out of $5m asked for.
With our SPP, it has been luck that has kept the SP above the asking price. No-one knew if the Gold price was going to rise or fall in those 3 weeks, we were lucky it rose. No-one knew if the price of lithium was going to continue on it's tear upwards or have a breather, or perhaps fall. No-one knew if the markets were going to stay really positive or have an overdue correction.
IMHO it was a gamble that everything would stay positive for the very large SPP. Remember that in the last Annual Report there were only 884 people with above 100,000 shares in the company, with just a tick under 3,000 having less than 100,000. Those ~3,000 shareholdings were each worth only $13k-$15k at most less than a year ago. Clearly most shareholders are small holders, with only a few hundred having the necessary free funds to go big with 2 SPPs in a year.
Last year all moneys were taken in the SPP, so small holders stumped up a lot relative to their 'financial size' to participate. 598 holders put in an average of $16,446 to get the $9.835m. Many of those smallest shareholders will be tapped out for putting in a lot more this year. Plenty will already be overweight FFX from that cap raise, so there might be a lot of token $2-$5k applications from the smallest shareholders.
Instead of 598 that participated last year, we would need 1,520 shareholders this year to put in an average of $16,446 to raise the $25m, which is asking a lot of shareholders.
Last year there were 2,748 total shareholders at end of Feb according to the 2020 annual report. With only 598 taking up that SPP, it meant less 22% of shareholders participated. By this year's annual report there were 3,865 shareholders, so we need a lot more than 22% taking up the SPP!! At last years participation rate we would only raise $13.6m!!
Hence why I thought there would be a great kicker (announcement) of some type to make the SPP too good to turn up. Instead BOD/management assumed that they could raise 5 times as much as they asked for last year on an assumption that everything in the market would stay good.
Imagine if we did have a downturn in the SP over the last few weeks and the SP was only around 55-60c?? The SPP would have only raised a couple of million at best in that situation, with the market understanding we needed to raise money, so would have likely market the SP down heavily. The market always savages companies that appear desperate for funds in the short term.
IMHO without a 'kicker announcement' the company should have raised the needed $25m in the normal way of $15-20m from sophs/instos/large shareholders, with the $5m-$10m as the SPP. They would have had most of the cash in quickly without having to worry about what the market would do. IMHO they should be taking 'luck' out of the equation as much as possible, not gambling on markets to remain good for a few weeks.
I do not think we have raised huge amounts over the $25m, in fact because we were mostly trading only 5-10c above the asking price, wouldn't be surprised to see the SPP being a little short of the required amount, just because it was asking for so much!! I hope I'm wrong, but for me this SPP has been the first sign of overconfidence/hubris from the BOD/management, expecting a relatively huge SPP to get over the line without offering anything extra, nor offering a deep discount for people to make easy money.
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