Ann: Update on proposed sale of Lake Johnston, page-29

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georgeaux

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01/05/24

18:05

Post #: 73614870
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Originally posted by zebster ↑

Perhaps those railing that LJ is worth much more should put together a syndicate and make a substantially higher offer.

Wrt to a CR, the current available headroom to raise (this FY, w/o special SH approval) is ~200-210m new shares. That's what remains of the 15% annual new share issuance limit this FY, remembering that a good chunk of that allowance was already used for last August's placement.

Fortunately, they've got enough of a cash runway now to reasonably safely see this quarter through into the new FY, at which point the annual 15% new share issuance limit resets. Come July 557m new shares can be issued without going to SHs for ratification. (Approval for another 10% will likely also be sought at the AGM in Nov, which is customary. Whether they obtain that extra headroom is another matter; they didn't last year.)

So, from July onward the Board will have automatic capacity to issue up to 557m (15%) new shares.
At what price? Given the broader Ni context and POS` near/mid-term prospects, it would need to be at a hefty discount, along with some free 'sweetener' oppies (that will never hit their strike price). If the VWAP continues the flatlined trend range of 0.6-0.7c, I would contend a ~30-40% discounted price of, say, 0.4c

557m new shares issued @ 0.4c = only $2.2M gross or, say, $2.1M net proceeds (after brokers fees). Remember, that's the entire 2024/25 FY new issuance allowance done in one hit, sans SH approval for more later on. That's enough cash for around ~1 x quarterly gross cash burn.

Notwithstanding the posturing I'm not completely discounting the prospect that a revised deal will eventually get done -- albeit on materially less favourable terms for POS. However, the realities of any meaningful CR to solve POS' cash challenges in the foreseeable future is pretty limited. The more you raise (dilute) at lower prices, just to keep the lights on (i.e. without adding any value), the more SOI you end up with, the lower the SP will drift, and the lower the dollar value you are able to raise. A slow-motion death spiral that becomes very difficult to pull out of -- even if you're able to raise cash via asset sales in a depressed market at depressed prices.

That's what I meant about being between a rock and a hard place. It's why I bailed.

CE (MIN) is a seasoned deal-maker. The big question for me is what spooked MIN when performing their DD.

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...exactamundo...if there ain't no value adding in refurbing a rusty old mill then he'll walk and won't look back...even if it means he's down a $mil...best to cop a bit of heat rather than third degree burns...

POS Price at posting: 0.6¢ Sentiment: None Disclosure: Held
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Last 0.6¢		Change -0.001(8.33%)		Mkt cap ! $18.56M

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Ann: Update on proposed sale of Lake Johnston, page-29

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