Banked versus Bankable . . .

The first thing I will like to say is that I applaud the consortium of investors who made it possible for Bathurst to transform itself from an irrelevant small-scale mining company with a questionable future, into a solidly profitable cash-machine with credible upside potential.

I have zero envy or ill-will toward anyone who converted their notes into equity at 2.2 cents per share. I say good on them for making the rising-tide possible that lifted ALL of our boats . . . from the boats of modest-holdings, medium-term investors like myself; to day-traders who may have jumped in and out anywhere along the way, in the rise from sub-2 cents to prices in the teens; to the consortium members themselves - including BRL Board and management - who benefited directly from the RCPS exercise.

I first bought shares around 5 cents . . . watched in disappointment and disbelief as BRL shares dropped below 1.5 cents . . . bought more at 1.3 and 1.6 cents . . . and continued to buy until my latest/last-so-far purchase at 12.5 cents. My overall position is solidly in the money, but I haven't sold a single share since first-purchase. And I won't sell at any price per share below 20 cents - which I am confident will be achieved by mid-August 2018, latest . . . even with the certainty of further dilution from as yet un-converted preference-shares outstanding.

I don't know who bought/exercised "the rest" of the 2.2 cent/equity notes, besides reported names like RIM, Asian Dragon, etc. But I will guess that the rest of the buyers would have been concert-parties to the group that organized the financing in the first place. Not sure if my terminology is correct, but by concert-parties, I mean independent investors who would have struck (probably) verbal agreements to act together in common interest.

It's true that some small sector of "the market" . . . whatever that means . . . was disappointed by the considerable dilution resulting from the RCPS exercise, simply judging by the various "I'm outraged" type of posts on this thread. But my impression is that The Market (writ large) hadn't been paying much attention - at all - to BRL pre-conversion and has continued to not pay attention (so far) post-conversion.

Just look at volumes traded! In September, soon after the Solid Energy acquisition was finalized and up to September 15'th, trading volumes crossed 5 million shares only a handful of times. That's a total volume per day of less than half-a-per-cent of shares outstanding - before dilution - on absolute-peak trading days. Since mid-September until now, there have been zero days with volume above 5 million shares traded. And you can count on one hand, the number of days during the past 3 months, when even 2.5 million shares were traded.

So fair enough that some of the long-time share-holders . . . and perhaps some of the more recently-inspired momentum day-traders . . . may feel betrayed by having been diluted, following the grand-slam home-run (hey - I'm American; do you prefer the Cricket Double-Century analogy ?) of the Solid Energy acquisition.

But it's pretty unlikely that many (any ?) of the sophisticated investors who benefited from converting at 2.2 cents have been selling their shares (yet) to take profit. One, they probably talk to each other - and to management - regularly and they recognize that BRL's current intrinsic value . . . even after dilution . . . is probably 18 to 30 cents; not 10 or 12 or even 15 cents.

Two, the volumes of BRL shares being traded recently, is rats-and-mice, small-time day-trader sized - exceeding 2 million shares total on just 4 days since 31 October. Three . . . practically for sure . . . the beneficiaries of RCPS conversion, with 8-figure and 9-figure share-holdings are not going to sell in-bulk into a low-volume market, thereby driving the share-price down. Instead, they will patiently wait for "The Market" to actually wake-up to the incredible opportunity presented by a still badly mis-priced (under intrinsic-value) Bathurst. That wake-up will probably be preceded by a number of securities houses and investment banks initiating research-coverage on BRL.

There is a huge wall of pension money in Australia alone . . . let alone hedge-funds and investors throughout the world . . . who pay close-attention to the commodities sector - including coal-producers. When BRL's half-year earnings document ongoing monthly cash-flow at current coal-prices . . . various insurance-companies, pension-trustees and hedge-funds will want to buy 10 million, 20 million, 50 million - like that - shares of BRL to hold as both dividend and capital-appreciation plays. Some may scarf-up shares in dribs-and-drabs via the visibly-traded market. But the bigger bite-sizes will mostly-likely be reported - after the fact - as done-deals.

THEN is when the RCPS-converted-notes holders will sell some (most ?) of their holdings. Watch for them to do so via married-deals, involving negotiations between willing-buyers and willing-sellers. Sure, the odd lot of a few hundred-thousand shares, or perhaps even a million shares may get sold into a rising market once volumes climb above say 15 million per day (1 % of outstanding equity). But wait for that action until shares cross into striking distance (or beyond) of 20 cents per share.

Just my opinion, but none of the big-money players who - so far - have not been paying attention to BRL, are likely to view management or BRL's Board as dodgy in the least as a result of the RCPS conversion. Rather, those players will credit the Board for transforming an also-ran, near-death's door, small-time operator into a bankable cash machine.

Closing with the thought motivating the subject-line of this post. Very few (perhaps none ?) of the beneficiaries from the RCPS conversion at 2.2 cents will have "banked" profits yet. Precisely because those profits remain "bankable", and because the potential profits are likely to be bankable at prices 30-60 per cent above early-December's low-teens per share, the smart money will wait to actually take their money off the table. That's when they can truly be said to have banked their gains.

Just my opinion. But count me in the solidly applauding bank of seats relative to the actions of BRL's Board and Management! What I have to say to all of them is "Thank you very much!".