Hi Sabine.
Sadly not surprised at how you have been assailed for your thoughts on this thread,
despite the sincere tone of your posts (regardless of if your assessment is right or wrong).
Your ability to maintain a mannered composure is commendable. I stopped posting
my chart analysis after I presented technical grounds for potential further downside
on Sep 13th [here] in what I thought was an extremely balanced perspective. For
Saying that my remaining long-term parcel (having taken significant profit) had a
stop below 0.35 I was accused of down ramping to suit my own agenda. I will continue
to keep my distance but wanted to address your point on financials as I understand it (despite
my bias to technicals in general).
According to the Appendix 4D:
- 5,346,097 USD in cash and equivalents at 30th June & Current liabilities of 1,167,490
- "In August 2020, 21,868,976 shares were issued on the exercise of options held by
CST raising (USD) $1,817,164, (A$2,558,670)."
- Call notice to LDA on 19/08/2020 - how much $$$ BRN received for it equates to,
I cannot calculate with accuracy, though considering 35m Collateral Shares were
issues for it and the terms of the agreement, I estimate it could be the full 10m AUD
BRN was liable to draw in the first 12 months.
(Very happy if anyone can figure that out or correct me if I am mistaken, at that is one
calculation I am not 100% convinced about).
If you study the Appendix 2A's the following options (with actual $ inflow to the company
have been converted since what is mentioned in the 4D:
2,5m @0.061 A$152,000
10m @0.15 (LDA) A$1,500,000
300k @0.15 A$45,000
4,6m @0.20 (LDA) A$920,000
15m @0.20 (LDA) A$3,000,000
15m @0.15 (LDA) A$2,250,000
That equates to another circa USD 5.6m
To me that all adds up to about circa 2 full years of required funds (excluding any further
optional call notices to LDA within the next year (or more if the agreement should be extended)
According to the interview with CEO from early Sep (between around the 5-7 minutes into the interview):
"Our steady state burn is about, USDs, about 2m a quarter... expect some incremental increase
in the early part of 2021...people in the field... sales & marketing, but it won't be a significant
increase."
Regarding the Put Call Agreement:
"I think it certainly will lessen if not eliminate the going concern on the matter of emphasis that's
noted in our half year report"
You can see what I wrote about the options issued to LDA (other than the 35m for the Call
notice) on my post: https://hotcopper.com.au/posts/47740471/single
Please excuse all the typos there... was in a big rush...
Some important excerpts from the 4D regarding the agreement:
On 13 August 2020, the Company announced ithas entered into a Put Option Agreement (Agreement) with LDA Capital Limitedand LDA Capital LLC (LDA Capital), a United States based investment group, toprovide the Company with up to A$29 million in committed equity capital overthe next 12 months which may be extended by the parties for a further 12months. The Company will control the timing andmaximum amount of the draw down under this facility subject only to the minimum draw-down commitmentof A$10 million within the first 12 months.
In accordance withthe Agreement, the Company issued 75,000,000unlisted options to LDA Capital comprising 37,500,000 unlisted optionsexercisable at A$0.15 and 37,500,000unlisted options exercisable at A$0.20, expiring on 13 August 2023.
On 19 August 2020, the Company issued a call notice to LDA Capital (a put option) and subsequently issued LDA Capital with 35,000,000 shares for no consideration (“CollateralShares”) which LDA Capital is entitled to sell on market (subject to certainterms), on 24 August 2020. Any unusedCollateral Shares will be adjusted or may be used for subsequent call, broughtback by the Company or transferred to a trustee or nominee of the Company. The issue price of the shares will be 90% of the higher of the average VWAP of shares in the 30 trading dayperiod after the issue of the call notice, and the minimum price notified toLDA Capital by the Company upon exercise of the put option. The VWAPcalculation is subjectto adjustment as a result of certain events occurring including tradingvolumes falling below an agreed threshold level or a material adverse events occurring in relation to the company.
According to my calculations, the 35m shares for the consideration would have been issuedat around 0.49c (??)
The highlighted part is why a trader who had done some research would have at least been wary of buying on
the 24th of the few days following.
The average volume on the stock is high enough that strong demand could temper any LDA selling (at least over
some time), but it should not be overlooked from a short term perspective, nor the resistance it could temporarily
provide if further options are exercised to be sold on market, volume decreases etc...
One of my only issues with BRN is1.5+ billion shares on issue. Not the type of tight registry that is ideal for smooth
trading.
The good part of that is that the dilution from the exercise of options and shares issued to LDA is relatively small
all things being equal, considering the share price and the potential for some commercialization before they need
to exhaust the full $29m available.
Bottom line is, Long term investors who have made informed decisions and not risked more than they can afford,
should be not be concerned with the current financial state of the company IMHO. To me, the risk remains in the
commercialization, which everyone can asses on their own. I find it hard to believe nothing will come of BRN. How,
when and how much I do not know. Not sure about the timing of a material announcement...I would not personally bet
on one too soon but who knows. Either way, I will continue to be guided by my charts. If my stops are hit I will re-enter
when it makes sense.
Best of luck to you, and those who deserve it...
P.S Ignore my sentiment below as it would change depending on what perspective we were referring to...
(20min delay)