This is precisely right Upstart.
I too am about to get a nice bunch of "free" options in ARL.
They're "free" because I don't have to pay for the actual option, as is usually the case.
However, they don't become a share until I pay the strike price (in that instance at 78c).
Same deal with what you are correctly describing.
One point about
@Kablooey raising the idea of loyalty options.
I too like the concept but they are addressing very different requirements.
ARL is currently drilling and has no pressing need for cash.
It doesn't matter if it takes a couple of months for them to move into the money and start being paid for.
GXY wanted to quickly move onto SDV and fund a team at James Bay for drilling, and more drilling at Mt Cattlin. They would also have been in a position where to attract significant fund and project partner interest (ie BlackRock and SDV finance etc) they were needing to solidify the books and reorganise debt.
To raise $60m quickly from options alone would have been a disastrous dilution.
Options are generally very cheap and sell for a fraction of the price of a share.
They would have returned massive value to the company once the strike price was hit - that is true, but, depending on the number issued would have also created a huge road block at that strike price.
Perhaps there is some rationale for using this tactic in the future but options or shares are pretty much all extra shares on the market. Galaxy has more and more options now that cash is coming in that it didn't have a few months ago. Debt finance, offtake, jv on specific projects, a registry with some big funds behind it.
One last thing about management options. Management so far has been pretty well-behaved and didn't pile out of their holdings when the share price went through the roof (and then the floorboards).
They know that management selling shares isn't exactly taken positively.
That means when they sell they do so with a lot more strings attached than any of us.
They also have a lot riding on getting this share price into the post-consolidated $3 range, and staying there for more than a brief visit. That means they have to hold the door open for any of us that want to get out in that range.
It also means, inherent in this deal, is that they are forming some sort of contract with us - that to make that share price happen there will need to be minimal extra dilution and that they are going to be heavily focused on share price growth.
As they should always be, of course.
And tomorrow I guess quite a few questions will come in about this.
I look forward to hearing the blow-by-blow account.
