The number of OB options being offered at fractions of a cent indicate that many holders will not (or can't afford to) exercise them this week.
The last day for trading the options on market is tomorrow (Tuesday 16th).
If the more than 10 million options on market currently remain unsold tomorrow, there will be less dilution, but also less funds for the company to produce and market it's magic material, just as the G Revolution threatens to realise the low cost, high purity Graphene it has been waiting for has just become reality.
On top of that there are probably thirty or forty million OB's held by directors and other top twenty holders that may not be exercised either. WG has exercised just 2 million of around 13-14 million that he has.
From the actions (or inactions) of the directors, it has become plain that they do not want all the options exercised. I guess they may not want to see that much dilution at this stage. They could have very easily ensured most were exercised by giving a clear lead - by exercising some themselves early, by making an announcement that they were supporting the option exercise, by finding a party to underwrite them, to remind option holders early on (it was left to the last possible moment, in fact a day late, to inform the market), and maybe even to encourage the uptake with a letter to holders.
That none of these things were done gives us a pretty firm idea that they weren't that keen to get all the possible funds in. The poor performance in Sri Lanka, and more importantly, the lack of regular information and explanations for the delays there has severely impacted the SP, and that in turn has clearly affected the agreement with Kremford, and as Yowie has pointed out, explains the delay in that announcement. No doubt we will see some new financial arrangements in the deal surrounding the Swinburne SC development agreement when it is finally announced.
Rather than wanting to increase their stake by exercising the 10 million options that were part of the deal, it now seems that Kremford wanted at least some cash out, and that was upset by the lack of value in the options.
There have been some good progress reported in recent weeks, but too many delays have really affected sentiment at this crucial time. To the extent that many option holders have lost confidence.
I side with spid81 on guesstimating that the directors were targeting perhaps $4-5 million out of the potential $13 million that could have been raised. On top of the almost $3 million in kitty now, that would have taken them well down the track, and possibly near the stage that income might be substantial enough to back financing from Traxys for further development.
As WG has pointed out in his FEC newsletters, FGR does not need any major capital processing infrastructure. Developing new mines, and building new, even larger, production cells is very low capex compared to others in the field.
So it probably makes sense to not dilute the shares too much at this point, and raise future cash nearer the time it is needed, at a much higher price.
While the SP is maybe a little lower than the board would have hoped at this point, there is no doubt that there are several reasons to hope that a re-rate is just around the corner;
1) One, maybe two producing mines in Sri Lanka this or next quarter,
2) A large stockpile of premium vein graphite in Perth (around 100 tonnes?)
3) The first production cell working at well over expected performance,
4) Traxys all signed up, marketing our wares in 20 major markets world - wide,
5) Very large end users (aircraft makers, auto manufacturers, paint manufacturers, master-batch composite suppliers and other potential bulk users all trialling FGR's Graphene. Any one of these trials could produce an order or an agreement to licence an in-house Graphene production cell.
And that would send the signal that the market is waiting for. And would almost certainly start the domino effect as other manufacturers decided "me too".
That is why, despite the fact that the OB's are only just "in the money", I have exercised all I can manage. I would have much preferred the share price to be where many of us expected it (somewhere around peppa's target). Then I could have exercised almost twice what I have.
Those still deciding what to do, should, in my view, forget about the current SP - think instead about what you expect should happen in the next few weeks and months. You may never get the chance to buy FGR shares for 10c again. Then again.....
But you have to make the decision based on what the future holds, not what has caused us to be where we are now.
Interesting times. And the best of luck with your decision.
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