Just my 2 cents worth (or 0.0002c or $2 worth depending on SOI..)
That point is entirely correct. If there was a share consolidation of 100:1 we would go from a few cents per share to a few dollars per shared the SOI argument then becomes redundant. Given that share consolidations happen quite easily it should really provide an answer to the SOI question.
The point that Mondy is making about the increase by ten fold of SOI and still no mine is a great point indeed! it needs to be understood that this isn't the first attempt to get things out of the ground and that the increasing SOI number is in fact a reflection on multiple capital raises in the past, great point there. However.. there has been a change in management so maybe things would have traveled a different path and SOI would be a different number? Hard to say and ultimately not a point that needs a lot of attention. The focus needs to be on how management of NOW progresses to mining and what that will do in terms of dilution.
Now dilution is another point that is thrown around with wild abandon here on HC... I am currently looking at a medical investment (angel round of unlisted) where the company wants me to buy 33% of the business for about $500k so that they can match a Govt grant and have $1m in cash for research and trials. The 2 founders are each diluting their share by 16.5% or so but in turn will have a business worth much more than the 50% they currently own(current value is about $100k). If I take up that stake my intention is to dilute myself down to 15% or so in the next funding round which should be (assuming trials work out) a multiple of few more than what I bought in at... everyone in that scenario is AIMING to be diluted in order that the business INCREASES funding and therefore ends up worth a whole lot more. My aim is to be diluted to 5-10% of a business worth $50m which is a great return. Dilution in order to fund growth is NOT A PROBLEM. Dilution of MGT shareholdings is only a problem if the project is not moving forward. If MGT does another monster capital raise in order to fund growth you either face dilution into a growing business or oblivion as the funding couldn't get through. Debt dilutes your equity so taking on a loan works against your return per share as well... personally I normally look for final funding rounds to buy into junior miners, lots of risk gone and the mine is in sight.0p-
Lots of SOI means that you have lots of liquidity. Liquidity risk is a real thing and can be priced into a derivatives position. Low SOI reduces spread and causes mis pricing issues, having the least SOI is not a positive either. I recently hopped out of another small medical company that has tiny SOI and a low market cap.. net result is that it took about 2 weeks to sell down and I had to continuously accept lower prices than I wanted.
In a nutshell.. -SOI can be corrected to a lower number by consolidation, don't stress. -SOI is high due to more than 1 funding round and still no mine.. reasonable cause for concern -Dilution of SOI to fund growth is a normal function of capital markets, stop stressing that it might happen.. almost certainly will -Debt is not a silver bullet for EPS.. don't think a bank will save the funding round for retail investors earnings per share, that's fantasy land -High SOI means you can get in or out easily without causing a ripple in the pricing that either over or under values your entry/exit position.
Dizzan, Realinvestor, Mondy etc it's great reading some well thought out points here on MGT.
BHP reports tonight... great chance to hear some intelligent commentary around where a major sees Iron Ore pricing going.. to everyone on here with only MGT and handful of other tiny spec stocks in your portfolio.. it is pretty hard to go broke holding BHP and RIO, maybe think about adding some before they go ex-dividend.
MGT Price at posting:
3.5¢ Sentiment: Buy Disclosure: Held
