Of course I haven't seen the fine print. I am going on all the...

Of course I haven't seen the fine print. I am going on all the other con notes I have seen ever since the RSG ones in the 90's that burnt me and was my first lesson. The Cornell notes were exerciseable at $3 odd were they not but monthly repayments until recently were being made in shares at a VWAP until HNC coughed up funds to pay them in cash. Why were they being issued at 30-40c when they are convertible at $3??

The first option for repayment method lies with the note holder, who has the right to ask for shares, which they will only do if the price is above the strike price to show an arbitrage profit. If the share price is under the strike price they will ask for cash.

The second choice then goes to the comapany. Pay in cash or pay in shares at some VWAP formula in the fine print. If the company has no cash then their only choice is to issue shares at recent VWAP. This is what was happening with the monthly Cornell repayments; no spare cash so shares to the value of US$1.5M or so being issued at going share price. Trouble was Cornell were turning around on issue and selling these straight back onto the market and pushing the price down further in a death spiral. Management knew this situation couldn't go on so they announced that future repayments would be made in cash and then borrowed the cash on a longer term fascility from HNC (12 month repayment). They needed to buy time hoping desperately metal priuces would jump etc.

Given we have seen this situation play out in public with the Cornell notes I am suprised there is much doubt about the sequence of events. That CMR dressed up the HNC raising announcements as positive and being locked in at 42c conversion is almost certainly misleading as has all their annoucements ever since the construction blowout last year. The whole tragic debacle looks to have been covered up with scandalous lack of disclosure, mis-leading statements and insider trading IMHO... though of course that is my personal interpretation.

I agree the shareholders need some clear communication of the situation so the insiders don't once again get out (short) first. Of course I might have it completely wrong and am happy to be corrected by the company explaining how:

The con notes work in the event of cash repayment default.

The Co-Ni that was due August still hasn't got a mention.

That the operation is not running insolvent, chewing up more debt and ultimately more dilution.

goodluck