I dont know why people think the options are such a dead weight....

I dont know why people think the options are such a dead weight.

If they are exercised the options then the company would be issuing a further 6 billion shares and receive about $450 million in cash. This could do wonders for AGO's future plans as they wont be requiring debt to finance these plans and can proceed much quickly to the next level. At the moment the value of the entire company is $320 million with 9 billion shares on issue.

If share price is 7.5c by July and options are excercised then that would mean company with 15 billion shares has a market cap of $1.1-$1.2 billion and by this time would be approx $500 million cash and no debt. Its earnings for 6 months would be 600-700 million and making a decent profit. It would most likely be back into the asx200 shortly thereafter. They could then do a 10:1 consolidation and share price at 75c so people feel more comfortable buying it and only 1.5 billion on issue.

To me the options being exercised would be a game changer for AGO and in AGO's interest to have a share price by June/July that puts the options in the money. I kind of see it as a cap raise at over 200% higher than current share price which really isnt a bad thing if you currently own shares at 3.5c. Alternatively, with no exercising it would take a number of years before AGO would be in such a strong cash position.

I note I have actually purchased some options on the above playing out on the basis that I either lose the investment or the investment performs extremely well. If AGO share price happens to hit 10c before exercise time then the options will be trading 2500% their current value and that represents a better proposition than owning the underlying shares for 300% current value.