Mercator Minerals Ltd MLKKF

Warrants

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First off here is a good website for warrant information:
https://canadianwarrants.com/values/current.htm

Now warrants if held to maturity are cashed in assuming the stock is above the strike price. For example if ML.WT is trading at $9.00 sometime before Feb 16, 2012 those warrants can be converted to shares of ML at a price of $4.00 - the exercise price (commonly called strike price). These shares can then be sold on the open market for $9.00 per share generating a profit of $5.00 per warrant. Most people who buy warrants this far out from the expiration date never plan on exercising the warrants but rather plan on trading the warrants.

Similarly the ML.WT.A have an exercise price of $1.00 and an expiration date of January 29, 2013. These are trading much higher because they have a lower exercise price.

Personally I bought some ML.WT.A today because it was very attractively priced and when ML goes up ML.WT.A will go up by a larger percentage. The ML.WT.A are safer then ML.WT. on the chance that if ML gets bought out for $4 or struggles and never gets to that $8 range you will still have a good return on investment.

If ML goes to $7+ you will get a better return on the ML.WT at they are more heavily leveraged.

Either way the warrants offer more percent gains than ML if ML goes up from here.

Problems with warrants:
They are much more thinly traded so if the market starts to dive good luck getting out of them. If the stock has a significant negative then you are stuck with a worthless warrant.

My choice: ML.WT.A which is trading only at a slight premium but offers more upside if ML goes higher than the regular stock. It also has a far off expiration date which is good if there is market trouble in the interim. I believe a takout would be at least $4 which would be a 250% gain from here on the warrants versus just less than a double with the regular stock.