Sprott $7M PP for 30Ms @0.24/sJust to put some facts on the table:
- This PP is subject to shareholders' vote at the Special Meeting of 8 May 2019, hence it has not been passed or rejected. I have not checled to see who would be eligible to vote. Of course, not ES with his current holding of ~20% holding, since this would be considered as a conflict of interest. But what about management and other insiders.
- According to the 20 Feb 2019 NR, ES has exercised 1.6M (@ $0.15) and 15M (@ $0.20) wts for $3.25M. The SP during the period 4 Jan 2019 to 13 Feb 2019 was from $0.16 to 0.235/s. The SP started to rise from 0.245 (15 Feb) to $0.27/s (22 Mar). So, the price of $0.24/s for a PP of 30Ms was not an unreasonable price, even for an insider, who is willing to have an additional $7M (~an additional 5% investment in WM).
In other words, given the background SP information, $0.24/s does not represnt a "sweetheart deal" for ES. The question is does WM need an extra $7M? The answer would be yes, since there is no wts (No further dilution) attached to the deal and $7.0M would would quite a bit of drilling for further development (say some 50,000m drill program).
- Dilution? Of course, there will be dilution, but the SP won't drop back to $0.24/s, since the run to the current $0.41/s was due to other factors, and the "news" about the PP has been digested by the market. IN exchange for $7M, WM will issue another 30Ms, so a dilution would be something like 0.41 x 390/420 = 0.38/s, ~8% drop in share price), ignoring the $7M coming in to WM treasury. If one takes that into account then the share price would be (theoretically assuming other factors remain constant) (160 +7)/420 = $0.397/s (not much different from 0.41/s, ~3% drop). This change is not really significant compared to the effect due to other factors, e.g. a positive NR from recent drilling, of the bulk sampling results, or an announcemnt that they will have another 50,000m drilling program from the $7M just raised from the PP, with the focus in increasing the strike zone beyond 400m and to increase the depth of area 51 (as examples).
I could be wrong, but the tea-leaf reading is saying that the PP would be approved at the Special Meeting, since the price of 0.24/s is reasonable for $7M coming in to the treasury. Note that ES has spent $3.25M for 16.67Ms (from his wt exercise @$0.15 to $0.20). Exercise your perogative.
GH11
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