Largo Inc T.LGO

Arias Warrant Conversion

[kha341]

TORONTO, Dec. 17, 2020 /CNW/ - Arias Resource Capital Fund L.P. ("ARCF I") announced that it made a distribution in kind of an aggregate of 24,065,457 common shares ("Common Shares") of  Largo Resources Ltd. ("Largo") from ARCF I to its underlying limited partners (the "Distribution in Kind"). These Common Shares include 10,488,564 Common Shares received on the cashless exercise of 13,156,707 Common Share purchase warrants ("Warrants"). The Common Shares distributed pursuant to the Distribution in Kind are subject to a hold period of four months and one day.

What is the value of each of the shares acquired by Arias from the conversion of ~13.2M warrants (strike price = C$0.29)? The answer is C$1.43, as explained below:

Arias got 10,488,564 common shares out of the conversion of 13,156,707 warrants via the cashless option. So instead of paying C$3,815,445 (= strike price C$0.29 x 13,156,707 warrants) to Largo for the exercise of the 13,156,707 warrants, Arias choose to receive 2,668,143 (= 13,156,707 - 10,448,564) less shares from the company via the cashless option. Meaning that in this case the value of each share newly acquired by Arias turns out to be C$1.43 or C$3,815,445 / 2,668,143.

[kha341]

The above is based on the assumption that the 13.2M converted strike price was C$0.29. And I do realize that the strike price was not mentioned anywhere in the NR, neither was the date of the exercise. The 13.2M could have various strike prices with various expiration dates. Apologies for not being clear in my calculation.

[st_esteban]

Those warrants were priced at .29 cents. These warrants have been with ARCF I  since they received them as part of the March 3, 2016 sale when they acquired 26,313,414 Units (number of warrants is half of 26,313,414 = 13,156,707).

[kha341]

Thank you.  In total 63,078,000 warrants were granted at the strike of C$0.29 on March 2 2016. Their expiry date = March 2 2021. So my calculation which assumes a strike price of C$0.29 seems to be o.k. DYODD

[ninja123]

I suspect this is what was behind the increased volume. Perhaps the majority of the LPs that received the LGO shares will be compelled to buy more now that they are individual shareholders.