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And just to remind everyone that the 2.2p warrants expire Feb/March 2022. The 3.25p ones April/May 2022. The 3p ones Sept/October 2022. I expect the next 12 months to be volatile, price wise. But it appears with each piece of good news a higher low is formed. The price goes up and the warrant holders (Kabunga / HNWIs) sell into it. I believe around 5p will be the new base.
So block listing now quarterly, from half-yearly. That's another 4mn exercised, in just one month, leaving another 80mn low priced ones to go by this time next year. There's your reason for the sp heaviness.
Warrants and options are nothing rare or unusual in juniors, I think in ACPs case it is two fold, there is a past were the company struggled and needed the warrants to move forward, the path forward is a strong one now....and secondly it has been highlighted more here due to one person heavy handedly selling the warrants into the market for one purpose so they can have funds for their own venture. This has caused swings were there should not have been and there are quite a few people here lucky to have put together decent holdings because of Kabunga, so in a way a double edged sword. You will be afforded a more generous entry now too. He can only sell them once and the more out of the way before production the easier for the share to find its true value without any resistance in the future. There are very few companies on AIM at this stage in development yet with such a small capex to attain a fair sized NPV, in a market/commodity on the verge of a super cycle due to the explosion of EVs. But also a high quality product with peer competitive costs. The risk reward has to be amongst the lowest at this price vs the potential value in short order.
Note that in the Capex thoughts mentioned before don't foget the FEED and the build pay later option. It is a very low risk for the Chinese to build this plant and they also might secure offtake, though that reduces prepayment elsewhere but if it secures a bigger chunk of build money then better.
O&W-you make a perfectly fair point below and you are of course correct, which is probably why we have so many traders in this stock.Although I do not trade this stock I do add to my existing position in periods off weakness.As you point out the economics are staggering, particularly when you consider they are only based on 25% of the potential resource.So yes we will have frustrating periods but my fag pack calculations-using $1300 basket price get me a price target in 3-4 years of 35-45p,so I can live with the volatility.The fact MB and "friends and family" own 25% of the float also provides huge reassurance.
I took an initial position just before the ML was granted, based on the DFS numbers and macro background.
Now i'm looking to make a serious commitment with the risk/reward tilting much more to the project being a success with the approvals in place. The raw DFS numbers are pretty staggering. Just getting to 40% of the current NPV ($430mn) as the project goes into construction mode, offers the prospect of a 4-fold sp gain from current levels even with assuming a 630mn share count after full warrant conversion. But navigating the intermittent large pre-selling of warrant exercises of this amount will create large short-term volatility, or periods of frustrating backing and filling, like the last week. Just being a realist.
O&A, Here is my post from last week concerning finance , if it's further dilution you are concerned about. Also Bwana pointed out last week my figures don't include around $2m of liquid assets sitting on the balance sheet. The CAPEX required is a mere $39.7m (including a $4m contingency) If you assume the normal 70/30 debt/equity split then $28m raised via debt (short pay back period too) Prepaid Offtakes should raise a minimum of $5m based on just 30,000tpa (this is what BlackRock have achieved). Outstanding warrants should raise $2.6m (not including the warrants exercisable at 7p) This leaves just $4.1m to find..... Easy when you consider the following; MB stated in the June 21 spongecast that he would be looking to maximise debt/equity so could easily be 80/20 split which raises an extra $4m If the share price is over 7p (and I expect it to be) then the remaining warrants could convert raising $1.2m Prepaid Offtakes could potentially bring in a further $5m for the remaining 30,000tpa from phase 1 production. All of this without further dilution to existing share holders. What's not to like!
The 2.2p and 3p warrants will bring in about £2mn cash. Not much in the grand scheme of things but enough to cover the burn rate for around 18 months. 90mn new shares in exchange. I've never been a fan of these generous placings which include warrants to get them away. 18% dilution is a high price to pay.
O&W, ACPs block listing review is 6 monthly not quarterly. Outstanding warrants as per the last review, 17th June 2021, were; 34,101,707 @ 2.2p 26,277,779 @3p On 28th June the remaining warrants were block listed too with a total of 43,333,333 these breakdown as; 18,888,889 @7p 24,444,email@example.com Grand total of warrants outstanding 103,712,819 I 100% agree with Bwana that the majority of these (if not all if the share price is high enough) will form part of the equity in the finance raise. Personally I believe that there will be very little further dilution and the distinct possibility of none.
O&W we know the balance of the 2.2p and 3p warrants are going to be exercised to provide cash for the final funding, that is very positive and reduces the final equity to be issued by about a third in my estimation.That will leave just the 18.9m 7ps-really not much in the big scheme of things-far better to help funding by excecising warrants rather than issuing new shares.(All warrants are of course already included in any fully diluted share count).
It's my understanding of the RNSs this year that those 18.88mn warrants (with an exercise price of 7p) issued in the £80k placing in May 2021 are ADDITIONAL to the 95.291mn warrants outstanding at year end 2020.
As I wrote previously, I am not aware of any of the warrants having been exercised thus far in 2021 so there are now 113mn warrants outstanding, at various expiry dates and prices. What I am most concerned about are the in-the-money warrants representing some 18% of total issued shares, that will come onto the market in the next year, starting in February (72mn).
Some pretty heavily positive news on project funding, offtake agreements and construction needs to happen before then, to compensate for the tsunami of potential new share creation at low exercise prices all the way down to 2.2p, in theory.
Has anyone got the latest current warrant position? I think the 2.2p and 3p ones are down to about 65m and then there are another 18.9m warrants exercisable in May 2024. The 2.2p and 3p ones are going to be exercised to provide equity to finance mine build.