Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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I don’t see that as a “told you so” moment, on either side.
We all have our own ideas of what minimal dilution looks like. I was expecting around 100m shares in issue to get us to Empire being underway. We are 15% over that, and while it was a bigger raise than expected we now have the extra cash to accelerate Red Star and Navarre Creek, which would have taken a few years to get around to otherwise. This will lead to a summer of activity ands newsflow, and hopefully propel the share price higher. That’s worth the extra 15m shares.
The 35p price was probably 10% below what we hoped for, and while I’m maybe dismissing this too easily, what’s 10% if we can get greater income in a shorter time period?
We have the potential of a billion dollar company with only 115m shares in issue. For a current price of 37p. If this is the last raise (certainly at these levels), then there is a solid investment case laid out.
Now we have some big institutions on board, we should hopefully see more stable (northward moving) price action in a few months time, once we get a bit of the overhang out the way. The US market is now also wide open to us.
Am I being overly rose-tinted? Maybe. But the numbers make sense.
2Daman, mate, I have no issue with your posts. Yours are with an occasion negative slant (or balanced, as can be argued), and mine might be tipping the opposite end of the dial.
Let’s both hope we have invested in a serious, profitable business here. I’m confident we have.
Dilution done and dusted (for the time being), I'd expect the share price to drift down over time unless we get some strong catalysts.
Tempted to now top up but holding back as I suspect a strong copper price is holding this share price up currently (even though we dont produce yet). Funny old game the markets, explorers creep up when their commodity price (in our case, Copper) is rising, but tank at even the slightest sign of weakness in the commodity. Lets hope the BOD can sail this ship to first pour now
When I read the RNS yesterday for the first time I was disappointed and perhaps a little shocked with the scale of the equity raise. I do talk often with members of the board, and whilst over the years we have talked of the need for cash, as you cannot finance a development project completely through debt, I was hoping that it would be on a smaller scale. I spent yesterday speaking with them, and reflecting, and what follows is a combination of both.
The first question I put was for clarity why do we need an equity raise at all. Why could we not finance 100% through debt? The answer was fast coming back, that PXC is a new company, without any production, with our only assets in the ground, and so we absolutely need to input some cash into the project to obtain finance. Next I asked about the scale of the raise, and why did it need to be so large. The answer I was given was that PXC needs the money for 2 purposes. First as our collateral for the debt, and secondly to advance our exploration programmes. Simply put for the second part, you cannot explore through debt. We would have had to hold back on exploration till we were producing from Empire which would have held us back for 2 years, pushing back the developments, and which would also have resulted in no news flow for that period.
There was agreement within the board that the share price could have been higher, but here we have an issue. We do not have large institutions on board, so we were at the mercy of traders and the Market Makers. It appeared that every time we had good news, our price was marked down. It was practically impossible to cross over the 45p line. I also guess it was because the market was expecting there to be a fund raise, and so many people were holding back.
To make a difference we really did need to recruit institutions on board, and move us away from these issues. Since most institutions are limited in that they can only invest in companies of value over $50 million equivalent, we had to ensure that the outcome from this raise was that coming out we had a higher value. The Board felt we needed to do something special to bring the institutions on board, so targeted £10 million. However, in so doing, they were offered it by some very significant institutional investors. I also understand that there is some substantial US involvement which is great news. Both of these create a step change. Why? With this fund raise we have crashed through the barrier, and are now on the radar of some large and important institutional investors, as well as being known in USA. And these boys are hungry, and when they get their appetite will be mopping up any loose shares.