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132m trade volume today, should have shifted a few anyway

I think commitment of HE1 funds to work on the ground would have to be guarded by a default agreement with BNL, however unlikely the contingency. That might be written in already I suppose. Then again we know BNL have already partially filled their equity raise with existing authorities, so they do have some cash I think.

And using this market logic, do you believe the next tranche of 20% discount CLN share conversions will be priced above or below the current market price? (e.g. if a second conversion was called today it might come in around 0.47p).

Totally agree but I'm not sure we'll hear anything definitive before the BNL shareholder meeting votes on their equity authority on 19 September.

Well, last we heard the processing plant was still in design stage in June so I wouldn't hold your breath until there are shovels in the ground, but if they do manage to get that finalised, groundwork, delivery and install, plus the pipework in from the seven wells, plant final certified and permitted, then it's plausible. I suppose actual 'revenue' might come after first production though.

The 10 June RNS then updated that with expected production now in Q4 2025. That was reaffirmed in the 18 July and 7 August RNS footnotes.

I.e. the financial group still obtained the 200m shares below market price not above market price and can still make marginal profits across the group by dripping them out anywhere above 0.5p.

Just be aware that HE1 is a high-risk AIM explorer, dependent on raising finance. CLN facility is usually structured to drip equity into the market rather than seeding long-term holders, and AIM is notorious for block crosses that look bullish but are really inventory recycling. MREX do not have the most benign track record. The sticky buyer scenario is plausible but may be less likely that a distribution / recycling scenario. If the debt fund and the equity fund are part of the same financial group then the cross transfer simply books profit to the short term debt fund and paper loss to the shareholding equity fund. That's then an internal accounting issue and the equity arm can drip stock back into the market over time or hold opportunistically. Hypothetically of course.

What are you reading between the lines in this extract? They published a 60 page report that explains where the lines are and the contingencies that lie between them.

Depends on the speed of conversion. The MREX agreement creates three parties (who may or may not act in consort in the future), so at least three conversion tranches of 200m probably needed.

The more pressing challenge is that the CLN formula still allows the three debt funds a declining conversion point. Yesterday’s block transfers did helpfully raise the VWAP but conversion is still running around 0.47p (lower than the first tranche conversion). So while the hypothetical buyer arm can maintain a clean reputation via (possibly internal) accounting transfer crosses at 0.68p the actual buy price is always below market.

Alternative scenarios might be indicated by trade action but we’ll see.

Thanks MC, I think we agree on that possible scenario (re my post last night)

I’d be interested to read MC’s scenario if it’s reposted. I have a couple more convoluted suggested if there’s no TR-1 forthcoming.

It’s always possible that the CLN block mechanism was used to return 200m shares previously traded during the long running 0.85 to 1.1p trading range. But that wouldn’t hold up for all 2bn shares implied in the total CLN agreement. I still think more likely that the debt funds are servicing a larger buyer but time will tell with more tranches. End buyer can’t be accused of undercutting the market anyway, even if the intermediary CLN process does.

Holdings of affiliated entities under common control should be aggregated if they act “in concert” but in practice, unless it’s a formal or declared group, TR-1 looks only at the registered holder (so it could be split at least three ways). If there was a formal agreement then it should be disclosed and the company would be able to enquire about it.

Bullish Case (price recovery) - Share price trades 0.65p–0.80p on strong exploration news. 10-day VWAP ~0.70p.

Conversion price ≈ 0.52p–0.56p. New shares for £9m: ~1.6bn. Total shares: ~8.2bn. CLN stake: ~22% — below blocking threshold. Less dilution, CLN holders stay influential but not controlling.

Bearish Case (VWAP slides) - Share price weakens to 0.40p–0.45p. 10-day VWAP ~0.42p. Conversion price ≈ 0.33p–0.35p. New shares for £9m: ~2.6bn–2.7bn. Total shares: ~9.2bn–9.3bn. CLN stake: ~28–29% — edging toward 30% takeover trigger. CLN holders could be forced into making a bid if they (or affiliates) cross 30%

Base case - Share price remains 0.50p–0.60p. 10-day VWAP ~0.55p. Conversion price ≈ 0.44p–0.46p. New shares for £9m: ~1.95bn–2.05bn. Total shares: ~8.8bn–8.9bn. CLN stake: ~25% — blocking minority reached.

I estimate a conversion price around 0.45p on the remaining £9m would be sufficient to result in a 25% blocking minority ownership for the investors, while the 30% takeover threshold might require a conversion price around 0.375p

Just to put this up in a separate thread for discussion.

Looking at today’s trades and some rough calculations, I’ll suggest a scenario.

A consortium of debt finance funds (arranged by MREX) agree to advance HE1 £10m cash to progress project operations (good news). They do this for convert notes. The three debt funds are event focused, targeting short term profit opportunities with optionality. They can call or hold their CLNs as they choose but they have fund protocols and rules, and they can’t be holding AIM shares.

However, they have relationships with investment funds (potentially within their own parent company, in the consortium, or arranged by MREX). So, on an agreed date they arrange a buyer for a tranche of 200m HE1 shares at market price of 0.68p. The buyer can’t buy that many shares on the market without moving the price up, but the debt company can call £1m of CLN conversions a lot cheaper at 0.5p and make a good profit selling them to the buyer. The debt fund makes £360k gross profit on the deal and the investment fund gets 200m shares without inflating the price. HE1 gets diluted about 3% but reduces debt by £1m.

Using a rinse and repeat model over 6-12 months of CLN conversions and share block transfers the debt funds make a few million profit from lending £10m advance and I estimate the investment fund(s) end up with roughly 25% ownership of the company, in which there is now zero debt.

We might observe coincidentally that 25%+1 share would result in the ability to block special resolutions (e.g. to approve major transactions, issue shares above authority etc), while 30% triggers a mandatory takeover offer. Hypothetically.

Question is whether the consortium has agreed a set buyer price for the whole advance, or an agreed margin, or a staged approach responsive to market price movements. The first tranche conversion of £1m debt at 0.5p should yield the debt funds about £360k gross profit on 200m shares sold on at 0.68p (maybe targeting £100k net per investor?). Will they continue to target conversion options at 0.5p versus 0.68p? Or continue targeting a similar profit margin at higher or lower prices? In a static model of conversion the debt arm would end up with £3.6m cash return on their £10m loan within 12 months, and the buyer arm ends up owning 2bn shares at 0.68p. But obviously parameters could change very substantially.

Not too bad considering it could well have been 20% discount to the retail opportunity, which was presumably floated to bring the price down in advance anyway. I guess you just have to keep in mind that for an early stage small cap company with only one pre-revenue project and one with yet unproven reserves they've been remarkably successful in raising funds from the capital markets. Personally, I think their expertise and experience in squeezing those markets gives them a USP over similar stage companies. Yes, it's brutal, but the only reason you'd list on AIM is because you have no other access to capital.