Member Info for Blubay

I don’t think we’ll see full conversion from all three investors and I agree with MC that de-risking is an important consideration when converting any cash debt to shares. But I think it’s naive to regard this capital advance as ‘investment’. It will be churned for marginal profit wherever possible and that will start early (imho). MREX have been working this for months as we know.

I genuinely do not understand why you would encourage people to ‘top up’ (again) in this situation, on a falling price and when you’re guaranteed a top up at a lower price within a fortnight. If there is ‘fireworks’ news before the meeting then it might work out but surely the balance of probability favours a later entry date at this point?

MC - “ The Institutional Investors are far more likely to want to convert when the share price is 3.7p for example”

If an institutional investor wanted to invest in the company for value return then of course they would want the maximum number of shares at the lowest possible price. £3m converted at 0.5p gets you 600 million shares in the company. £3m at 3.7p gets you 81 million. The advantage of waiting is of course the added security of projects becoming derisked. However, I would be quite surprised if these investors had long term intentions. I think they would more likely take phased conversions to sell shares into each price pump along the way. But we’ll have to wait and see.

PS. just to clarify, I do not see a ‘worst case’ here at all. I think the board has done well to secure a rescue package using their connections in the capital markets and I look forward to a production plan for Colorado. But I would expect short term downward pressure on the SP given the terms of the proposal.

Read the RNS. Extra general meeting called to approve authority to issue up to 4 billion shares, with initial capital raise of £10m, based on convertible notes to institutions and discount retail offer. Price to be determined by discount to average trading.

It’s expected, as we know from the Q1 statement they have only a few weeks cash flow remaining at this point. But still interesting. If it was an acquisition then I think they have to say so on the ASX. It clearly says capital raise. I also don’t think we would see news of acquisition before HE1 raises its own capital. The thing is how much will BNL raise? Does the amount and purpose look like a continuation of current arrangements or prelude to HE1 acquiring more interest in Galactica. One to watch.

They have done what they agreed at the AGM, and are now requesting authority from shareholders at the meeting. They need that authority to issue shares for cash (from retail or institutions). If they don’t get the authority vote then they’re going to do the institutional raise anyway using a cash box (without the retail raise).

It’s not implausible that the newly funded appraisal work might prove up the commercial viability of Itumbula, which might open the door for a future JV / farm in partner to come in with a down payment against HE1’s exploratory investment so far (as HE1 did for their farm in with BNL).

*Not

Oh required for authority to issue new shares for cash, so not needed for cash box (shares for acquisition)

Unfortunately AIM is a shark pool, in which shark institutions (including brokers and MMs) mostly make their money by rinsing retail investors and rarely the reverse. Watching posters telling people to keep buying falling shares prices is just worrying as those telling people when to sell. DYOR.

The VWAP will be based on the volume of trades at their actual trade prices, bid or ask, so the mid price won’t come into it but the spreads set by the MMs (including MREX) will have a material effect.

If the 10 day qualifying average turns out to be the current price 0.7p then the 20% discount retail offer could be 0.56p, etc

For the retail offer it will be the same 20% discount calculation but based on the ten days VWAP prior to a specified date (presumably the date of the offer, or the date of the share issue, yet to be specified)

Alan - people make money from shares going down as well as up. Some people make spread bets, some people leverage movement in either direction, some people use contracts for difference, some investors look for lower prices, even existing holders might want a cheaper retail offer price. In the current situation prior to the meeting you’d have to imagine there would be as many vested interests looking for lower prices than higher, although many of the same interests might be looking for upswing shortly after.

“Oh yes retail offer will be high as possible :) ”

I doubt it.

If the current 0.75p SP holds for the ten day average then the discounted retail offer should come in around 0.6p.

You’re missing the second clause, which is that conversion of debt remaining after 12 months is at the company’s discretion. So, within the 12 months the lenders can choose share conversion in any proportion at any time. After 12 months the company can choose to repay cash or shares.

“ Any outstanding amount of the Advance is repayable by the Company on the date falling 12 months after the drawdown of the Advance (the "Maturity Date"), either in: (a) cash; (b) Ordinary Shares (at a price equal to 80 per cent. of the higher of (i) the lowest single daily VWAP in respect of the Company's Ordinary Shares during the 10 trading days immediately preceding the Maturity Date; or (ii) a floor of 92.5 per cent of the VWAP for the 10 trading days immediately preceding the Maturity Date; or (c) a combination of both, at the Company's discretion.“

The clock should be ticking now on the ten day volume weighted average that will define the proposed retail offer price (assuming it’s based on ten trading days prior to the meeting or very soon after).

The RNS says the proposed retail offer would be announced as soon as possible after the meeting, if the resolutions are carried. It can’t be announced before.

Think that’s closer to £48m mcap?