Dilution - Scene setting and clearing the way7 Oct 2021 13:08
Thanks to Blackadder for posting the link to the GM papers.
Performance Right Plan - appears perfectly reasonable at an estimate cost of AUS£947,000 covering 4 Directors over a period of 3 years - approximately $78,000 per Director per annum. Not insignificant, but they are senior people and deserve rewarding for success. The total number of performance shares in question is 40 million, a comparative drop in the ocean with 14.5 billion shares in issue. No problem.
Moving on.
As background does anyone recall the AGM resolution on 21 May 2021 which changed the rules under which the company can issue shares without reference back to its shareholders. ASX Rule 7.1 required that a listed company cannot in any one year issue up to a further 15% more shares in any year (based on the number of shares in issue at the start of that year). That's a lot of shares!
At the AGM this was increased to 25! That's a hell of a lot of shares!
Moreover, at the GM the company is seeking retrospective approval of all of the shares issued during 2021 associated with payment for services rendered in relation to the Merlin 1 drill, shares issued in relation to the acquisition of the remaining 50% rights in Peregrine owned by Alaska peregrine Development Company and services rendered, including to DW's company in arranging the share issue for the latter. There were a few other bits and bobs too, but in total there were circa 1.9 billion shares issued, almost exactly 15%. None of this really too much of a problem as, hopefully, the acquisition of the remaining share of Peregrine will bear fruit and the drilling services needed to be paid for, one way or another.
On to the crux. Because the company has a limit on the number of shares it can issue, it clearly needed headroom if it wants to issue more and it anticipated that it had blown its allowance in the shares it had issued in 2021, hence the need to increase the allowance to 25%, however, what it now seeks approval for, at the GM, is that all of the shares issued in 2021 are disregarded for future calculation, of the now 25%, extra issue, thus leaving the decks cleared for the issue of a further net 25% of shares in the current 12 month period - all of the 1.9 million shares issued so far in 2021 are set aside for the purposes of calculation.
Look out all, the door is being wedged ajar for a potential further 25% SP devaluation in the current year. The results had better be good.
Forget the Performance Rights Plan - the first subject matter we are drawn to by our prolific poster @10.10 - 40 million shares is barely going to scratch the surface and we ought to be concerned about far bigger issues (forgive the pun).
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