Member Info for slowlyslowly

How does this differ from CLN? With CLN the amount of cash gained by the company is known and fixed; the share price will determine how many new shares they get and that's if they exercise. With this deal, the number of shares they gain is fixed and known; the share price will determine how much cash Oriole gains. With CLN, the option is there to convert into shares at any point before the loan expiry. With this deal, "conversion" (paying for placing shares) happens 24 times at set points.

How does Lanstead stand to benefit or lose. Some have suggested they only gain if the share price is below 25.33p, but that's not so. If the share price drops to 10p and stays there, they benefit. They get their shares for 7.5p, and their worth 1/3 more at 10p. If the share price rises to £1 and stays there, they benefit. They have to pay more for their shares than before (75p), but they're worth 1/3 more at £1. Arguably, they benefit more in this case. Remember the number of shares is fixed. So they still gain 1/3 on their investment, but their position size is bigger.

The trickier case to follow is if they share price fluctuates rather than steady. If it rises steadily, they definitely gain more, because their earlier subscription payments grow in value by more than the 1/3 profit they began with. However if the price drops steadily, their earlier payments turn into a loss, so they make less overall and maybe lose net.

Is it in their interest to drive the price down by selling so as to reduce the cash required to make later payments? No. Firstly, the dropping price curtails the profit on their earlier payments. Second, they may pay less for the next monthly payment, but unless the share price climbs back up they also get less when they next sell - their gains are still only 33%, just starting from a lower point. They stand to gain the most if the price climbs and continues to do so.

So will they sell as they go? Possibly, yes. The two examples I've found of similar agreements are with NNN and IMM, neither of which inspires confidence, and in both cases they sold some as they went along. It is worth noting that with IMM they took part in a subsequent placing and then only half went into a sharing agreement. Here is one good thing about the getting all the shares on day 1, even though they only pay for them later: all sells will no notified and cannot be hidden in percentage holdings figures not changing as they acquire shares a few at a time.

One other thing to note: I have no reason to think this is coming, but what is the risk to Lansdale if Oriole went bust? They protect themselves a little by putting in capital a little at a time. But other than that, their exposure is in the form of a 26% share holding, which they'd have to write off. Had they issued CLNs instead, they'd be a creditor rather than a shareholder, so get preferential treatment in any liquidation.

As far as I can see, the 19p placing price and the 25.33p benchmark price are irrelevant to the deal as far as shareholders are concerned. They could have given us any two figures provided one is at a 25% discount to the other. (Looking at other deals Lanstead have done, 25% discount seems standard).

Those figures are relevant from an accounting point of view. They have to issue the placing shares at a price that will appear as share premium on the books, and the sharing agreement has to involve an amount owed. So for accounting purposes they've gone for 19p and 25.33p. As someone else said, 19p being a premium to the closing share price before the announcement does make for good optics. But that's it - any other pair of numbers would make for the same deal.

Here's what's not happening. It's not a CLN agreement (I'll explain the differences later). They're not committing to sell their placing shares into the market at monthly intervals. They don't only make a profit if the share price is about 25p, or if it's below 19p. It's all a bit more complex.

Here's what's happened. Oriole have issued 930m placing shares at 19p. The resulting £1.767m has been paid in full to Oriole by Lanstead. Oriole has also gifted 83.7m shares to Lanstead as an arrangement fee. That 83.7m stands on its own and is not then connected with the Sharing Agreement.

Having done the placing, Oriole has lent the £1.767m back to Lanstead. So now Lanstead has an extra 930m shares, and owes us a repayment of the £1.767m we've lent to them. (They've not been given the shares at no cost.)

A normal loan would see them repay that amount over the term of the loan, with interest. This is different. They make 24 payments, one each month. Each is the price they'd have to pay for 1/24 of their shares, if they paid a price 25% discount to the 20 day VWAP. So if the share price was constant at 25.33p they'd pay an amount equivalent to 19p per share, which is the same as the £1.767m they paid for their placing. A lower price sees them pay less. A higher price sees them pay more.

So effectively the deal is that they buy 38.75m shares each month for 24 months at 25% discount to VWAP. That's why I say the 19p is neither here nor there. That's not quite what they do. They actually get all 930m shares now, but pay for them in 24 monthly instalments.

@broomtree - simply because it's in their employment contract (probably) as a standard part of their remuneration package. The fact they plan to sell either the assets or the company in the next few months doesn't mean that they don't award senior staff the options that they're entitled to.

As I said earlier on in this thread, he will almost certainly be able to exercise his remaining warrants once an offer comes in. So he doesn't lose out unless he does it now.

That means this is unnecessary from this point of view. He could have waited without loss to himself, and had less cash at risk in the stock in the process.

So the fact he's done it now is either because it helps the negotiations along for the company to have lots more cash, or because he knows they'll need working capital soon and this is the most efficient way to fund the company and minimise dilution.

Either way, putting more money in at this point expresses huge confidence he won't regret doing so.

I've not checked, and we may not even have been told, but I'd expect that there would be a clause in his warrant agreement that says he gets a period to exercise his warrants if an offer is made for the entire issued share capital. So whether he did it now or not, his warrants would enable him to benefit from any sale that's agreed. As you say, Simms, by doing it now he ensures that shareholders can rest easy that the company won't need to ask for funds, and potential buyers can realise that the company isn't going to put a yellow sticker on the assets.

I'm sure he's not doing it to flip them quickly for an instant profit, so this is a fantastic way for Condor to ensure it has enough working capital to see it through the sale process.

I'm sure some of the selling here has simply been people expecting La India to be sold faster than it has been, and getting bored. But it may well be that other people have been getting nervous that the company won't have sufficient working capital to see it through, and we could be faced with a heavily discounted raise that then creates an overhang as the placees bank their quick profits.

If that was at the back of anyone's mind, they can breathe easy again now, knowing that the company has a fresh million in the bank.

Good job we're not a Chinese company then.

Some Chinese company or companies have treated people poorly when mining gold in the same district. Presumably the problem was the companies involved, rather than the area itself?

It was always going to be only an option at this stage. That much we knew, although a number ignored it when they were worrying how we'd pay for a new asset at this point

You'd get our first, right? If you're so wired that you need to let the world to know what a shady investment a company is (as opposed to keeping your negative thoughts to yourself), you'd exit your own position before going on that mission. Otherwise your only lowering the price you get to leave at.

I seem to recall, technically, that Mindea could go to 1000m before. Have I remembered that correctly? Mind you, if I have, it doesn't mean they don't have the capability to supply equipment with deeper options if asked. But either way, your point stands: They can do deeper than 600-700m if keeping going seems a good idea

Makus - please enlighten us all. What depth are they at, and what depth is the target?

Tamesis introduced Kavango to some significantly sized explorers who were very interested, but the feedback was that more data was needed before they'd move forwards. So not a waste of time - they made the right introductions. But there was feedback from the process that means it's too early to JV the KSZ, and in the meantime discussions with those parties have not closed off.

That's fine - you see red flags, you don't have to invest. Walk away. Others see other things here that lead them to want to invest.

But I would defend F79 on one point. Ben's tweet yesterday said that he'd just left Botswana and was back in Zimbabwe. This is not F79 pumping blindly. He's just reporting what is in the public domain.

Now, if you're misread that piece of public data, there's a possibility that you're misread the other pieces of information available to us all. Possible. That, or you're finding some general notes of caution, that are important to here, but don't necessarily carry the weight you give them where the whole company gets written off.

Given you're presumably not invested here, your altruism to stay on the board and make sure nobody else is invested either is commendable. But can I suggest that, if you've decided this company's not for you, and if you reached that conclusion some time ago, you spend your time now researching companies that are likely to be investments for you. You could spend too much time helping others with their portfolios. Unless you stand to gain in some way if the Kavango share price does badly? Not quite sure what keeps you here.

But F79 never reads as a pumper to me. He researches carefully, and posts detailed arguments, arguments that others can engage with for sure, but far far from being empty pumps

Christy, "our initial capital should still be somewhere!"

Unless your AMC shares came from a placing, where your money went directly to the company, you bought your shares from somebody else who held them before you did. That's how the London Stock Exchange works - it's a secondary market where shares pass from one holder to another, with money passing in the other direction, sometimes via a market maker who acts as an intermediary.

So the cash you paid up when you bought your shares is still somewhere - it's in the account of whoever was on the other end of the trade when you bought your shares. When you bought them, they came with rights to the dividend. They now don't have that right, so people are not willing to pay as much as they were before. That's why the price has dropped. But if you bought for 1.8p, received a dividend of 1.8p, and still hold the shares for which someone else will pay you 0.2p in the market, you are better off than if you'd sold before the dividend date. If you'd done that, you've had bought for 1.8p and sold for 1.7p. Instead, you bought for 1.8p and can receive 1.8p + 0.2p back. Or you could decide to hold them longer, in the hope that events flow in such a way that people will be paying more for them at a later date - that's for you to decide.

@Phoenixy - you do not. As your nominee, Halifax will deal with it for you. It's their bank details that the company needs, not yours.

The previous share prices have been revised down to deduct the 1.8p per share dividend. Websites / charts that adjust for dividends will have done this, deducting exactly 1.8p. However, as I explained to someone else here earlier today, for most of the period leading up to the ex date the share price was below the 1.8p dividend price. That means the dividend was never fully priced in, so the correct amount to deduct will be somewhere below 1.8p. But such websites have no other calculation to go off - so they subtract 1.8p. But because we were trading slightly above, or even below, dividend, that gives some crazy calculations - like the Google Finance 500% gain on the day

That's because they tried to factor in the dividend, which means the base price they're using to compare today's prices is yesterday's close minus 1.8p. But, as we discussed yesterday, yesterday's close factored in less than 1.8p for the value of the dividend. It was trading at so close to the dividend amount (and nearly closed below it) that they're virtually comparing it to yesterday's price of zero. Ignore Google's percentages

The conclusion in here the other day was somewhere between $8m and $9m

You are correct Billy. Buy today, you get the dividend. Sell today, you don't. Buy tomorrow, you don't get the dividend. Sell tomorrow, you still get the dividend.

So the share price would drop at the open tomorrow by whatever amount the market has priced in for the dividend. Of course, the price fluctuates, so other factors may come into play. If they announce an RTO tomorrow morning, that would skew the amount the share price drops (or stop it dropping at all). But apart from factors like that, the share price drops at the open tomorrow.

The question is: By how much. The bid is still below the dividend. That tells me that the market is not pricing the dividend at 1.8p on the share price. Otherwise 1.8p would be the absolute minimum anyone would sell for. That must mean that there is still some skepticism out there whether the dividend will definitely be paid. Personally, I think that risk is infinitessimal, but if everyone thought the risk was zero then 1.8p would be a clear floor for the bid price.

So the share price will drop by whatever part of the current share price is explained by the dividend. Obviously not 1.8p, because you cannot sell for -0.02p tomorrow. We'll find out in the morning

Don't forget the T2 settlement. The ex-dividend date is the date when it trades without rights to the dividend. That's 1st June according to the RNS. Buy on 1st June, you don't get the dividend. That's because you won't hold the stock by close of play on the 2nd, because your trade settles on Monday 5th.