The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
>> "Pre announcing a possible raise at 15 p was bad imv"
Although wasn't the price already below 15p when they announced that, so they were inviting people to price-match Jim's option exercises at a point when that would be premium.
Regardless, as a result of Jim and the placees the company should now have plenty of cash to see it through the asset sale. And Jim would have got to exercise those when a sale went through anyway, so he's not added us any dilution when the sale proceeds get handed round.
No. Resolutions for authority to issue shares are standard. I'm interested in the change of domicile, and the comments in their background notes on why that's needed and what it opens up.
More interesting than the date of the AGM are the resolutions tabled. Surprised everyone is more interested in the exact date.
They did. They sold to Ben Turney and Peter Wynter-Bee. Peter took just over £500k worth of stock
If he was forced to take it private by taking over 30% without a waiver from the CMA then he'd be required to make an offer for the remaining shares, and the minimum he could offer would be the highest he has paid in the past 12 months (not the highest paid by anyone in that time).
If he chooses to make an offer for the remaining shares, he can do so at whatever price he wishes. If the board choose to put his offer to a shareholder vote, obviously he stands a higher chance if the price his higher.
That hopefully clarifies those rules that are often misunderstood and misquote. But, of course, that is entirely theoretical, since there are no hints there is any plan other than to find a buyer for La India as Mark has explained on numerous occasions.
Well, it can be binary. Depends on the project. Or you find certain widths at certain grades at certain depths, and you have to assess what to explore next, whether it's economic to develop, and so on. Often, the actual numbers from a drill campaign are very important and complex to interpret.
A lot of people seem to be setting their sentiment for Cizzle based on the rise (or, at present, fall) of Conduit, as though Cizzle were simply a proxy for Conduit. It's like Cizzle is nothing more than a cash shell, and our value is solely set by how well our holding in Conduit performs.
Nothing could be further from the truth. The fortunes for Cizzle are set by how well the CIZ1B biomarker performs as a readily available early diagnostic test for lung cancer. We're looking for progress on entry into Chinese and US markets, obtaining UKCA mark and NHS approval, etc.
But let's pause to look at how much a rise or fall in the price of Conduit should affect the Cizzle share price.
We hold 395,460 shares in Conduit.
We have 363,841,773 shares in issue.
That's to say, each Cizzle share holds the equivalent of 0.00109 Conduit shares.
Conduit IPOd at $10 per share. So at that price for Conduit, each Cizzle share gets $0.0109 (£0.00892) of its value from its Conduit holding. Since listing, CDT shares have dropped to $2.60. So each Cizzle shares has lost the equivalent of $0.0085, or £0.006938. 0.7p.
So that's a decent chunk. But these calculations highlight two things
1. It's a fraction of the Cizzle share price. So most of Cizzle's share price is nothing to do with the fortunes of Conduit
2. The enterprise value being ascribed to the Cizzle test under development is tiny.
If that test succeeds, the boost that will give to the share price will dwarf what our Conduit holding will be worth, however much that goes up in value.
And, given they've listed post merger, we may assume they meet the criteria for doing so. Case closed
Surely the very fact that Conduit and Murphy have now merged means that the "initial listing requirements" referred to in your second paragraph have been met, and this is now water under the bridge referring as it did to a company that has been succeeded.
Yes, the three things I look for are potential in the assets, management who are competent and looking to advance the prospects not just draw a wage, and sufficient funding.
1. Assets. Look at the postcode. Near neighbours of the type of Barack. Previous results from drilling and sampling from past owners, and our own work. In the case of Sunbeam, a past working mine that only stopped because the tech wasn't great for extracting anything less than near nuggets 100 years ago. Sampling already backing up huge potential at Esa and North Hemlo.
2. Team. Look at the past achievements of people like Marc Sale and Bruce MacLachlan. Look how hard they work. And the quality and frequency of comms is like nothing I've seen in any other listed explorer.
3. Funding. They've just raised at 10p, and are fully funded through this exploration season and next. Also a huge warrant bank to grow the funding as progress raises the share price.
Spot on Kutzz
Once again - what selling action? If they play this how they've done similar investments, they won't start selling these from the time they need to make the first payment.
We'll see instantly if they do, because even a small sale will take them below 26% which would be a notifiable change of position.
I'm looking at the TR1s from those shares. Did the share price do well after this? No. Was it because of the terms of the finance? Hard to say, maybe it would have dropped anyway. But did they sell everything as they went? No
On what basis are people saying they'll sell their shares to cover each month's payout? Sure, they could. But while there were some TR1s for the other two companies I'd found with the same arrangement, it was nothing of the scale of selling 1/24 of their holding each month, and in one case they even took part in a subsequent placing (only putting half of those further shares into a sharing agreement, whilst holding the rest as a regular subscription).
People seem to be assuming that one way they could play this, the worst way for the share price, is inevitably what they'll do. Nobody has explained how they can be so sure this is what will happen.
It's why I explained the deal at such length yesterday. We need to be clear on what we know, beyond which we can speculate but can't pretend to be sure
Out of interest, I could only find two other examples. Someone said there are over 40. Can we build a list of tickers and dates?
In all, this is a higher risk route for them, but with potentially higher reward too. For us, if the share price rises, a CLN agreement could kill any rise as it gets sold into. Here, that would happen far less, because the rising share price also makes their later payments much higher.
Interests are aligned here, in that the best outcome for shareholders and for Lansdale is if the share price heads steadily up. They have protected themselves in case of decline, but they'd get less profit if that happens. I can't see why this agreement will bring about a falling share price, in and of itself. That would be down to sentiment and progress in Senegal and Cameroon.
So I think this is basically a good deal. That said, I agree with others who have said that this must be a last resort because they couldn't raise in a more traditional way, and I also agree that the money here may not be enough to finance all exploration. But they have said they're looking for project level finance for that, so that's not a fault with this deal.
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.