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Yeah that's correct. so if the vwap is $4 we can only exercise at $5 for example. DUe to the time we have it would be nice if the vwap was low and CDT release some news that makes the SP climb and we exercise our option nicely below the SP! so many scenarios that could play out though!
So giving away some shares in your company 'doesn't really count' lol!.
Anyway the difference is VELA have not exercised their option so still have some degree of control. Yes, if they exercised when CIZ did then that's a howler, they also have until Feb to exercise the option so will potentially have longer to see the lay of the land before exercising the option.
Secondly as per RNS: The Economic Interest and Royalty Sharing Agreement were valued at cost, totalling £2,080,000, in the Company's 2022 interim results to 30 June 2022, announced on 28 September 2022. No profits or revenues were attributable to the assets subject to the Option. The Option is exercisable solely at the discretion of Cizzle and Cizzle has agreed to pay Conduit £120,000 in cash as the premium for the Option, which has a nine-month term.
I know the Conduit SP is ever changing but currently the shares are worth circa £1.95m so would represent a loss of over £100k if sold now. And lets not pretend CIZ will be able to sell $2m worth of share with out making the share price fall....
From the RNS:
Cizzle exercised its Option on 26 September 2023 and once this has been settled, the Company is expected to hold 395,460 shares in the NASDAQ listed business with no restrictions.
One would assume this has not been settled yet.... so highly unlikely they are one of the institutional investors having sold. Assumptions work both ways...
Yeah they way i see it is if the CDT SP falls below $5 and the vwap goes below $5 then we can't get it wrong as the lowest we can exercise at is $5 which would be the best possible price possible for us. then it would be a waiting game for the CDT SP to hopefully recover. I still think we should leave the majority in CDT as Hereshopin said, its better there than our BoD investing in some more howlers.
Apologies i thought they would have the same terms for a PUT option as VELA but appears they don't (to their detriment unfortunately):
Should Cizzle exercise the Option, Conduit will acquire both the Economic Interest and Royalty Sharing Agreement from Cizzle for a total consideration of approximately £3.25 million, to be satisfied through the issuance of new shares in Conduit (the "Consideration Shares") at the same price per Conduit share that a proposed US$27 million private investment round in Conduit, led by new and existing investors of Conduit (the "PIPE Investment"), is to be effected at, as further described below.
I don't think people should be judging others when they have concerns over a £3.25m option being valued at £1.88m (currently). That represents less than the option and interest in AZ1656 cost the company, would have been better off not investing in it!
If CIZ have time to hold until the SP recovers to better levels then great, but most on here seemed to think that represent needed funding so would imply they don't have the luxury of time to wait.
They do t have at least £3.25m though that's the point. Their shares are worth £2.1m currently. In their rush to exercise the option they have cost themselves over £1m. Granted, if the SP of CDt increases they will get near to their original 3.25 but equally if that happens and they had waited then the 3.25m could have been worth more.
That's fine they have done it but they couldn't have timed it worse. Those shares are now worth $2.5m (£2.05m) so if they try and sell all those shares at the current SP of conduit they will have lost over £1m in value compared to the option price of £3.25m.
I'm glad we haven't exercised out option yet!
We have £43k in the bank so we have until end of Oct before we need to dispose of holding to fund the company.
CDT share [rice continues its downward trend. Bearing in mind the option has a minimum of $5 per share the SP currently is $5.48 so if it carries this slide on the vwap will be below what we can exercise the option at so will not be worth doing until it (hopefully) increases.
£34k cash 30th June, we disposed of shares in Ensi to make another £68k so we had £102k for the quarter we are in. lets say we have running costs of £25k a month we should have enough cash to see out October without having to dispose of any other investments.
That also leaves some time for VELA to see how the SP of CDT goes and when to exercise the option.
Yeah to summarise, cash shouldn't be a problem with the disposals and no more investments. Some of the previous investments during that quarter were at all time lows, mode has picked up a bit but still worth naff all and csfs has picked up some gain recently. They haven't exercised the option which is good news and due to not needing the cash they are in a position to wait it out a bit.
Encouraging moving forward with an MCap way below asset value.
If they have exercised the option in the last 2 days the value of the shares would be roughly $2.4m. Roughly the vwap is $12.5 for the last 10 trading days, currently the sp for CDT is $6.40.
Knowing our BoD they have probably exercised the option.....