CDB 0.00% 0.9¢ condor blanco mines limited

So what this means is (as an example) 1. Shares are issued at...

  1. 104 Posts.
    So what this means is (as an example)
    1. Shares are issued at 80% of average weighted trade so let's assume 0.003 x 80% = 0.0024c share.
    2. You issue "commitment" share free of 5% of (say) $300k = $15,000 @.0024c
    3. These "commitment" share are sold into the market at (say) 0.03 and the issuing company gets $12k (80% of 15k) and pay 5% commission on this funding. So net proceeds is $11,400. Seller gets $3,600 less brokerage costs.
    4. New shares are then issued against this "payment" and the cycle continues.
    5. As the amounts are relatively small the company might only see $50k or $60k a month from these placements so funding a major project would be difficult. Certainly funding a multi-million dollar drill program wouldn't work.

    What I see is (let me put it in my layman terms):
    #no risk for the company selling the shares as really no money up front and the issue price simply tracks the share price.
    #there is a huge windfall if the share price goes up and there is a real incentive to push more stock (more cycles) up to the limits of the agreement when share prices increase. As the shares are issued below current trade this disadvantages SH who had to buy at market.
    #the commitment shares are simply a way to provide the initial seed money to obtain the future issued shares so a $2 shell company wouldn't have any problems entering such an agreement provided they could convince the listed company this was a good idea.

    Thanks Andy as this helps me understand these announcements and I am just amazed this scheme is allowed but I am a novice here. What I thought was good news I now think (IMO) is really bad news as there is nothing but value decline for SH and no incentives for the listed company to provide anything beyond basic information on the arrangement.

    Great if you can get it ..wish I had mates who could help me into one of these deals.
 
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