BTV 2.33% 21.0¢ batavia mining limited

options issue and options for action

  1. 3,666 Posts.
    Holders,

    I have had a think about the options issue...(I will set aside the question of what to do with the war chest of money for the time being, but more on that later).

    Options Issue:

    Until we know what the strike price and the expiry date of the options are, I really can't say whether I would want to participate or not. However, depending on those two, it may be in shareholders' interests. Bear with me here...

    The Options will cost only $0.005 - half a cent - on a 1 for 4 basis.

    eg Take a holding of 10,000 shares. Current market value of $700 at $0.070. This would entitle the holder to 2,500 options, at $0.005 each, which would cost only $12.50, or less than 1.79% of the current value of the holding.

    So, this requires very little outlay. Even my own company's holding of 1,949,000 only requires an outlay of $2,436.25.

    The total capital raised (if 100% participate) will be 133.284m shares, divided by 4, times $0.005 per option = $166.6K. Negligible compared to BTV current cash.

    So why would they bother?

    2 reasons, I think.

    (1) FUTURE ACCESS TO CAPITAL. It allows for the possibility of more capital later on, to support a potential project. This happens IF AND ONLY IF the options reach their strike price, and holders choose to cash in for the fully paid shares. It the price never makes it, no dilution of shares, and no extra capital injection.

    (2) REWARDING SHAREHOLDERS. It may be actual a way of REWARDING shareholders. This is because the options are very cheap (HALF A CENT EACH), which gives tremendous gearing to a BTV price rise (again, dependent on the strike price and time).

    A 'WHAT IF' SCENARIO:

    - 2 year expiry, strike price 10 cents:

    For half a cent, you can buy options that have a break even of 10.5 cents. Beyond that, the % return is large.

    BTV 11 cents: Percentage Return (on options) is 100%

    BTV 15 cents: Percentage Return (on options) is 900%

    BTV at 18 cents: Percentage Return (on options) is 1500%


    If the strike price is 15 cents (a less attractive proposition), break-even is at 15.5 cents. But bear in mind that NTA is ALREADY well over 15.5 cents right now.

    So at 10 cents (and a reasonable time frame), for me it is a no-brainer - YES. 10 cents is below BTV's current cash and so if you believe the market should value BTV far higher, you are likely to get fantastic gearing on that price rise.

    On 15 cents, whilst still under current NTA, I would not be so sure. 15 cents is 114% of current market price. Perhaps worth the extra flutter...or perhaps not.


    WHAT TO DO WITH THE BTV CASH?

    As a contrarian investor, it is hard to ignore how many bargains there are out their in the small resource sector. I strongly believe BTV is likely to buy well, as it is a buyers market, and anyone with cash is likely to do well.

    Having said that, I get the strong impression from this forum that there may well be a lot of support for a large capital return. Exactly what % of shareholders share this view, I am not sure.

    Cash is King at the moment, not just for BTV, but for the shareholders too. The idea of 'cashing up' BTV's cash now for many shareholders is an attractive one.


    Hypothetically, if BTV were to cease being a small resource company, and existed only to funnel the current cash back to shareholders, and then pay the Gullewa proceeds back as they come in over the next 3 3/4 years, HOW MANY PEOPLE WOULD SUPPORT THAT? (THIS MEANS ACTUALLY VOTING FOR IT IF PUT TO A VOTE.)

    I don't expect everyone to disclose their exact shareholding as I do, but I would like to get a sense of the sentiment out there. Perhaps if you could post on here, and give a range of shareholding, say 0-300,000, 300,000- 600,000, 600,000-1,000,000 or 1,000,000 and over, and whether you would support at motion at an EGM to this effect. (10 cent immediate return of capital).


    Once we know what shareholders really think, we can go from there. Remember that directors only hold 10m shares, 7.5% of the company (and some 15 cent options). This is not a big voting block, although they may well have other supportive shareholders.

    But I also encourage shareholders to contact BTV directly, because posting on here may not even be read by management. A quick email will get your views across if you want at least a smaller capital return.

    I wait to here from you all.

    Yaqona.
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.