Bathurst Resources - BRL

[BlackPeter]

Forgive my possible ignorance as i'm pretty new to all of this, but wouldn't it be normal for an offer like this to be made at a discount to current share price? otherwise where's the incentive to participate (other than presumably not having to pay a brokerage fee?) I only ask as I recently participated in the CRP offer which was heavily discounted.

Same conditions as the institutional offer some 4 weeks or so ago. They can hardly sell it first for 6.5 cts to the institutions and than go further down in price. But I guess you have a point regarding the attractiveness in the current climate.

In a way they do this as well to demonstrate their "fairness" towards the existing shareholders who couldn't participate in the earlier capital rising, but I am pretty sure that they still hope like hell for the coking coal price to go up (and with that the offer to become more attractive). Their latest cash flow report didn't look that flash ....

[barleeni]

Agree that fairness and parity is important to uphold. However with the way the SP has been tracking I would think very, very few people wold be inclined to participate at 0.065. You could possibly just as easily put in a bid at 0.064 tomorrow on the market and have it go through. I guess the perceived value now, 4 weeks after the institutional offer, in my humble opinion would be lower than it was then, and hence the offer should be lower? Time will tell I guess depending on how much uptake they get on their offer.

[biker]

Same conditions as the institutional offer some 4 weeks or so ago. They can hardly sell it first for 6.5 cts to the institutions and than go further down in price. But I guess you have a point regarding the attractiveness in the current climate.

In a way they do this as well to demonstrate their "fairness" towards the existing shareholders who couldn't participate in the earlier capital rising, but I am pretty sure that they still hope like hell for the coking coal price to go up (and with that the offer to become more attractive). Their latest cash flow report didn't look that flash ....

Agree BP. They have said existing shareholders would get a go at a cash issue so nothing new and being non-renouncable means the institutions will simply pick more up at the price they were happy to pay a month ago including all those not taken up.
So, the cash issue gives the appearance of being fair, provides more shares for the institutions and provides the company more development capital. On a two year view, all good.

[barleeni]

It still doesn't entirely make sense to me. Assuming the perceived value of BRL is fixed at a point in time, that time being say the time the announcement was made (0.066) then this offer basically dilutes that share value by 4% (roughly 1/23) So at the very least shouldn't the offer be made with at least a 4% discount to reflect the newly diluted share value? which would equate to closer to 0.063? Either way I cant imagine anyone who would participate? It doesn't make sense by the numbers?

[Bobcat.]

If you want to buy at a discount, put a bid on market just above 6c. The sp is still drifting south and I see nothing in this recent announcement to create an immediate momentum shift.

BC

Holding a small parcel, and looking to buy more on a confirmed upswing / large volume pivot.

[macduffy]

It still doesn't entirely make sense to me. Assuming the perceived value of BRL is fixed at a point in time, that time being say the time the announcement was made (0.066) then this offer basically dilutes that share value by 4% (roughly 1/23) So at the very least shouldn't the offer be made with at least a 4% discount to reflect the newly diluted share value? which would equate to closer to 0.063? Either way I cant imagine anyone who would participate? It doesn't make sense by the numbers?

The company is keeping faith with both shareholders and the instos who subscribed to the placement. They probably don't expect to raise a lot - hence the rather meagre 1 for 23 ratio. A gesture rather than a serious capital raising exercise!

[BlackPeter]

Sorry guys, but I don't know if coal really has much of a place in the future. Check out this link, especially the graph which shows how China is planning to create energy in the future. More nuclear, gas and renewables to stop the incredible amount of smog and heavy metals being pumped into their environment!

http://www.thebull.com.au/premium/a/...-showdown.html

Hi Moosie, I think you have a point if you talk about thermal coal - but that is not BRL's main product (well, at the moment it is, but just for local supplies). What they want to export is premium hard coking coal - much too expensive to burn.

Hard coking coal is an essential ingredient to make steel - you need it for the process to to turn iron oxide and hard coking coal into iron and carbon dioxide. The main purpose of the coal is to release and than bind the oxygen again, not to provide energy for the process.

The use of hard coking coal would drop when the world doesn't need steel anymore, but don't expect that to happen overnight.

The current oversupply of hard coking coal is not a result of competing energy sources, but is the result of an under supply some years ago. Hard coking coal prices skyrocketed and everybody wanted to benefit from this opportunity and developed new mines (as well BRL). Guess what happened when all this new supply swamped the market - prices dropped.

At this stage however there are more news about hard coking coal mines getting mothballed (or development delayed) - i.e. the producers take coal out of the market. I expect the price at some stage to come up again (and time will tell, whether BRL can hang in long enough to benefit from this rise).

Discl.: Hold

[tony64peter]

Given the current market price. If BRL was to release positive news to the market, prior to rights issue closing,would this be a no no in the eyes of the FMA?

[macduffy]

Given the current market price. If BRL was to release positive news to the market, prior to rights issue closing,would this be a no no in the eyes of the FMA?

I doubt it. Listed companies have an obligation to keep the market informed about market sensitive information. More likely to be censured for not disclosing any such info.

[BlackPeter]

Interesting depth - both on ASX as well on NZX seem to be much more buyers than sellers, but price is low as. Go figure?