I don't think 'the right to bid' by itself has much value to it, let
alone being salable.The key factor is the whole 'agreement',about
which we are yet to know the details.Once the details are known,we
would get a much better idea about the whole thing.Mind you, Tracer
is not paying 7 mil of its shares to Tarkington just for the 'right to
bid',the shares would be paid if the bid is successful and Tracer
would be a partner (dont know to what extent) in the venture,sharing
in the exploration and benefiting from the results.
The 7 million shares are going to be newly issued shares and not
'treasury stock' as I don't think they have ever bought any shares
back,making the number of outstading shares to about 44 million.If you
read the annual report, you will see that they have 'unlimited' number
of authorised shares with no par value, so issuing 7 mil. new shares
is not a problem.
You ask, 'how is Tracer going to pay if the bid is successful?'. Well,
for one thing, when they pay 7 million shares,that will fetch them
1.75 mil in cash,from Tarkington, plus they have a drill they can use
for the exploration which should fetch close to 1 mil per 'hole',and
also one the two blocks they are bidding has producing wells,and
being a partner in the venture Tracer can plough back all of their
share of the revenue back or some of it back into the project.
Another point to remember is that they have 'singnificant proven
reserve' in the blocks,so this being the case,they shouldn't have
any problem arranging financing,if further funds are needed. |
