His explanation++++++++++
"The following is a summary of the recent inside selling and my take on it.
The following Management group still owns a total of 6.8 Million shares and Options. This is equal to 7.4% on a fully diluted basis.
.......................................................................................................................................................................................
Ken Bates
Shares Held 2,115,000
Options Held 600,000 Exercisable @ 23 cents for Total Cost $138,000
Shares sold 200,000 @ 1.073 = $214,600
Profit Taken $79,600 If all options exercised. Options exercised 400,000.
Shares Owned 2,515,000 Assume all 600,000 options exercised on above basis
………………………………………………………………………………………………
Dale Hendricks
Shares Held 1,800,000
Options Held 1,100,000 Exercisable @ 23 cents for Total Cost $253,000
Shares sold 267,500 @ 1.507 = $282,747
Profit Taken $47,747 If all options exercised - Options exercised 400,000.
Shares Owned 2,632,50 Assume all 1,100,000 options exercised on above basis
…………………………………………………………………………………………………
William McNight
Shares Held 0
Options Held 900,000 Exercisable @ 23 cents for Total Cost $207,000
Shares sold 150,000 @ 1.31 = $195,820
Profit Taken $0 If all options exercised - Options exercised 400,000.
Shares Owned 750,000 Assume all 900,000 options exercised on above basis
…………………………………………………………………………………………………………………………………………
David Tkachuck
Shares Held 0
Options Held 400,000 Exercisable @ 23 cents for Total Cost $92,000
Shares sold 190,000 @ 1.28 = $243,000
Profit Taken $151,000 All options exercised 400,000.
Shares Owned 210,000
With David Tkachuck being a member of Parliament, he may have decided to reduce his holdings; in accordence with best practices expected, of his public position of responsibility. It does not look to good if Members of Parliament are making huge profits from public corporations by way of options.
…………………………………………………………………………………………………………………………………………
Allan Taylor
Shares Held 522,593
Options Held 700,000 Exercisable @ 23 cents for Total Cost $161,000
Shares sold 220,000 @ 53 cents = $116,600
Shares sold 300,000 @ 1.11 cents = $333,000
Total Sold 520,000 @ 87 cents = $452,000
Profit Taken $291,000 If all options exercised - Options exercised 400,000.
Shares Owned 700,000 Assume all 700,000 options exercised on above basis
………………………………………………………………………………………………………………………………………………………
The above shows, the Management group owns a total of 6.8 Million shares and Options. This is equal to 7.4% on a fully diluted basis.
…………………………………………………………………………………………………………………………………………………….
From the above, it is very reasonable to assume that most of the insider selling has been done to exercise options.
The only exception appears to be Allan Taylor. This one is hard to figure. When he sold at 53 cents, he may have gifted them to family members in a lower tax bracket. Hard to determine the true reason.
.......................................................................................................................
I am still of the opinion that all options and warrants are probably getting exercised and ready for a corporate restructure. Getting options and warrants exercised, gets things clean & tidy before a restructure.
If Management wants Mitsui and Krupps to execise options and warrants, it looks good if management does the same thing.
There are approximately 10 million warrants and 6 million options outstanding for a total exercise price of $8.3 Million. Cline also has $7 million cash in the bank. Giving a total of $15 million cash in the bank. This would allow Cline to buy all the New Elk coal properties.
Getting all the New Elk assets legally into Clines name is an essential step to any re-organization.
The AGM is another important step in any re-organization. When shareholders vote, they actually legally empower directors to act for shareholders. Lawyers like to get legal powers refreshed before any corporate restructure; this is for the eyes of the court.
It is quite possible Cline will own the New Elk coal land without a major financing.
The evidence does not support the idea that insiders sold to get in on a low priced financing.
The insiders sold shares to buy options at 23 cents. They do not need a low price financing.
The major press release for the Iron project was issued nearly 1 year ago. Intelligent mine people who studied the news release fully understood what it meant and what Cline had discovered. New Elk was announced last year. Shrewd investors had over 9 months to accumulate cheaply.
I doubt we will see a large low price financing.
If I am correct, Cline now has approximately 92 millions shares out and is fully diluted with $15 million in the bank. This cash will buy the New Elk and coal properties. Any cash short falls can be got from Mitsui or ThyssenKrupp.
The bottom line is that Cline is very undervalued even at $4 per share. So shareholders enjoy a massive margin of safety.
I doubt insiders will partake in major selling at such low prices. My due diligence blog clearly shows that management can un lock great value, well over $10 per share by 2011. They would be crazy to do a low priced financing. Look to Baffin Iron and Consolidated Thompson, they did a high priced financing on much lower quality assets.
The above seems a very reasonable. " |
