CXY - Cougar Energy

[james99]

Desolator. It is, frankly, almost unbelievable. It places it well above Mee in terms of funding and is 1/3 of the Shell / Arrow deal. Wow.

 

[Dukey]

Mmmmm - very nice announcement - german backing, plenty of $$$, accellerated pilot program..... all looks up and up for CXY.....

-wonder how redback will try to trash this one???


(Holding cxyo)

 

[alanding]

any thoughts of dropping? just sell on fact or because of friday slump of US stock?

 

[Dukey]

any thoughts of dropping? just sell on fact or because of friday slump of US stock?

dunno - probably just nervous market - my whole sheet is red today despite some promising announcements.

I'll go away and come back tomorrow I think.

g'luck all - dukey.

 

[blehgg]

Desolator. It is, frankly, almost unbelievable. It places it well above Mee in terms of funding and is 1/3 of the Shell / Arrow deal. Wow.

Got smashed today - down 16.67% =="

wasn't it good news or am I missing something? ~

Oh wellz, hopefully it should kick back tomorrow.

 

[desolator]

well, a veryy lack laster performace today considering.. but had a chance to top up.. should see some positive anouncments to follow.. i get the feeling we arnts being told something, u dont put 280 mill unless you see some real promise! bring on wednesday

 

[farout]

I did warn you guys. In farout you should trust.

80 million options at 25c. Of course the day is going to finish in the red! This will result in a large capped resistance. Good luck.

 

[springhill]

I did warn you guys. In farout you should trust.

80 million options at 25c. Of course the day is going to finish in the red! This will result in a large capped resistance. Good luck.

Surely there is somehing to be said for having $280 mill in the bank in 18 months time, providing certain conditions are met of course. With the amount of shares on offer at that time, cash in hand values them at around 45 cents give or take, thats not taking into account proven up resources and the drag created by LNC test run and MEE taking the next steps aswell. Im def no expert here, just thinking out loud. Am i incorrect in this assumption?

 

[Dukey]

I did warn you guys. In farout you should trust.

80 million options at 25c. Of course the day is going to finish in the red! This will result in a large capped resistance. Good luck.

There are plenty of examples of options not capping a share price. QGC gave out free 60c (?) options a couple of years back. the sp charged straight through and way beyond. not a hiccup in sight.

And people seem to forget that when converted, options raise funding $$$$.

a little patience will be rewarded IMO. Vast majority were down today.

(holding cxyo)

 

[WindriderAU]

How did you buy in at 15.5c? Were these options? Who from?

I am new to investing and have not advanced to the Options stage.

 

[Wilson!]

windrider, I bought options at 15.5c - correct
you pay only 5c conversion fee, in Dec 08 from memory and they become heads
just need to send a cheque in before expiry date

usually offer great leverage over heads

 

[WindriderAU]

OK Team - Newbie question, sorry.

Wilson bought using options, he paid (or rather he has to pay?) 15.5c per option. If he has to pay 5c to convert each option, does this mean the shares actually cost him 20.5c?

My education is still in the steep learning curve at the moment, so hopefully this can be answered fairly easily.

Does buying options, means that if he wants to buy, he can, and the price he will pay will be 20.5c per share prior to the expiry date? This includes the 5c + 15.5c option price?

If the stock has gone bad is Wilson still obligated to buy? If not, what does he have to pay?

So yesterday:
What would Wilson have paid?
What has Wilson committed to?

Thanks in advance.

 

[Dukey]

OK Team - Newbie question, sorry.

Wilson bought using options, he paid (or rather he has to pay?) 15.5c per option. If he has to pay 5c to convert each option, does this mean the shares actually cost him 20.5c?

My education is still in the steep learning curve at the moment, so hopefully this can be answered fairly easily.

Does buying options, means that if he wants to buy, he can, and the price he will pay will be 20.5c per share prior to the expiry date? This includes the 5c + 15.5c option price?

If the stock has gone bad is Wilson still obligated to buy? If not, what does he have to pay?

So yesterday:
What would Wilson have paid?
What has Wilson committed to?

Thanks in advance.

Windy - check out post 181 further down (up?) this thread. I think that might answer some questions

-dukey.

 

[WindriderAU]

Thanks Dukey. I read your post #181 and read the ASX link. I am getting there, just not totally clear at the moment.

You wrote....
***********************************************
At that time CXYO were about 7c ; CXY were about 12.5c

so.... assuming $1000 to invest : I could buy 14285 CXYO or 8000 CXY... this is where the options give you leverage.

Todays close was CXYO = 18c ; CXY = 24c
If I had sold everything today,
my profit on CXYO would be 157% (x $1k investment = 1570$ profit)
My profit on CXY would have been 92% (x $1k = 920$ profit).
***********************************************

Working with your $1000 to invest, you can purchase 14285 CXYO @ 7c each. Prior to expiry, you exercise your options (this means you have to pay the other 5c?).
Q - If you don't decide to exercise your options, what happens with your 14285 CXYO's that you purchased for $1000? If I understand it correctly, you simply lose them along with your $1000. If you had purchased CXY's you would still have them.

So as far as I can see if the price is higher at the exercise time, then all is good.

Also another think I noted is that at 7c, your exercise amount was 71% of your purchase price. At todays prices (approx 15.5), the exercise amount is 32% of the purchase price. Would this mean that the benefit of using options will decrease if the exercise price does not change/increase with the share price. The longer the exercise price stays at 5c, the less the difference in gains between CXYO and CXY.

Hope I have worked it out correctly, and the main question is if you do not take up the options/exercise, then you lose your money?

Thanks again.

 

[Dukey]

Thanks Dukey. I read your post #181 and read the ASX link. I am getting there, just not totally clear at the moment.

You wrote....
***********************************************
At that time CXYO were about 7c ; CXY were about 12.5c

so.... assuming $1000 to invest : I could buy 14285 CXYO or 8000 CXY... this is where the options give you leverage.

Todays close was CXYO = 18c ; CXY = 24c
If I had sold everything today,
my profit on CXYO would be 157% (x $1k investment = 1570$ profit)
My profit on CXY would have been 92% (x $1k = 920$ profit).
***********************************************

Working with your $1000 to invest, you can purchase 14285 CXYO @ 7c each. Prior to expiry, you exercise your options (this means you have to pay the other 5c?).
Q - If you don't decide to exercise your options, what happens with your 14285 CXYO's that you purchased for $1000? If I understand it correctly, you simply lose them along with your $1000. If you had purchased CXY's you would still have them.

So as far as I can see if the price is higher at the exercise time, then all is good.

Also another think I noted is that at 7c, your exercise amount was 71% of your purchase price. At todays prices (approx 15.5), the exercise amount is 32% of the purchase price. Would this mean that the benefit of using options will decrease if the exercise price does not change/increase with the share price. The longer the exercise price stays at 5c, the less the difference in gains between CXYO and CXY.

Hope I have worked it out correctly, and the main question is if you do not take up the options/exercise, then you lose your money?

Thanks again.

The exercise price won't change - ever. Even if the shares go through the roof - it will still cost you 5c per option to convert them to ordinary shares. The idea is - that you don't have to pay that 5c until later (before the exercise date) - so allows you to buy a greater number of options (than shares) for a given amount of cash.

If you don't want to pay the 5c per option to convert - you can sell the options on the ASX before the exercise date.

... or - if the options have no value because god forbid - the share price has tanked - you just let them lapse and you've done your $$$.

- I guess what you are getting your head around is that the 'leverage' with these options comes about because of the % diff between the share price and the option price on the asx. greater %difference in price = greater leverage.

At 7c V 12c - the option price (tracking ~5c lower, roughly = the exercise price) is about 60% of the regular shares.

Sometime down the track, at say 30cents for CXYO and 35c for CXY - the option price (still tracking ~5c lower ) is about 85% of the share price - so much of the leverage/advantage of buying the options is gone.

----------
risks:
If the regular shares start tanking towards the 'exercise price' - then this means the options value approaches zero! and it can do it quickly.

ie if CXY crashed back to 5c..... the CXYO would be very very low - maybe something like < 0.5 cents.
If the CXY price recovers before exercise time - then the options will follow them back up.
If CXY is below 5c at exercise date - then there is no point in paying 5c per option to exercise/convert - because you could just buy CXY for less!!!

I'd suggest you put CXY and CXYO next to each other on your watchlist somewhere - or SXP / SXPO or some others.
- this way you can watch the relationship of % gains or losses between the shares and their options.

Generally you will see that as the share price increases, the % diff between share and option prices decreases and so does your leverage. (because the options will track cheaper by roughly the exercise price = 5c for CXYO)

Hope all that is not toooooooooooo confusing!!
-------------------
-EDIT - anyone please feel free to add to this discussion or correct any mistakes !!! - dukey.
===============

 

[alanding]

I do some calculating for DI. I am wrong, correct me.

DI will invest 280M with 80m options @25c. If DI want to earn money from the investment, the only way is to execute options of 80m. AM I right here?
If it is right. then their cost will be
280+80*0.25=300m.
So there average cost per share is:
300/80=3.75$.
That means if DI want to cover from lost, the SP have to be 3.75$ before 30/06/2011. (80M options due date). Otherwise DI will lost money.
Am I missing something? just tell me.

 

[WindriderAU]

The document says it is a MOU (Memorandum of Understanding). Is this a legally financing contractual obligation deal or a gentleman's handshake?

 

[james99]

The document says it is a MOU (Memorandum of Understanding). Is this a legally financing contractual obligation deal or a gentleman's handshake?

Windrider, MOU's generally contain a legally enforable obligation to pursue the goal or purpose of the MOU in good faith; provided that the parties do so in good faith then neither can sue the other if, for example, a binding financing agreement (eg this amount on this day) does not result. MOU's are, therefore, less than money in the bank but more than a handshake.

I see that earlier in the link there are some projections as to the total cost per share of the investment. I am not sure that they are right (or more to the point calculatable at this stage), because there may be financing fees and other expenses (including issues of securities) and potentially interest included in any binding agreement.

That said and perhaps more importantly, DI has management, business expertise and money, all of which CXY needs. If a 400mw project is viable and if (as I understand DI wants) the Exgo technology Cougar has the rights to is easily scaleable and able to be rolled out across Au, India and Pakistan, then I think DI will pursue this vigorously.

And the Exgo technology is that that was used in the 1999 Linc burn, and that it lost in (I think)2006; and now CXY has the rights; an BP is a collaborator with Exgo. Further, Exgo's plant in Africa is, I understand, doing very well. In short, CXY has done well with obtaining the Exgo rights and the MOU at this early stage (ie still being a micro / small cap). Hope this helps.

In short, I am very optimistic, despite the fact it is only the MOU stage. I disclose long term holdings.

 

[LittleMak]

The document says it is a MOU (Memorandum of Understanding). Is this a legally financing contractual obligation deal or a gentleman's handshake?

As far as I know its a contract, 'BUT'.... The MOU provides for DI to arrange two tranches of funding, the first of around $30m at the end of
2008 (First Financing), and the second of around $250m at the end of 2009 (Second Financing),
subject to achievement of agreed project milestones. The funding may come from a combination of
corporate and/or project equity and/or debt.


So basically if CXY don't meet their agreed project milestones, then DI is exempt from paying up.

Hopefully this will give CXY management a kick up the ass to get this project rolling.

 

[rsteven]

I am new to this and this may be a silly question but why are the options killing this?

I bought a small amount of these shares as I am learning the game. To me it seems that they have a knowledgable team, money and the tech to do this.

Does that not make this a good 12-36 month punt?