@debarwa I reckon you are right here.
I have been trying to determine why a company with such good fundamentals has been dropping so hard and until I saw your post today I hadn't clicked on to this so thanks for posting as it has now given me the reason for the large drop.
Abit of research through the past ASX announcements shows that 60m unlisted options were given to advisors of the Canadian cobalt tenement purchases. 30m of these are exercisable at 1.1c when VWAP of SP for 20 days is > 4c and the remaining 30m when SP > 8c. Looking through the announcements the advisor exercised 13m on 7/12/17, 6m on 19/12/17 and 6m on 7/3/18. If you look at the below graph I have circled the impact on the SP each time these options were exercised and sold.
View attachment 1034923
The 1st 2 conversions and sales I believe were made when the SP spiked back to 8.3c and the effect was to reduce the SP down to 5.2c. The 3rd conversion and sale was made after we had another spike at the end of Feb 18 when the SP rose to 5.1c. Note that as liquidity has reduced in 2018 it is taking the advisor longer to sell their converted options. The good news is that I think the advisor should have probably sold all the recently exercised options now and he only has 5m left to exercise which I believe they will do when the SP spikes next. The bad news is that when the SP gets back to 8c we could see this all again but by then it may not have as big an impact I think as the SP will be driven by the drill results coming out and we should see a lot more liquidity with it so hopefully these 30m shares will be absorbed with not as much impact.
Apart from the great fundamentals and new management of MEI though the other thing giving me great confidence in the SP rebounding this year (and why I am not looking to sell even though the current chart looks ugly and I'm well in the red) is that all the directors and the new consultant have performance rights directly attached to SP appreciation so they are incented to get the SP back up and I believe they will. 4.5m performance rights are issued when the SP hits 8c, 6.5m when it hits 12c and 6.5m when the MC reaches $100m.
