I started this thread as a means of monitoring KMRW, especially in relation to KMR, over the years to 23jul09, when KMRW expires. I am interested to see if the theory holds up in reality.

These are my own sums, and I welcome any corrections or alternative views.

Currently, I hold just KMRW; no KMR; but I will trade either short-term as well as maintaining/increasing my long-term holding.

- - - - - - - - - - - - - - - - -

As the shares move up, the warrants should out-perform the shares just by keeping (more or less) at-the-money, ie:

now:
KMR = 40
KMRW = 24 (KMRW out of the money since 24+19=43)

future:
KMR = 60
KMRW (if it comes up to at-the-money price) = 60-19 = 41
% gains:
KMR = (60-40)/40 = 50%
KMRW = (41-24)/24 = 70%

That's a modest outperformance of the warrants; but they don't expire until 2009, so there's plenty of scope for greater gains.
if:
KMR = 100
KMRW (if it comes up to at-the-money price) = 100-19 = 81
% gains:
KMR = (100-40)/40 = 150%
KMRW = (81-24)/24 = 237%

At some stage before expiry, I expect to sell enough of my KMRW to exercise the rest, leaving me with a decent chunk of shares.
100,000 KMRW, price 81p = value = £81,000
exercise cost = 100,000 x 19p = £19,000
number of KMRW to sell meet exercise cost of remainder = 19,000 (as it happens)
...leaving me with 81,000 KMR, price 100p = value £81,000
ie. converted KMRW to KMR at no cost, and avoiding the expiry of KMRW. The extra % gains get manifested as a larger number of KMR shares.

Of course there is no guarantee that KMRW will tend to remain at-the-money; it could do better, ie. give greater % gains.

The chart shows graphically how the warrants can outperform the shares


And this one shows the moves happen down as well as up

edit 20jan08: PYF/W chart no longer shows what I intended

I thought that many on here might find this an interesting read. It helps to explain recent strong rises in KMR. A valuation of almost £1 per share is very tasty indeed.

http://www.minesite.com/fileadmin/content/...ekly_290507.pdf

LG - well found - many thnx 4 posting it
97.7p - v.nice
I bought back in to KMR at 60.5p today

take up of special warrant offer (temporarily reduced exercise price) - 45.3m exercised (an uptake of 60.8%) raising £7.7m fpr the company;
new shares to be admitted (hence a bit of dilution, but I think the market will take this in its stride)

Great thread, Mike.
I couldn't say DILLIGAF & get away with it!

"I think the market will take this in its stride" re KMRW conversion pair-passu.
As there's no divi, I can't see the upside on that issue, so I abstained,
& this early conversion doesn't affect the final number of shares in H209 anyroad.

Still holding fast regardless of the market, as the figs are well estimated.
KMR have been trying to launch on this scale for 20 years & more;
This time is the right one.

thnx Nap
20 years - yeah - coming good
and one day (maybe 200 years?) they might make something of their old Ancuabe graphite asset!

And another thing!

Teething problems won't shake me out either.

More likely to add.....



Edit 300108:

Due to gearing, Ws down 45% from nov08 45p with the mkt,
& this latest down 50% in jan puts these from "hold" to "add".

For anyone reckoning the figs stack up long term, W is the one to be in.
19p discount 'till july'09; time for 70p on ords & 50p on these? - much why I bought.

top

Thanks for the minesite link. Interesting site.

KMRW - long (in 3 small bits) 27 - moving, but offer yet to shift up to follow KMR
DAVY looks to be dozing at his desk, all other MMs moved up

.