I call it the 'pot odds theory' that poker players use. If there is a substantial sum in the pot and it only costs a fraction of the pot to 'call the bet' then you get great 'pot odds' to call.
But you can still get beat. Doesn't matter how much you lose, it's still a loss. Bankruptcy doesn't mean it isn't a good company or that they're not worth a lot of money. Sometimes it's just a business decision make by people outside the boardroom. Don't be looking at 'pot odds' on this one...
No disagreement necessary ;P
PE, if they are anything like their biotech brethren, will use any method or data point to generate further venture/speculative capital. Sure, they'd like to have a profitable company providing a necessary resource to a world-changing technology (TSLA). They would love the prestige of bringing their own new-tech to maturation while mining a rare-earth resource. But none of that is required to get more money from people who seem have plenty and no good places to put it...
Sorry for the poor communication. I would be a lot less glib if I was just a little less cynical...
I am saying that the dilution could be exponential, not just fractional.
If discovery reveals an order of magnitude more lithium available than first thought they could ask for hundreds of millions of dollars (both Canadian & US) to dig holes and establish filtering/refining plants.
As for percentages, if they dilute 100% your 35 cent shares are worth 17.5 cents. But they might dilute 1000%, making your shares nominally worthless unless the good news that accompanies the dilution compels investors to pile into the stock.
ronfab1, this is my first exploratory mine play as well. But I do have 7-8 years experience watching biotech startups plumb the depths of the capital markets to extend their trials/enrollment/opex/ramp. My impression is that the dilution will be 100% of what the C-Suite can hold in both fists after making their sales pitch regarding the 'value' of the 'proven' reserves that can be 'realized.' In the case of HMGLF I would guess the TSLA agreement will be used as further proof that any capital investment is worthwhile even if new-tech testing doesn't provide any recognized measure of long-term viability.