What impact will the attached warrants, exercisable at $0.08 for 24 months, have on future share count and potential upside?

Dilution and future share count

The private‑placement issued 4,368,333 Units, each containing one common share and one 0.08‑exercise‑price warrant. If all warrants are exercised at the end of the 24‑month window, the company will issue an additional 4,368,333 shares, roughly doubling the current post‑placement share base (the placement already added 4.37 M shares). Assuming the pre‑placement float was about 12 M shares, the total share count would rise to ≈ 20.7 M – a ≈ 73 % increase in outstanding shares. The dilution factor translates to a ≈ 0.73 × current EPS/earnings per share reduction, which must be absorbed by the capital raised ($262k) and any subsequent earnings growth.

Potential upside and valuation impact

The warrant exercise price of $0.08 is modestly above today’s market level (the stock has been trading around $0.07–$0.09 in recent weeks). If the company can lift its cash‑flow or secure higher‑margin projects, the market may re‑price the stock toward $0.12–$0.15 in the next 12‑18 months. At an $0.08 exercise, each warrant would represent ≈ 30‑40 % upside over the current price, providing a built‑in catalyst for a short‑to‑mid‑term rally as the expiry date approaches and investors anticipate the dilution‑adjusted upside. However, the upside is contingent on the company’s ability to generate sufficient earnings to offset the dilution; otherwise the market may discount the post‑exercise shares back toward the $0.08 floor.

Trading implications

- Short‑term: Watch for buying pressure as the 24‑month expiry window narrows (especially in the final 3‑6 months). A price bounce toward $0.08‑$0.09 can trigger warrant‑exercise speculation and support the stock.

- Mid‑term: If the company demonstrates credible cash‑use (e.g., advancing projects, expanding reserves) and earnings growth, the diluted share pool can still deliver upside; consider a long‑position with a stop just below $0.07 to protect against a dilution‑driven slide.

- Risk: If earnings do not improve, the market will likely price the post‑exercise shares at or below $0.08, capping upside and potentially triggering a sell‑off as dilution materialises.

In short, the warrants double the potential share supply, creating a ~73 % dilution risk, but the low $0.08 strike leaves room for 30‑40 % upside if the company can lift earnings and the market rewards the additional capital. Position accordingly: modest long bias with tight downside protection, and monitor the approach to the warrant expiry window for any catalyst‑driven moves.