But then, i wonder, why would they not just buy on the market at current/recent much lower prices?? Could it be that their buys would be in such large amounts that they would propel the SP past $3.75, thereby making $3.75 a bargain in comparison? Are they locking in a much lower SP than they are expecting to see our SP going to?

You answered your own question. Recall that LM pointed out that it only took ~500k shares to propel the share price up 10% without Dundee 'managing' the price. With an average of 1M shares traded daily, it would be difficult to obtain 6x that without making a significant share price move.

That said, their cost, after the flow-through credit, is more likely somewhere ~$3, putting it at a substantial discount to the current market price.