OFL wrote -
The next step ,if we do a CR at .07c for $130m AUD then we end up with an additional 1.9b shares which takes us to 5.6b shares therefore being diluted by 34%
OFL, remember can only issue another 15% of total on issue per year without SH approval.
But as others have said, we cannot run this to production without considerable capital costs which will mean either debt or more dilution. Which means it is very hard IMO to see the value of what is one share today (which may well become a 10th or 20th of a future share on the ASX after a consolidation) reach the magic $1.
My opinion is that debt is cheaper than dilution when you have a solid business plan for making loads of income, but if you have a significant element of risk dilution is the safer option.
Wouldn't mind seeing an option issue for capital raising at this stage. That allows investors with an appetite for risk to be well rewarded and reduces dilution for current holders. For example, 1B options with a strike price of 15c and 2 year expiry date with an issue price of 2c would raise $20M now, and another $150M if they hit the money. Investors would break even at 17c, make two bags at 19c (a bit less than what buyers on market today would make), five bags at 25c (compared about 3.5 buying at current price) and 10 bags at 35c (compared to only 5 buying at 7c).
Holders happy with what they have suffer no dilution until the SP doubles, then they have a 22% dilution instead of your 34% raising $170M in total instead of your $130M.
Understand that doesn't help much if you need money now, but it's a thought. Maybe attaching options to a rights issue would work.
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