Quarterly Activities Report, page-137

Whiskey,

Most companies attempting to build a profitable business do not start said venture with over 4B shares on issue. Their share base may eventually rise to the billions but that is a factor of growing the business. Show me a billion dollar company trading on the ASX with a share price of 25c and then show me the quality of their top 20 holders. You may find one but that company has probably had a significant share price decline due to serious problems. Some facts for you in your BHP example you provided me.

BHP was inaugurated back in the late 1880's. Those days you had thousands of shares not billions. BHP had a 1 for 2 share split (doubled the amount of shares on issue) when they first reached the dizzy heights of $40 back in the early 2000's. So now we are talking about a company worth $100B having only had a maximum of 1.6B shares on issue.

FMG only had 74M shares on issue in 2003 and the amount on issue rose to 264M by 2006 when they were developing their first mine. Their shares climbed to over $50 and they too had a 1 for 10 share split in 2007, thus increasing the amount of shares on issue by ten fold.

The fact is that fund managers, the people that handle other peoples money predominantly steer clear of low priced shares. Why you may ask? Well a daily 2c drop in a 20c share is a 10% drop in your investment. Not many $2 companies drop 20c in a day unless bad news but the nature of the beast is a 2c move in a 20c stock is not that unusual. Fund managers do not like extreme volatility and thus most will steer clear of shares trading below 50c. There are funds out there that do invest in 25c $1B companies but these funds probably make up less than 10% of the funds out there and thus FAR relying on these fund managers is limiting their exposure to the potential fund pool by more than 90%.