Ann: Share Purchase Plan Closes Oversubscribed, page-10

Hi J L.

I don't see how this is a vote of confidence at all, in fact I think the whole announcement is borderline misleading?

I just clarified it with my broker and these numbers don't really stack up.

The company on the 25th May announced that it would issue a total number of shares up to the number 174,080,704.

The issue was underwritten by Canaccord to $1million - if you were able to issue up to 174 m shares then surely $1m wasnt the target? $1m was the maximum risk that Canaccord were prepared to take in underwriting the shares in this offer. If Canaccord really believed in it they wouldve underwritten the entire offer. As it is it looks as though they have been paid 6% of $4.1m or over $240,000 and have not invested a cent.

Even if you said the VWAP was 10 cents (which it wont be), applying the 20% discount would imply a price of 8 cents per share for the new shares to be issued. So $4.1m would represent just over 51 million new shares or approximately 30% of what was proposed.

So how can they say it was oversubscribed because full subscription would have seen them raise nearly $13 million? It looks as though it was way undersubscribed to me.