Ann: June 2020 Production Update, page-10

I am no expert in share dilution but here is my take.

At this stage, the proposed CR is for $75-85m at 2-5c/share.

Let us assume a CR of $85m at 5c/share (one of many options).



There are two scenarios:

1 Each existing shareholder takes up their pro-rata Entitlement
Under this scenario, there are 1b shares pre-CR ... the pro-rata Entitlement is 1b shares and there are 3b post-CR shares.
Post-CR, existing shareholders own 67% of GCY (ie 2b/3b shares) ... or a 33% dilution.

2 Each existing shareholder does not take up their pro-rata Entitlement
Under this scenario, there are 1b shares pre-CR ... the Entitlement is 1b shares and there are 3b post-CR shares.
The 1b shares which should have been taken up by existing shareholders now go to the Underwriter(s) who dispose of them ... wherever.
Post CR, existing shareholders now own 33% of GCY (ie 1b/3b shares) ... or a 67% dilution.

My take is:

• if each existing shareholder takes up their pro-rata Entitlement then there will be some dilution (33%) but this seems a reasonable outcome for a year in VA?
• the new shares issued to NRW and the Creditor's Trust are hardly 'freebies' ... they are simply debt-to-equity at 5c/share
• the new shares issued to Richard Hay could be interpreted as a reward for his work over the past year - I don't have a problem with this
• but even if each existing shareholder does not take up their pro-rata Entitlement, they will still own 33% of a post-CR GCY

FWIW - my first decision has been to vote online for the Recap on 5 August. If this vote is successful, then my second decision is whether to participate in the CR where I will be guided by Production as well a Cash in the bank at the end of the Jun20 quarter. DYOR.