TNG CONSIDERED COMMENTS, page-10

Re the definition of 'sophisticated investor', if you can prove a net worth of $2.5m or above you qualify. You own a paid off house in a decent suburb of Sydney you are a good chance to be worth over $2.5m. It's not a high bar.

Would the directors not partaking in capital raises concern me? A little, but a lot of other factors need to be considered. For one, directors can and usually do hold shares and/or options that they were gifted and even if they are bullish on the company's prospects it may not produce a good overall financial balance to buy more shares in what is still a speculative situation, albeit a promising one with considerable upside. Sometimes the composition of Top 20 shareholders who are not directors is a better indication of whether there is smart money being deployed into the situation.

Will the new investors in this raise be weak hands looking for the stag profit? Obviously some will, but I think most won't. Here's my reasoning. It takes a while to be able to trade your allocation and the company comes out of its trading halt before that happens. In stocks like this the price then usually drops to the CR price and thus there is no quick profit. If you want a quick profit at the moment there are plenty of IPOs available where in a bullish market like this the price generally gets pushed up by investors wanting to buy in once the stock becomes available to the general public. Traders wanting a stag would be more attracted to IPOs, this is more attractive to fundamental investors looking for a longer term multibagger.

The other deals that attracts stags are capital raises with free attaching options, as the share price usually only retraces to around the CR price, so there is a stag available by dumping the options. That's not the case here. Obviously fundamental investors like free options, too, but if the milk looks attractive they don't require cream on top as well.

I think most of the investors stumping up for this raise will be like me, people who looked at the story and liked what they saw and hope to see a solid medium term appreciation in the share price once the issue is bedded down. I am not expecting or looking for an instant profit, although I obviously hope the shares don't quite retrace all the way to the CR price. I think they probably will, but I doubt they'll go below it unless the market turns bad. But you never know. Assuming no market tantrums, my guess is that the share price will bob around the CR price for maybe 5 or 6 weeks and then break to the upside again during the traditional Christmas rally. Crystal ball gazing is worth about the same as most opinions though, exactly what it cost.

I've only taken 300,000 shares in the raise, but hope to be part of a good, evolving story that will one day turn that into a valuable holding. I look forward to building my understanding of the company further through instructive posts from people like Brunod who proffer balanced and well reasoned analysis.