Well this is a surprise announcement. I am pleased to see Ansteel's commitment, however I am very interested to see this "premium".
The fact they want to reverse our initial instalment and take up the full $162 million in shares is very interesting. I see it as them scoping up as much cheap shares as possible in one hit. Why would we need 18 million back when we have around 35 million outside KML? We will be producing a cash flow in about 14 months, and there is simply no need to have huge "exploration expenditure" until Karara is in production.
Ansteel "could" have applied to the FIRB for a greater stake in GBG earlier, however that would have created an inflationary affect on GBG. Takeover rumours etc would have put GBG's share price to a high or unprecendented levels. Now the financial crisis has worked to their advantage and can potentially take a huge slice of GBG at bargain prices in one hit, and avoid trying to accumulate on market.
I am all for the placement assuming its at $1+. Our shareprice has suffered significantly, and I'd prefer us to keep below 700 million shares.
The positive side to a share placement by Ansteel is that a "price floor" may be created and we can finally begin to rally upwards. However something around 80c would create unneccessay dilution and I would prefer to debt option.
At least we know the Ansteel connection is strong, and this is going to production.
GBG Price at posting:
40.4¢ Sentiment: Buy Disclosure: Held
