CGT 0.00% 21.0¢ castlemaine goldfields limited

proposed $16.5m capital raise, page-51

  1. 190 Posts.
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    Snowyjim, with respect, I don't think we can conclude in this situation that the institutional investors believe the resource is a certainty based upon their willigness to support the capital raising.

    Institutional investors who invested in CGT would always have considered it a high risk investment. They are now in a situation where the downside risk has manifested - if they do not support the capital raising then the company would have to be wound up and they'd suffer a likely complete loss of their initial investment.

    You might say - well why would they now throw good money after bad if the company won't be profitable - but that is an overly simplistic way of looking at how institutional investors make these kinds of decisions. I suspect that given they would already have regarded CGT as high risk in their portfolio, they may not even require an assessed 50% chance of success from here in order to justify "taking the punt".
 
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