Its complicated. So long as the additional capital increases the barrels per share.
Nailed it Szaba. This 'constant dilution' (btw, did you realise FAR have not issued a single share in the past 10 months...) is a necessary 'evil' to increase value. As for the 'fully funded? - I guess not!' jeers, CN never said we were fully funded for DJ if we decide to go ahead, nor for the new leases. She said we were fully funded for the current work program and there is no indication whatsoever that was a lie.
But I guess raising money before we run out would be fiscally irresponsible.
Here's another angle - if we hold 8c after tranche 1, we will be a $410M company. After T2, 8c will give us $437M MC. Hmm, did someone mention the ASX200?
Loosely speaking, how do oil explorers create value? By taking risks, by paying peanuts for large equity positions in unproven blocks that the majors won't touch, shooting seismic and doing other small scale de-risking activities, and then farming down the equity in exchange for the big boys to do the drilling.
But of course, that model didn't work for SNE, what makes anyone think it could work again?????
I'm happy about the CR because it leverages my investment. If they use the 80 mill to develop assets worth an extra 200 mill (say) worth of MC it adds about 3.5c per share to my holding.
And as others have said, if you're worried about the dilution, just buy extra shares on market. It's a fair chance you'll be able to get them below 8c anyway. Oh, but that will cost you extra money? Well I'm terribly sorry but if you want to maintain your current percentage of an asset that requires more funding to develop you're just going to have to chip in. But if you can't keep up, be thankful that it's you that can't pay their way and not FAR. Which is the whole point of of the CR anyway.
Same goes for Farjoy. If he wants to keep his 1.5% of the entire SNE field he will have to dig deep too.
Whether he chooses to or not he will have lost none of my respect. If FAR chooses to go to production IMO it was going to be inevitable that he would drop off at some point.
BTW, if you wanted to pick up a 10% stake in FAR from scratch in the CR, you will need to stump up 43 mill. Expect some insight into the new look register with some new or changed substantial holding notices.
Cheers, Dangar.
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