Let's not forget that the next round of financing will be a...

Let's not forget that the next round of financing will be a combination of debt and equity. Hopefully the equity component is minimised - especially if supported by strong offtakes.

My view is that the shareprice weakness and the discounted capital raising was due to of a lack of short term catalysts, and therefore lack of incentive (other than the large VWAP discount) for our major shareholders to participate.

The prior capital raising (A$28m in Nov 2015) was actually done at a 10% premium to VWAP. However we were in a much more bullish market environment for phosphate which justified this premium:
- Phosphate rock price was at a 2 year high at US$123/t
- Promise of near term Baobab production at healthy operating margins - without the need for formal & expensive scoping or feasibility studies
- Bullish Broker reports highlighting Baobab project upside
- Still some hope (although fast diminishing) of IHP process being the white knight for Wonarah

These short term catalysts have since disappeared
- Phosphate rock price is at 10 year lows US$80/t
- Baobab value can now only be unlocked via proper and time consuming feasibility studies
- Brokers have gone quiet
- IHP failed to attract funding for quite some time, and strategy to build a smaller plant adds to any future commercial implementation.

With this in mind, the discount to VWAP is not surprising. Don't forget there are also 80m unlisted options in play at 25c that expire in 2019. I'm sure the company will be keen to have them exercised and I'm sure this is still possible if everything goes well from here.