IMO, what this latest capital raising has shown/ reminded all...

IMO, what this latest capital raising has shown/ reminded all shareholders is that:

- despite all the bullish talk by management, media articles and hotcopper posters, EQR is still a high risk speccy stock that still has a lot to prove and achieve before it’s share price can actually start rising in a meaningful manner. Perhaps the markets will only start believing in EQR’s story when the company actually starts delivering sustainable profits and positive cash flows.

- you can’t believe everything that’s announced and stated by management. While the announcement states that “Strong support was shown for the Placement…”, thanks to Scottm’s post, we know that the only reason the placement received ‘Strong support’ was because the company had to provide an even bigger discount to what was originally offered. The company clearly wanted to raise $8million at 4.5 cents with 1 for 3 options but only managed to raise $4.9million even after discounting the offer to 4 cents with 1 for 1 options and had to give extra free options on top of that.

- despite all the bullish statements like “this is a seller’s market”, “geopolitical tensions have resulted in everyone scrambling to secure western supply of tungsten”, “lots of downstream players keen to support western tungsten projects” and “EQR could probably sell 3 times the amount of tungsten it had available”, the reality is quite the opposite based on how EQR couldn’t raise what they wanted at the original price and terms they wanted. The lack of movement in the tungsten price also says it all…

So based on all these ‘half truths’, can we still believe that EQR ‘turned down’ the apparently initially ‘attractive’ QIC loan or were they actually forced into a corner because they needed funds urgently and couldn’t fulfill the conditions of the QIC loan in time. What exactly were these conditions that they failed to meet? Was it production targets, drill results, improving recoveries, due diligence? Why did the company choose not to disclose the details?

The only positive I noted from the announcement is Oaktree increasing their % holding in EQR which at least shows that Oaktree continues to believe that EQR is still on the right path and is still a good investment. Interesting that there was no mention of whether directors were participating in the offer as that would have been further assurance that the directors truly believed in the future of the company. Would be a bit concerning if they didn’t participate because 4 cents with 1 for 1 free options would seem like a no brainer if things were going according to plan.

My concern though is that if all the money they raised was for Mt Carbine and working capital, they will still need an additional $2.5million to complete the acquisition of TMG Group. More dilution down the road? Hopefully not…