Ann: Funding for Grandis and Nomgon, page-192

Last week there was a lot of grizzling from many disgruntled shareholders about the fall in SP and the fact that you could pick them up on marketfor less than the SPP price. Whilst there is no denying this, should EXR besuccessful in their proposed Daydream 2 about to spud next month and Nomgonflowing successful gas rates in the new year sentiment will change.

If you were to participate in the SPP this could be a great opportunityto turn fortunes around with the free options attached with a strike price of12 cents.

I know a few posters have had a crack at putting a few figures togetherso I ran a couple of scenarios with the current market price of 6 cents give ortake a few pips verses the SPP price of 7 cents.

I then looked at this with a market price of 20 cents which is roughlywhen you come into the money with the market price being higher than yourstrike price.(Exercise price)

I ran this again at SP of 1$, I chose this value because essentially weare chasing 1Tcf of gas at Daydream 2 with Elixir having roughly a billionshares on issue valuing the company at 1$B. I’m just trying to round numbersoff for simplicity.

You can see from the table below that with a SP of $1.00 with theoptions carrot you gain another $44,000 on your initial purchase of 100,000shares at 7 cents, (roughly 6 X’s your initial investment)Feel free to correct me if you don’t agree with these calculations.

I know we have to prove up this reserve and get the gas to flow but Neiland the team seem very confident in fact their geologist has said from thesoftware simulations they have run that this shows that they can flow gas.

I do have a lot of faith in Neil, Richard (the Grandfather of Coal SeamGas in Australia), Stephen, Greg and Anna. Others may not share my view and Irespect that.

These guys have a lot more invested in the company than I do make nomistake.

Investors have also mentioned the company will still need another capraise down the track, which may be true at some stage, but if they can get theSP to around 20 cents minimum then around 50M options will be hopefully beexercised and that’s more money in the bank. Also its possible that the SPPcould be over subscribed and take it out to $3.5M on this particular cap raise.

These are all scenarios and possibilities which I am thinking about andreasons why I should take up the offer. Even if the SP does not reach 1$, theoptions around that 20c SP mark to use Neils words is free money (less tax ofcourse). Granted there will be a little more dilution with these beingconverted to fully paid shares but if EXR is travelling pretty well I wouldn’texpect a significant drop in price. Also this SPP provides an opportunity toaverage down if you are out of the money with your current holdings.

Whilst I sympathize with those that may be carrying a loss and I respectthe fact that these could be substantial. I know I can’t control the SP but Ican control whether I am in or out.

AIMHO and all the best to all share holders.