Ann: Hawsons JV Partner Pure Metals Dilution Election, page-2

OK, so now we all know that Silvergate will not pay the AUD $246,000 owing but why?

IMO, these are some points that us smaller shareholders should think about why Silvergate has not paid:

* For simple maths purposes, Silvergate was meant to pay AUD $250,000, as part of their contribuiton to developing Hawsons. Using the CAP shareprice of 6c, $250,000 is equal to 4.2 million shares in CAP. I think Silvergate currently own around 19-20 million shares in CAP.

* The election to dilute their shareholding in Hawsons does not mean that Silvergate own less shares in CAP, it means that the 40% of the Hawson's project that Silvergate owns will be diluted due to the non payment of the AUD $250,000 and I am assuming that CAP will have fund the $250,000 development costsnow, but will then increase their ownership percentage of Hawsons. I do not know what the change in ownership (as a percentage) of Hawson's will be due to the non payment.

* Could Silvergate actually increase its overall ownership of CAP / Hawsons by spending the $250,000 buying shares on the market compared to contributing to the development costs as per the J/V agreement?

* The larger percentage of Hawson's that CAP owns, the more it has to spend on developing the project, increasing our CAPEX.

* At current burn rates, CAP has enough cash to last around 2 years and the CAP board is trying to cut costs, not increase them, which if I a reading this correctly, Silvergate will be forcing them to do.

* If CAP does not keep the project going forward, then we will find it harder to secure a development partner / an offtake agreement. Hence, how will we add value to the project and increase the CAP share price if we stop developing Hawsons???

* So with CAP having to spend more on the project (not to mention the legal fee's, EGM costs, etc), a capital raising is probably likely.

* If the current share price is 6c, what would the shares issued at a capital raising be priced at, 4c, 5c? The last capital raising was not well supported. Using a shareprice of 5c, $250,000 would buy you 5 million shares in CAP.

* By not paying, Silvergate look like the bad guy, by re-nigging on the deal, further swaying the court of public opinion. From a pure business perspective, I can see some possible merits as why Silvergate have elected not to pay.

* By not paying, do Silvergate demonstrate that their interests are not aligned with other shareholders?

As a shareholder, I am not happy that Silvergate have not pay. This whole battle between the CAP board and Silvergate is like a big game of chess and as pawn (small shareholder), I am tired of being slaughtered (share price wise).

With the iron ore price extremely depressed, we have enough "external" issues facing our company, we don't need "internal" issues dominating the landscape & the board room.