It's kind of ironic that just before the anticipated April...

It's kind of ironic that just before the anticipated April signing with POSCO, GUN's share price was north of 20c, and now, as we inch closer to the finalisation of the deal, the share price is almost half of that! Whether you believe DH or not, that's some degree of mistrust priced in!

Yes, GUN shareholders face some major dilution. But that should not come as a surprise to anybody. What is important is that even post-dilution, the current share price is very undervalued versus back-of-the-envelope outcomes. Consider:

CAPEX Requirement: 192mm
GUN's 60% share: 115mm
Assume Gun's share is financed 60% debt / 40% equity
Gun's financing: Debt 69mm / Equity 46mm
POSCO's contribution to GUN's financing: 28mm
GUN's required Equity Raise: 18mm + more for working capital.

So:
raise at 10c per share = 180mm shares / total shares 425mm
raise at 15c per share = 120mm shares / total shares 365mm

GUN's portion of project NPV = 126mm
@ raise of 10c = NAV 30cps
@ raise of 15c = NAV 34cps

You could add on an additional 4-5cps for the non-Zircon assets too.

Obviously, I have applied a speculative pricing formula, and it remains to be seen if the final terms will be better or worse, but all things considered, GUN looks to be about 3x undervalued, just one month from a potential deal closing. A LOT of bad news is priced in at these levels.

G