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0.6¢ gulf manganese corporation limited

I should have also pointed out option B (CR to SI) is...

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tt2000

4,718 Posts.

1233

28/02/17

12:18

Post #: 22968419

Originally posted by tt2000 ↑

Here's a comparison of the dilution under Pak's buy in approach versus a CR.
1. Based on $500M Project
A. Pak Approach

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12

1 Pak's Funds ($M) $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0

2 Pak's Stake 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

3 Shares (m) 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800

4 Project ($M) $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0

5 GMC's Project Share ($M) $450.0 $425.0 $400.0 $375.0 $350.0 $325.0 $300.0 $275.0 $250.0 $225.0 $200.0

6 Share Price $0.25 $0.24 $0.22 $0.21 $0.19 $0.18 $0.17 $0.15 $0.14 $0.13 $0.11

7 Effective Dilution 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

B. CR to SI

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12

1 Capital Raising US ($M) $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0

2 Capital Raising AUD ($M) $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0

3 Effective Raising Price $0.0075 $0.0100 $0.0125 $0.0150 $0.0175 $0.0200 $0.0225 $0.0250 $0.0275 $0.0300 $0.0325

4 Additional Shares (m) 1,738 1,304 1,043 869 745 652 579 522 474 435 401

5 Total Shares (m) 3,538 3,104 2,843 2,669 2,545 2,452 2,379 2,322 2,274 2,235 2,201

6 Project ($M) $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0 $500.0

7 Share Price $0.14 $0.16 $0.18 $0.19 $0.20 $0.20 $0.21 $0.22 $0.22 $0.22 $0.23

8 Effective Dilution 49% 42% 37% 33% 29% 27% 24% 22% 21% 19% 18%

2. Below based on a $250M project
A. Pak Approach

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12

1 Pak's Funds ($M) $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0

2 Pak's Stake 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

3 Shares (m) 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800

4 Project ($M) $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0

5 GMC's Project Share ($M) $225.0 $212.5 $200.0 $187.5 $175.0 $162.5 $150.0 $137.5 $125.0 $112.5 $100.0

6 Share Price $0.13 $0.12 $0.11 $0.10 $0.10 $0.09 $0.08 $0.08 $0.07 $0.06 $0.06

7 Effective Dilution 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

B. CR to SI

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12

1 Capital Raising US ($M) $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0

2 Capital Raising AUD ($M) $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0 $13.0

3 Effective Raising Price $0.0075 $0.0100 $0.0125 $0.0150 $0.0175 $0.0200 $0.0225 $0.0250 $0.0275 $0.0300 $0.0325

4 Additional Shares (m) 1,738 1,304 1,043 869 745 652 579 522 474 435 401

5 Total Shares (m) 3,538 3,104 2,843 2,669 2,545 2,452 2,379 2,322 2,274 2,235 2,201

6 Project ($M) $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0 $250.0

7 Share Price $0.07 $0.08 $0.09 $0.09 $0.10 $0.10 $0.11 $0.11 $0.11 $0.11 $0.11

8 Effective Dilution 49% 42% 37% 33% 29% 27% 24% 22% 21% 19% 18%

Points of note:
1. The effective dilution is independent of the Project valuation (obviously)
2. Under the Pak scenario, we would have had a local Indonesian with skin in the game and local connections - so the effective dilution could be lower under the Pak scenario to compensate for this factor.
3. Our baseline effective dilution was 10% with Pak Marthen involved (and having skin in the game). How management's performance should be assessed going forward should be relative to how much we are additionally diluted.

Expand

I should have also pointed out option B (CR to SI) is constrained by how many shares can be issued.

GMC can only issue another 330m shares plus 15% of share capital (1.4bn = 210 ) = 540m more shares.
(However, they are able to issue attaching options to reduce the effective price)

Interesting to see how they raise US$10M. As people have pointed out, if they can't raise the full amount then what is the point....

Last edited by tt2000: 28/02/17

GMC Price at posting: 4.2¢ Sentiment: None Disclosure: Held

0 Great analysis

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Add GMC (ASX) to my watchlist