erichmjHere is my opinion on how the capital raising will work...

erichmj

Here is my opinion on how the capital raising will work out.

My "back of the envelope calcs" and reasoning below.

In the current market environment, I doubt if after the 20 to 1 consolidation they will be able to issue new shares at $1.00

The current price for the shares is 4.2 cents.
So post consolidation this translates to 4.2 X 20 = 84 cents.

From 7.2 page 24 of the notice of AGM.

The issue price of the shares will be not less than 80% of the average share price calculated for 5 days before the issue is made.
While we dont know what the average share price will be at the time the new shares are issued, it would be reasonablee to assume, in this current market, it wont be much higher that it is now,and it could quite possibly be lower.

The need to raise capital right now could not have come at a worse time.
So the ensure it is successful, the new shares will have to be issued at a meaningful discount.

And this discount price will have to be at around 80% of the probable price of say ~84 cents.

So it the new shares will be issued at 67.2 cents.... say 68 cents.

Therfore to raise $10M they need to issue ~ 14.7M shares
and to raise $28M they need to issue ~41.2M shares

I would think it prudent to only raise the $10M now so as not to dilute the capital too much.
This will give them sufficient funds to complete the purchase of the leases and do some of the planned serveying and drilling.

Hopefully by then, the overall market has improved and the drilling added further value to the leases.
At that time ( about 12 months away) a further capital raising can be made by issuing share at much higher prices.

I am at a meeting attended by ME on Tues and will be suggesting just that.