How much will it cost the company to do a company raise? Will it...

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giantbunny888

259 Posts.

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21/10/21

09:41

Post #: 56958427
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Originally posted by longreach: ↑

I had a thought "outside the box " moment which won't be popular for SGC holders in the short term (and particularly option holders at all!). But don't misunderstand me, its very positive for the longer term for shareholders. Consider this:
I am (rightly or wrongly) of the view that SGC's current asset base could support an overall market cap well in excess of $100 million. The Philippine project, with the right deal, alone could support a market cap far higher than that. So under that scenario, whilst it would be good to have around .04x131 millions exercised in the coming months (=$5.2 million cash), that would increase the shares on issue to 477+131 million (=608 million shares), plus the cash.
An alternative would be to "keep the lid on the bottle" for the next couple of months. Other than report great oil revenue from Canada (which gets sunk straight back into additional well production), but no big news out of Borba, and similarly Philippines. That would very likely see little change in the share price leading up to December 31 options expiry date. Who would convert options with a share price sitting around the exercise price (probably only the uninformed). Thus you don't get the cash, but you also conserve your shares to the current 477 million.

After the options expire unexercised you then make announcements re Philippines plus Borba, the share price is +20 cents - you then issue only 30 million placement shares at say 17 cents, voila you have $5 million cash and 100 million LESS shares on issue.
Scary isn't it? (Especially if you're an option holder).

Would GJ be that calculating? Probably not. But its something to be wary of.

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How much will it cost the company to do a company raise? Will it be underwritten?

I think the company should do the following.

1. If it does not need $5m capital, ie it can generate enough income from Canadian oil to fund their projects then do nothing. Shares won't get diluted.

2. If it needs $5m then try to get as many options exercised first as it is cost effective and money comes in much sooner.

3. If options don't get exercised and they need to raise capital, I would look at a capital raise.

There are obviously bigger players in the background that have other interests. A capital raise may not be open to the general public but to only institutions.

SGC Price at posting: 4.0¢ Sentiment: Buy Disclosure: Held
5 Upvote

0 Great analysis

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