Capital Raising, page-105

Cap Raise - OK ,

Timing on that one was difficult to predict as we don't have a precise details on their costings and cash burn rate but we knew they were converting options which was raising cash ... I would say they probably had enough cash to see them through to November just even with additional drill rig ...but they saw the share price jump a few days ago (Thanks SYR) saw the 5 and 10 day Vwap jump up and decided to take an opportunistic Cap Raise (Reading between the lines the new Comp Secretary was probably the key clue).

All credit to them I say they could have raised at 20c ($6 or 7m) and could have raised at 30, 35 40 or 45c ... but with the Mcap today around $160m the can raise a whole lot more ... Probably around $15m which is approx 10% of the Mcap


My "roughie" understanding of the listing rules for this last 10% left in their 25% raise yearly limit are as follows ...

The can raise via any of these methods:-

• If issuing within the usual 15% annual limit (i.e. not requiring pre shareholder approval), they can issue at a fixed price or at a price defined as a minimum, based on being 80% or higher than 5 day VWAP.
• If issuing within the additional 10% limit (requiring pre shareholder approval) they must issue at 75% or greater than the 15day VWAP

• Share purchase plan - Can't raise more that 30% of capital, and issue price must be greater than or equal to 80% of 5 Day Vwap (everyone allowed up to applied up to a fixed $ amount - not pro rata)

• Prorata Issue (example Rights Issue) - To issue more than 1 share for every 1 held must be renounce-able and issue price higher than 5 day Vwap

But its complex area and there are pages of exceptions to the above so don't quote me ...


Cap raises are generally done to Sophs and Insto's ... and almost always at a discount to the prevailing VWAP price but sometimes at a premium... In this case it is likely to be a discount I'd say.


My guess (and hope) is they will raise their max of 10% giving them around $15m cash to spend. I think it will be around the 10 day VWAP as this is the most typical one used ... if they go rights issue then it slows the whole process down.. I'd like to see a quick turn around to insto's Sophs so as not to loose the too much momentum ..we don't won't SPP dragging out for 6 - 8 weeks when we can raise and have it all squared away in a week or 2 ....but that's just my personal opinion other holders may differ depending on where they entered .

All in all well done to MGMT and great that they raised at a relatively high price to minimize dilution to existing holders...they may have been able to raise higher they chose not to OK ...

The only folks likely to be unhappy are those that entered in the last spike... but to those I say raising an additional money say around $15m will only accelerate the whole program... and bring results sooner...and allow the uptrend to continue much higher ultimately ... I expect them to up the drill rigs to 4 or 5 rigs all working simultaneously probably around the clock.. bring an indicated Jorc much sooner and also accelerating the Pre-feasibility/Feasibility studies, metallurgical studies .. .and everything really

So with the extra cash the company is now on "steroids" ... things will come much faster and stronger drill results studies and assays etc etc... no need to worry about a cash or cap raise again for some time ... Generally a companies share price falls to the cap raise price as the sophies unload for a small premium but then usually kicks away higher as people adjust ... Occasionally the price of a stock will rally on a Cap raise if if its a a discount to the prevailing price as there sometimes is a relief that they have more cash to drive hard.

I should also point out the SYR also did a cap raise during its 12 months initial uptrend and the ascent in the value/SP company was only interrupted for a short time before the uptrend resumed in earnest... So lets get done quickly and get back on to appreciating the value of the company but much faster now... Also I think you can expect some +ive announcements by the company on drill either at the same time or slightly after the Cap raise ann on Friday

So haven't got access to any of my trading platforms right now so can someone calc and publish the 5 day, 10 day and 15 day Vwap pls??

Thanks ... FH

PS: King Louie ... no wasn't my Cap raise ...Didn't organise it... I perhaps would have waited to we broke above 80c again ... but mgmt taking the conservative route which you have to applaud. Its for the greater good.