The directors basically didnt have a choice but to raise the capital. Originally they were hoping to farm out the gas plays for cash and drilling costs.
The cash released from the farmouts would have funded the Grieve core well and the farmin partners would pay for the sahllow gas drills that ELK have committed to under the lease agreements.
Having not been able to farmout the assets, ELK needed to the cash to fund these committments. The directors have done the right thing in this regard. What I am frustrated is that the directors would have known this 3-4 months ago and to my knowledge didnt have a plan B or didnt meet the market with the farmin partners.
Binbin makes some valid points and obviously understands the company and its background. The positive out of all of this is that we will get closure on a couple of important questions in the next 3 months.
If Chemical flood is a go and ELK potentially obtaining project finance to keep 100% working interest, even with 92m shares on issue this stock is still a 10 bagger from current levels. If Uppersands and one of the gas plays are viable add another 5x. Then theres Ash creek which could be the sleeper project that could end up being bigger than Grieve so theres plenty to look forward to. IMO Grieve will be a no-brainer and low risk.
The funny thing being in 3 months time being all these are proven up if the SP is significantly higher than current levels, everyone will say what a great job the directors are doing. However the larger shareholders who got diluted through the rasing by either choosing not to particiapate or not having the means to participate will get less value per share.
Anyway heres hoping to a much better quarter than the last.
DJ
ELK Price at posting:
11.5¢ Sentiment: None Disclosure: Held
