dumping, page-11

Hi Patrolly,

I see where you are coming from mate but irrespective of the original buy price for the shares being sold (ie 10c, 50c, $1.50), the current market price is less than 1c so thats the amount currently at risk. In reality the rest is already lost and is just an unrealised capital loss at this point in time. Selling now and taking up the rights issue may provide some longer term investors with some additional short term benefits, ie realising the capital loss.

If I purchased 6,000,000 shares in 2002 for $1.50 then I am currently sitting on an unrealised capital loss of $8,496,000. Under Australian tax rules I'm not really allowed to sell the 6,000,000 and then buy another 6,000,000 just to take the tax loss. I believe that the rights Issue is slightly different however because it is exercising an entitlement and thus may be providing some people with an opportunity to legitimately take a tax loss now while maintaining all the exposure for the future via the acceptance of their entitlement.

While nobody is ever happy about realising a loss and I don't know what the actual entry price for these sellers was, the ability to take a tax loss now to offset against capital gains on other stocks would be very valuable for some people. In this example for a cost of between $6k and $12k they could get a $8.5mil tax deduction which would be quite a compelling argument for selling the original stake. Taking up the rights means they still have most of the exposure to the upside(excluding any share price gains between $0.008 and $0.015) for 75% of the holding.

As I say mate, I really don't know the sellers or their personal circumstances and have used the example you provided as your entry date to show how others who may be in similar circumstances may view the situation. I'm sure there are lots of other possibilities however and I wouldn't advise anybody take these assertions as tax advice. I don't intent to encourage anybody to do this or offer council on the ATOs attitude towards it. Just an indication of what others may do in given circumstances.

PS. I hope your entry price is well below the example given and I really hope for all our sakes MST management manage to use recent momentum and all our newly inserted cash to provide shareholders with some well deserved relief in some form other than a tax loss. Good luck to you mate.