Author: tt2000
Here are the risks of GMC. I bailed faster than Usain Bolt on open last Thursday and will never touch this junk again.
1. 466m shares offered at 1.5c that came with free 700m options at 0.5c = effective price of 0.9c.
2. Tanah capital (owner of Boronia) got 200m shares at 0.5c
3. Tanah was meant to subscribe to CR (point 1) but pulled out - i.e. Tanah didn't see value even at 0.9c for the risks.
4. Tanah pulled out because he wasn't satisfied with the lease = some risk that he identified pertaining to GMC's land lease.
5. EPCM contract requires $14M. GMC have raised $7M. They've got a 'binding agreement' for $4M due by 30th sept at an effective price of 0.9c. If GMC isn't above 0.9c by 30th Sept, do you think the SI will contribute the funds?Furthermore, I wonder what conditions precedent exist relating to this agreement. Is there a clause that stipulates share price can't fall below a certain amount. Has this already been triggered?
6. Even if GMC do get the $4m, it still won't be enough as they will have $12M but require $19M. Furthermore, GMC are doing construction themselves and exposed to any increase in construction cost.
7. Do GMC even have approvals to sell manganese. This depends on Indonesian govt? Furthermore the land lease is only binding to the extent that a contract is binding in Indo (remember Pak Marthen).
8. GMC have given $800k in value away to Triple C.
9. GMC now have 2bn shares and 0.7bn options. This values them at circa 30m at 0.1c. Would you pay $30m to be exposed to the risks/reward of GMC?
10. Finally its now a new financial year. With 2.7bn shares and those SIs buying at 0.9c, they will inevitably look to cash out for a profit. If they sell today, they don't have a tax implication for a whole 365 days.
GMC Price at posting:
0.8¢ Sentiment: Hold Disclosure: Not Held
