help design the least dilutive 9m cap raise?!?

Guys,

The cap raise that the company is evidently planning to raise 9Mil, is one of the most important management actions in terms of possible dilution. Great affect on both the share price and especially the oppies.

It's apparently going to be announced with-in weeks, and I hope that if we are pro-active and pool our knowledge, we can offer collective suggestions that may help the company avoid unnecessary dilution.

An indication of the level of shareholder support may also ensure that the SPP is structured in a manner that is the fairest to holders and discourage a windfall deal to some finance company.

Earlier today I posted the following in another thread:

"Cheers morebull,

About the oppies effect on valuation.
The biggest threat to the oppies being in the money is the dilutive effect of a low priced cap raise. By definition, any shares added to the register at less than the excise price will make it harder for conversion.

Although good policy dictates that there a reasonable ratio between oppies issued and shares, the oppies in themselves are not dilutive (until the SP exceeds the strike price).
This means that if issuing some oppies will help the cap raise proceed at a higher price, it increases the chances of being converted, by reducing the dilutionary effect.

The key to a good cap raise IMHO is to make the term such that people need to buy shares to participate, thus increasing the VWAP ..a good way to do this is to set the record date for several weeks in the future to increase participation.

While it is often the case that the cap raise is issued at 80% of VWAP for a particular period, this is not set in concrete, and there have been many cap raisings at a premium to the share price ..although these would normally be to a private institution or sophisticated investor and may involved some free opppies as a sweetener.

We need to raise 9m, so I would suggest a one for five (assume a 20% increase in current SP) with one free option at 80% VWAP of the last three days before the record date advertised two weeks in advance.

To include option holders (normally excluded), I allow them to purchase an option at one for five options held (80% VWAP of the last three days) and would give them say one free option for every 10 they hold.

The record date should be after “the market appreciated the potential magnitude of the project” and extrapolation is possible from initial flow results.

These are my thoughts on how to get some excitement into the cap raise!"

Please give consideration to this question and offer your suggestions so that we may formulate a consensus of the best possible plan to avoid unnecessary dilution and maximise the share price.

I would be grateful if you would also indicate if you would support a cap-raise of this nature.

Because of time constraints, I would like to forward a consensus to the company no later than 9am Monday morning Perth time.


Regards,



John S.