Potato, pohtahtoe.I think we all know that a capital raise...

Potato, pohtahtoe.

I think we all know that a capital raise involves the marketing of a company's prospects to a group of potential investors, so as to solicit funds to pursue an investment (or keep the lights on), secured by the issuance of marketable securities. While that entails the issuing of shares, the issuing of shares does not automatically and necessarily construe a 'capital raising' event. For instance, shares are issued as employee incentives or in joint venturing. Neither example would be considered a 'capital raise' in the sense that that term generally means. At least, not for most people, I would have thought.

The company has announced a non-cash based pre-payment of a contractors fixed costs....set aside into escrow and only released on agreed milestones. Once released, it is likely the contractor will cash in their chips (if history is a guide), but that is exactly what you would expect a contractor to do. People do wear multiple hats - in this case: contractor, executive and investor. If conflicts of interest can be managed, then it is not unreasonable to expect each hat to act in its own way.

Doesn't smell like a capital raise in the typical meaning of the term.....but really, it is the bottom line that counts in terms of fear or faith that individuals are trying to read into the event. Bottom line, the company has materially reduced the cash call on its existing cash balances, without going to market or farming down. That is not to say that either or both of those events won't happen prior to drilling, but their chances have eased somewhat after yesterday's announcement. Existing shareholders have taken a 3.5% (approx) dilution to enable that.

Meh!