As far as small cap stock raisings go, this is a great one. I...

As far as small cap stock raisings go, this is a great one. I posted earlier today the various options that holders and non-holders have.

There seems to be some bitterness regarding KS's opportunity to creep, but hey, it's his company that he founded and we are lucky to have the opportunity to be part of it. I have personally been a holder and supporter of IOH well before Blue IM and will continue to support it with the information that we have.

Emotions aside, here are some facts.

This is the same style of offer that was successfully used by RIO in 2009, which got them out of their debt hole. It's also similar to the current, highly praised offer by Origin, with the exception of no action will not result in a cheque in the mail after the bookbuild as will happen with the Origin entitlements. Regardless, it has the necessary criteria to be just as successful.

There are some potentially very good opportunities to average down, buy your 'entitlement' equivalent before the ex-rights date and sell your actual entitlements, etc. If you do the maths and calculate the risk/reward and potential Present and Future Values you will see this is a good deal. I would publish the maths here, except everyone might follow suit and the opportunities would evapourate...

As with all things in the market, the person who spends that little bit extra time might just outsmart your average punter, like the very silly person who sold out down to $1.70 this morning. I can tell you from my calculations, he/she was on the losing side of a potential risk/reward trade of 3:1. Not smart, unless he/she really needed the money in the next four days...

As for the capital, it's more than most anticipated. But to put it in perspective $40m is worth just over 114MT of iron ore, using the assumption that IOH was valued at 35 cents per tonne perfore the raising was announced. And if we use the benchmark 50 cents (which I admit hasn't every really applied to IOH due to KS stake), that becomes 80MT.

So can they prove up 114MT with that money - too right they can. At the end of 1Q2009 they had 350MT of iron ore and $18m in the bank. After spendng around $17m (noting option conversion and expected current cash balance) they proved up another 350MT from the drilling - in one year. Sure they may have hit all the sweet spots, but let us remember that the $17m ran the whole company (working capital) and exploration for one year.

The current raising has $14m just for exploration. As the exploration program matures, so does their knowledge of the area.

With $40m in the bank and multiple feasibility programs paid for we wont see another cap raising until the big one, for development.

As I said, I wont publish the full maths here and save it for somewhere else, but as a guide we should sit at around $300m market cap on completion (noting the cash balance and feasibilities due in a few months) and that works out to be $1.81 diluted for the listed options. That's why its trading around $1.80. Above this is a punt, below this is an opportunity.

Good luck all and I hope that helps to put a bit of perspective on things.