seems to me that many punters don't understand the fundamentals of markets.....
why do capital markets exist? - for companies to raise capital by offering shares in their companies to investors who believe in a company's future prospects.
For all the sp increases and trading in a company's shares on a daily basis this does not bring in one cent to company coffers. Many seem to think that all the frenzied trading brings in money to the company. It brings in NOTHING. Traders and we who buy and sell hoping for a profit are only secondary to a company's financial health. When I buy and sell whether I lose or gain means nothing to any company's cash position - my trading is simply parasitic on the market's perception of a company's situation.
Issuing of options are of course another way to boost cash reserves as are debt for equity deals, but other than that there is just no way for a company to pay its way until it's a producer. Getting more capital into a company inevitably means dilution of value to existing shareholders - but that's saying no more than eggs have to be broken to make an omelette.
So organising Cap raisings is a fundamental requirement for any company and taking advantage of favourable market sentiment is obviously the way to go. Needless to say, companies which are absolute no hopers also do likewise many times over but only mugs participate..... there's no shortage of mugs it appears.
KDR will at some point need more funds to advance its projects so there's no question of a CR at some stage and for most the earlier the better and if good drilling results continue there's little harm done to shareholders when the share register is fairly small and the share price is very healthy.
that's how it works.... sorry to the informed to post some very fundamental issues on companies and capital but there are a lot out there who just don't know the basics.
KDR Price at posting:
60.0¢ Sentiment: None Disclosure: Held
