no brainer, page-27

Jatz,

The issue of dilution is always a sensitive one for shareholders and I also think can be misunderstood.

Where the general consensus by shareholders is that the company is going places and likewise the consensus is that management is of high quality and cash is being spent wisely then dilution, let?s say via capital raising, occurs for very good reason and does not necessarily mean that the share price will be drastically affected.

Cash is the lifeblood of any business and without it then the business will fail and shares would be worthless and we would not want that.

For PEN to continue its development it is going to need cash until ultimately it becomes a producer and thus able to fund its own growth without share dilution. Hence there will be dilution of some nature but the share value will recover and continue to gain value dependent on the cash being spent in a manner that builds value for the company. For example an explorer finding and proving up its mineral resources is cash well spent and will be reflected in its SP.

Pen is at or arriving at one of those stages where cash injection will be required. It has to its credit already put in place a $US50M Credit facility with Ya Global where it will swap Cash for shares. Whether it draws on this facility or does a Cap raising is not a concern for me although it would be difficult to understand why it would not use this credit facility. Pen stated on the 18th Sep 09 re the Ya Global Credit Facility

?.... Under the terms of the Facility, Peninsula may, at its discretion, over the next 60 months (5 yrs),
draw down up to A$500,000 in any 10 trading day period (Advance) enabling it access to exploration and development funding with timing and price at the discretion of Peninsula."

The operative words are above are 'at its discretion re timing and and price'. Also it stated....

?...under the current development scenario, this facility can take the company through to production at its Ross and Barber projects. With the reduced availability and increased cost of project debt the ability to move to production on a non-debt basis may prove to be a preferred option for Peninsula.?

The increased Production Capacity will in my view change the funding requirement however that is for a later discussion.

The real issue in relation to the magnitude and minimisation of dilution for shareholders is the amount of $Cash to be raised, the frequency of raising and the Value of the SP at the time. The Credit Facility gives PEN management full control over minimising the dilution.

Announcements to come and with PEN announcing JORC resource at or before June 2010 will impact the SP hopefully in a positive manner. Thus it will be interesting to see Managements 'Control' of the timing and Cash $Amount drawn from the credit facility or any other form of Cap raising. Of course there are other external factors that PEN cannot control re its SP as per the latest correction to markets.

There is one obvious long term impact that dilution will directly impact and that not much can be done about re current holdings and that is the share ex dividend., however shareholders thinking this long term can overcome this by increasing their shareholding.

Regards, JJ